THE BOND GURU

It's nice of bond guru Bill Gross to finally come out and say that ultra low interest rates are killing folks. Most likely after he's made tons of money off them.

It's nice of the Butler Creek boy to say what others have been saying for some time now. Who are these others? Mostly the voiceless. But here's an example--anyone on a COLA. Like maybe your 87-year-old grandmother those politicians who care so much about and want her vote this November.

And what savers? Is that term still in the lexicon of most people? It's been reported that Japanese investors are moving funds to the U.S. because they find the zero return rates on cash attractive. We know you do too. We also know that those rates are somewhat responsible for gold's recent upswing, zero yield.

In the land of the poor-sighted, the one-eyed guy is king. Who doesn't understand that zero  outperforms minus zero? Gross apparently has some Chuck Schumer lineage in him. Any opportunity for publicity is a good one, so he dons the cover of this week's Barron's. No, we're not knocking Gross' smarts. Like we said, he's smart enough to know when to keep quiet about an investment and when to open the flood gates.

He makes an interesting point about volatility, every retail investors'--including the February Japan and China sell off--worst fear. There's really three kinds--upside, downside and flat. All can be used to make money. He says volatility--at least right now--has the lowest risk relative to the return on the others such as credit., currency and liquidity. If you don't know and have some understanding of these, forget the market. Take up sports betting. The bookies will love you.

The average retail investor usually doesn't realize what he and she is buying and selling. It's not just a stock or bond or earnings or P/E or whatever. That's the financial gobbledygook they want you to buy into. It's buying and selling disappointment. If what he thinks will happen happens, someone else is disappointed. And just the reverse. Can credit ratings ever disappoint? Yes. How about liquidity?

We had this really attractive girlfriend recently who was a neurotic nightmare. We had to evict her to get rid of her. That can be a real illiquid situation .So you know the answer to liquidity, it can really disappoint. The same goes for earnings, analysts' reports, and here's an even more certain one, predictions of economists.

We apologize. We omitted another big one--promises of politicians.

What Gross is intelligently saying here is central bankers won't any time soon be adorning the face of your currency with inscription of: In Central Bankers We Trust. Now don't take our word for it.This is Bill Gross, the bond guru.