Is President Obama a better stock picker than Bill Gross?

In February I interviewed Bill Gross back when the Dow traded at 7,182. Gross's message? Equities are dead. Or more specifically, in light of his expectation that there would be no economic growth for the foreseeable future, there was no point in risking an investment in common stock since it stands in line behind all sorts of debt for a piece of the cash flows of a company in the event of a bankruptcy.

Interestingly, President Obama spoke to reporters not long thereafter -- on March 3rd to be specific when the Dow was at 6,726 -- and during that talk, he mentioned that buying stocks might be a good deal. Since then, the Dow has risen 21.5 percent and since Gross recommended staying away from stocks, they've gained 13.8 percent. The Dow is at 8,175 as of this writing.

Since Gross was so happy to communicate with me back in February, I hoped he would share his insights on the market in response to the latest results. On April 12th, I sent him the following email: "I was thinking about your comments on equities back then and noticed that since I posted about your comments on February 26 the Dow has gone up 12.5 percent from 7,182 to 8,083. This made me wonder about what you might think about some questions:

  • Do you still believe that this is a bad time to invest in equities?
  • I have always struggled with explaining why stocks go up or down and was wondering whether you could offer your views on why the market has risen since February.
  • Has anything changed in the economic outlook, financial results of companies, or government policy that would cause you to revise your views on equities?
  • Could you envision an investing climate in which it would make sense to invest in equities?
  • If so, what would be some of the specific indicators that things had changed?"

Gross has not responded which makes me think that he has better things to do with his time than to defend what looks for the moment to have been a bad call. Although, to be fair, if his comments convinced some readers to put more money into his bond funds, then they served his purpose.

I still don't know why stocks are up since February. But if Bill Gross knows, he isn't saying.

Peter Cohan is president ofPeter S. Cohan & Associates. He also teaches management at Babson College. His eighth book isYou Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.

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