Pimco or Vanguard--Who's Got The Right Idea?

Stocks and bond returns to be lowered for years, that's the word out of Pimco's own Bill Gross in an interview on CNBC. Gross serves as no less than Pimco's co-CIO, and Pimco itself is the largest bond management firm on Earth.

"We should expect less as opposed to more-new normal as opposed to old normal," he said. "We should expect that the private economy is delevering on a global basis. That means consumption and household income growth will be less than it has in prior years."

In fact, Pimco is going so far as to suggest that a "normal" rate of return for your investments is four to six percent for "risk assets".

But Jack Bogle of the Vanguard funds group is less pessimistic, saying that we should be able to net returns of six to eight percent, fully double Pimco's projections.

So what does that mean?

What it means, of course, is that someone's going to be wrong here. If Pimco's got the right of it then you can expect precious little out of your portfolio for years to come, and conservative strategies will be rewarded. If Vanguard's right, you've got a little better shot if you go aggressively because bigger gains are more likely than expected. I'm personally calling it for Pimco, especially against a backdrop of high unemployment and a commercial real estate problem in the making.