#5 What Gradual Economic Devolution Looks Like to Bill Gross of Pimco

Beware 'Credit Supernova' Looming Ahead : Gross

Published: Monday, 4 Feb 2013 | 12:02 PM ET

By: Jeff Cox ; CNBC.com Staff Writer

"Pimco's Bill Gross looks at the investing universe and sees a dangerous supernova - a looming explosion that could see investors lost in space.
The head of the Pacific Investment Management bond giant has issued an ominous forecast in which he worries that the global central bank-induced credit bubble "is running out of energy and time." ...
As a result, investors will have to get used to an atmosphere of diminishing returns and portfolios that will hold more hard assets like commodities and fewer less-tangible financial assets like stocks.
"Our credit-based financial markets and the economy it supports are levered, fragile and increasingly entropic," Gross said in his February newsletter.
"When does money run out of time? The countdown begins when investable assets pose too much risk for too little return; when lenders desert credit markets for other alternatives such as cash or real assets," he added.
Gross advocates investors turn to gold and other commodities for inflation protection and currencies and assets in other countries that don't have such active central banks and huge debt loads. He favors Australia, Brazil, Canada and Mexico. ..."