Tuesday, April 05, 2005

Bill Gross Rocks (No, not that Bill Gross)

While most people in the startup world think of the IdeaLab! founder when they hear the name Bill Gross, people from the financial world know that the one true Bill Gross is the superstar PIMCO bond fund manager who is the world's greatest bond investor.

Much like the world's greatest equity investor, Warren Buffett, Bill Gross writes an extremely entertaining and informative letter to his investors, which he is kind enough to make available over the Internet to the rest of us peons.

In this month's letter, Bill tackles the subject of real interest rates, and how negative real interest rates have led to various asset bubbles, including the current housing bubble.

When homebuyers can borrow money at a post-inflation zero real interest rate, home prices should grow higher. It's essentially free money. However, as Bill's letter points out, the party is probably over. Real interest rates are on the rise, and home prices are already at an all time high. Bear this in mind the next time someone tries to convince you that real estate is the best possible investment, and that house prices can only go up.

2 comments:

Justin K said...

Chris,

I assume you're renting? :)
Here's a "blog" you might want to check out http://www.homebubble.com

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