The perfect storm of wealth destruction

So the lesson must be to go forth and find the bull market, wherever it is.

Almost always – but not now because in a global financial marketplace in the process of delevering, assets that go up in price are rare diamonds as opposed to grains of sand.

For the past several months our PIMCO Investment Committee blackboard has continued to display the following lesson plan:

What Happens During Delevering
Risk spreads, liquidity spreads, volatility, term premiums – they all go up.
Delevering slows/stops when assets have been liquidated and/or sufficient capital has been raised to produce an equilibrium.
The raising of sufficient capital now depends on the entrance of new balance sheets. Absent that, prices of almost all assets will go down.

Bill Gross (manages the biggest bond fund in the world)
Source: Must read article if you want to understand what is going on right now.