As US shares and Treasuries fell on Thursday following some concerning economic data, Bill Gross advised investors to "stick to value stocks, avoid tech for now."
In a post on social networking site X, the former bond king said a few choice words: "Microsoft Corp." He also included a phrase from the 1971 hit song "American Pie."
In April, IT companies in the S&P 500 Index fell more than 6.5%, dragging major benchmarks lower, and these comments come at a time when the index is on track for its worst month since September. Vanguard Value ETF, on the other hand, has lost about 3.5% of its value during the same time period. This ETF include companies like General Motors Co. and Berkshire Hathaway Inc.
"The day the music died" was the opening line of Gross's post in which he noted that the yield on benchmark 10-year Treasuries was "moving to 4.75%," which was not far from Thursday's peak of approximately 4.74%, the highest level this year.
The post asks, "Why own bonds?" while pointing out that the yield on Treasury bills is 5.25%. Pacific Investment Management Co. was co-founded by Gross, who also served as its chief investment officer
Although pipeline master limited partnerships, one of Gross's favorite bets, was showing signs of progress, he warned investors not to "overweight too much."
Mid-Long Pitch (MLP) investments are characterized by greater yields, tax benefits, and trading on exchanges. MLPs typically invest in natural resources such as oil and gas. Western Midstream Partners LP and MPLX LP are investments that the investor boasts about, praising their substantial payouts.
There was a 1.6% drop in the S&P 500. Thursday, following depressing earnings from Meta Platforms Inc. and news that US economic growth slowed in the third quarter despite rising prices. With the first drop completely priced in for December, traders have also pared estimates for when the Federal Reserve will cut interest rates.