PIMCO Said Economy Returns To The ‘Old Normal’, Should Our Investments Too?
According to Bloomberg, PIMCO now believes that the economy returns to the ‘old normal’ from their touted ‘new normal’. What that implies is that U.S. economy is back to a classic expansion that will garner about 3 percent annual growth. Furthermore, it signifies that we will see a normal growth and bust economic cycle instead of a secular stagnation punctuated with a few (serious) downturns.
From time to time, investors hear or read such a significant prediction/forecast. They are often confused: some start to change their investment strategies, some start to dabble into the favorable segments ‘bravely’ and some completely abandon their risk management methodology and start to speculate.
In this newsletter, we would like to take this as an example and go through a few items to clarify how we, as normal investors, handle such news or reports.
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