Bill Gross Advises Investors to Stick to Value Stocks and Avoid Tech Amid Slumping Treasuries and Equities
Bill Gross, the former bond king, has some advice for investors amidst the recent slump in Treasuries and equities: stick to value stocks and avoid tech for now. In a post on social media platform X, Gross recommended investing in companies like Microsoft Corp. if investors must dabble in technology.
Tech companies in the S&P 500 Index have been struggling, with April shaping up to be their worst month since September, sliding more than 6.5%. On the other hand, the Vanguard Value ETF, which includes companies like Berkshire Hathaway Inc. and General Motors Co., has only slipped roughly 3.5% over the same period.
In his post, Gross referenced the yield on benchmark 10-year Treasuries, which is nearing 4.75%, the highest level this year. He questioned why investors would own bonds when Treasury bills yield 5.25%.
Gross also mentioned his favorite trade, pipeline master limited partnerships (MLPs), which focus on natural resources like oil and gas and offer higher yields and tax advantages. He highlighted Western Midstream Partners LP and MPLX LP for their lofty dividends, but cautioned against overweighting this trade.
The S&P 500 took a hit on Thursday after a report showed US economic growth slowing last quarter and inflation rising, along with disappointing results from Meta Platforms Inc. Traders also adjusted their expectations for a Federal Reserve interest-rate reduction, now fully pricing in the first cut in December.
As investors navigate these turbulent markets, Gross’s advice to focus on value stocks and steer clear of tech may prove valuable.