from Zero Hedge
One week ago, in an interview with Bloomberg, Bill Gross made a surprising announcement when he said that he was starting to short credit. As he said at the time, “It’s really hard to change your psychological makeup and to be a hedge manager that is comfortable with being short,” he said during his interview. “I’m working on it, because I’m an investor that ultimately does believe in the system, but believes that the system itself is at risk.“
In his just released monthly letter, “Bon Appetit!”, he provided some additional insight on why he has become so bearish on credit instruments. In short, as he says that since the inception of the Barclays Capital U.S. Aggregate or Lehman Bond index in 1976, investment grade bond markets have provided conservative investors with a 7.47% compound return with remarkably little volatility.