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The Bond King Doesn't Like Bonds... "Real Assets Are the Better Bet"By
Tuesday, July 24, 2012
Over the weekend, the Bond King "tweeted" twice...
His points were simple: You can't make money in bonds. Real assets are the better bet now.
I agree with the Bond King. And I think one "real asset" looks like a great bet here.
Bill Gross is the "Bond King"... He earned this reputation from decades of outperforming his peers in bonds. And he runs the world's biggest bond fund. But he doesn't like bonds today.
A key reason he doesn't like them is because after inflation, you're actually losing money in bonds. You're losing "purchasing power."
The Bond King asked, "How will investors maintain purchasing power? Stocks maybe. Real assets are the better bet."
"Real assets" typically means commodities and real estate. And between those two, there's one clear winner for me.
Take a look at the chart below, from the latest issue of my True Wealth newsletter. It shows real estate versus gold. To me, real estate looks like the place to be.
 The price of gold has gone up for 11 years straight. Meanwhile, real estate is dirt-cheap by any measure... It's more affordable than ever (thanks to record-low mortgage rates)... And the uptrend is just beginning.
When even the Bond King says you don't want bonds, you know it's time to lighten your load in bonds and other paper assets (like cash in the bank).
He says real assets are the better bet. Based on his track record, you should listen.
Of the real assets out there, I believe real estate is the one that offers the least downside risk and solid upside potential.
Listen to the Bond King.
Get rid of some of your bonds (and other paper assets) and replace them with real assets.
Real estate is my favorite real asset now... It's what I'm doing with my own money... You should consider doing the same.
Good investing,
Steve
Further Reading:
Many DailyWealth editors agree real estate is a terrific value right now. Catch up on the "cheap housing" argument here...
"It's no wonder some of the wealthiest people I know have been quietly doing this for years," Mark Ford explains.
To understand the true value in housing, you have to understand one thing...
Market NotesTHE BULLISH HOMEBUILDERS VIEW OF THE U.S. ECONOMY Homebuilders are saying the same thing as hotels... that "things can't be all that bad."
This year, we've featured many charts that display how the U.S. economy, while not great, can't be doing all that bad. For example, we've noted the solid price strength in Home Depot and transportation stocks. We've also cited the strong price action in Wyndham Worldwide, the giant U.S. hotel operator. The profits and share prices of hotel operators rise and fall with America's ability and desire to take business trips and vacations. This month, Wyndham shares struck an all-time high.
The price action in Toll Brothers is telling us the same thing. Toll Brothers is America's largest luxury homebuilder. It builds big "McMansion" homes with price tags well over $500,000. In recent quarters, Toll Brothers has reported strong orders and rising profits. This has produced a huge rally in Toll shares.
As you can see from today's chart, Toll shares declined with the rest of the market during last summer's selloff. Since bottoming, Toll has rallied more than 100%... and just hit a new 52-week high. As long as stocks like Toll are soaring, we have to say that the U.S. economy, while not great, "can't be all that bad."
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