William H. Gross, Buy Cheap Bonds with Safe Spread, PIMCO, 2011

Rating: 4/5 Link

• Rather than outright default, many countries attempt rather successfully to keep nominal interest rates lower than would otherwise prevail.
• Over the long term, this “financial repression” results in a transfer of wealth from savers to borrowers.
• Investors shouldn’t give their money away, and at the moment, the duration component of a bond portfolio comes close to doing just that – because it doesn’t yield enough relative to inflation.