Bond guru Bill Gross of Pimco has made his share of forecasts, which usually do not sit well with investors. The one that caused a bit of an uproar was when he forecast the Dow to be falling to the 6,000 level, or thereabouts. I think that one was made sometime last year.
A few days ago, he said the recession had begun in December and that he’s been begging the Fed to cut interest rates, at least according to 24/7 Wall Street. I am not sure in what form that begging took place, but let’s not forget that Mr. Gross is somewhat biased in that lower interest rates will help his bond investments. Muni bond funds have had their worst year in seven, and Pimco’s own PML is down about -9.7% for the year. So yes, a recession and much lower interest rates will bode well for his stable of funds.
My point is the same that I have made before: Forecasting can’t be done with any accuracy at all. While I have written about the prospect of a recession as a result of the Subprime/credit fall out, we can’t make investment decisions simply based on that possibility alone. I will continue to watch the actual market trends and make my picks based on those ETFs/no load fund areas that are showing the strongest momentum figures.