If you’ve been reading All Star Investor for long, you know how often we quote Bill Gross. Gross manages a mountain of money in Newport Beach, California at PIMCO, a company he founded in the early ’70s. He’s been known for periodic quips and insight on the current market. Today was no different. Bloomberg quoted Gross today saying:

“Inflation, a weak dollar, and the fact that up until this point 225 basis points of easing have produced very little. There’s a roadblock and we’ll just have to see whether the tradeoff between inflation and the ultimate progress in terms of the credit markets is a viable one.”

For those who are not used to hearing oracle-speak from lofty bond-investor mountaintops, let me translate. Gross is concerned about how the Fed’s loosened pursestrings will effect the economy. His initial expectation was the credit market would calm down when the Central Bank cut rates. He now fears the intended effect will take longer than initially expected. Inflation is happening and the resultant stimulus seems far behind. Can somebody say ’stagflation’?

If Gross is right, what’s an investor to do?

We still like defensive stocks, ETFs and funds. Cash, or even some inverse funds are not out of the question. There are some long-opportunity equities, but you have to be selective. Check out our Picks-of-the-Week in Invest With An Edge for a free pick every week.

Gross reminded us of the Bearish sentiment in the market. He concluded with: “Those looking for quick overnight miracles are going to be disappointed.” We hope you won’t be disappointed when the storm has passed.