Blackrock CEO Laurence D. Fink bashed Pimco’s “New Normal” concept during today’s conference call. Insider Monkey previously criticized Pimco’s New Normal by pointing to the stark contrast between Pimco’s low returns in the stock market prediction and the huge rally we observed during the past 18 months. The stock market increased by nearly 50% since Bill Gross compared stock investors to borderline retarded Polyannas.
“We never believed in the ‘new normal’ ” Fink said. Unfortunately for Fink, Pimco’s funds performed much better than El-Erian’s and Bill Gross’ ridiculous predictions about asset returns. Pimco not only managed to beat 99% of their peers, their mutual funds attracted $64 Billion of fresh capital from mutual fund investors.
The bottom line is one should read Bill Gross’ “predictions” about the economy for only entertainment purposes. There isn’t any correlation between the performance of their predictions and the performance of their portfolios. We don’t take Bill Gross’ statements seriously and we’d rather use a coin toss than follow Pimco’s “advice”. It’s very intriguing that they always somehow manage to beat the crowd and generate spectacular results in their domain.