The September investment letter from Bill Gross is worth a read. Someone who can achieve close to 11% year-to-date return on a $177 billion fixed income fund deserves respect.
Pimco Total Return Fund - NAV and total return with dividends reinvested:
With references to the game of golf, Mr. Gross introduces a concept he calls the "New Normal". We are entering a period of higher savings, less dependence on the consumer driven growth, lower rates of home ownership, and significant government interference in the private sector. All this will lead to slower growth.
Our world, and the world’s world, is changing significantly, leading to slower growth accompanied by a redefined public/private partnership.
Although in passing, he makes a scary reference to Japan and their stagnated economy. Related to that he makes a reference to the demographic of the aging baby boomers. As boomers try to save without relying on real estate for retirement, home ownership is dropping (clearly also driven by defaults). 
By listening to what the US government had been saying, Pimco took advantage of some of the stimulus/quantitative easing (trading RMBS and agency paper for example.) Obviously that worked for them, and Mr. Gross is advocating that other government sponsored opportunities to make money will be there going forward.
Investors should continue to anticipate and, if necessary, shake hands with government policies, utilizing leverage and/or guarantees to their benefit.
Clearly Mr. Gross has a vested interest in forecasting a stagnating economy with significantly slower earnings growth, lower consumer spending, and low interest rates because such an environment favors fixed income investing. But his views are by no means unique.
An “even par” scorecard (plus some hard earned alpha) may be enough to hoist the trophy in a New Normal world.
Disclosure: Long PTTRX
