Bond king Bill Gross released his market outlook for 2021 — betting on a change in thought to the market’s high-flying stocks.
What Happened: In an outlook note called “Little Bit Softer Now,” Gross warns that SPACs “may struggle” this year.
One of the hottest stocks of 2020 was also highlighted as a risky bet by Gross for 2021. Tesla Inc TSLA is “definitely overvalued,” as per the fund manager.
“Growth stocks, SPACs and the Teslas of 2020 may struggle to please day trading Robinhoods,” Gross said.
The investor said the market’s music in 2021 should not resemble 50 Cent played at 100 decibels, but rather Gilligan’s Island at 60 decibels or less — “a little bit softer now!”
Related Link: Fast Money Traders Weigh In On Natural Gas Stocks
Why It’s Important: The play from the legendary investor is to focus on value and not momentum stocks.
“I thought IBM was a bargain six months ago with its 10 P/E and 5% plus yield,” Gross said of International Business Machines IBM. “Value and dividends are so pre-covid.”
The influx of retail traders and rise of commission-free trading platforms like Robinhood have increased valuations and more experienced investors like Gross are likely to call them out.
“In the hands of Robinhood gods I’m afraid it’s definitely overvalued,” the investor said, referring to Tesla.
Gross is picking natural gas pipeline stocks as his favorite market sector for 2021. The investor highlights the dividend yields of 9% to 12% for the sector and “certain tax advantages.”
The picks from Gross include Magellan Midstream Partners LP MMP, BP Midstream Partners LP BPMP, and Enterprise Products Partners LP EPD.
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