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Young Americans: The Death of Equities May be Exaggerated

August 21, 2012

PIMCO founder Bill Gross believes the "cult of equity is dying" . let me take the other side.

-Liz Ann Sonders, chief investment strategist, Schwab



Key Points


- PIMCO founder Bill Gross believes the "cult of equity is dying" . let me take the other side.


- Mutual-fund flows suggest that we may have lost a generation of investors.


- However, demographics suggest there may be another generation that could be the stock market's savior.


Rumors of the death of equities may be greatly exaggerated. Bill Gross, founder of PIMCO, recently wrote that the "cult of equity is dying," and of course it generated a furor of interest. In a separate Tweet, Mr. Gross noted that disillusion with stocks "might be a generational thing." I have great respect for Bill and was very fortunate to share the stage with him at the opening of last year's Schwab IMPACT conference. He was no more optimistic then than he is now and several media outlets that covered the conference called me the "optimistic ying to his pessimistic yang."


Bill's recent comments didn't do much more than repeat the view he's held for some time. I remember reading back in February 2009 an interview he did with Forbes Magazine in which he opined, ".things will never be the same. Risk taking has been destroyed and any animal spirits must come from Washington. Global growth rates-low, low, low-asset classes will be readjusted for that outlook. That is-stocks will be more of a subordinated income vehicle as opposed to a 'stocks for the long run' growth vehicle."

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