Last Monday, the self-described “Bond King,” Bill Gross, declared an end to the 30-year-plus bull market in both stocks and bonds. This isn’t the first time he has made such a pronouncement, having done so twice in 2013, which he now acknowledges was premature.

Such an announcement coming from just about anyone else would hardly be considered newsworthy, but Gross has deservedly earned a reputation for understanding the complexities of the fixed income market better than anyone else. If you are not familiar with Gross, amongst Wall Street intelligentsia he is to bonds what Warren Buffett is to stocks.

If you are familiar with Gross, you may recall that he jumped ship in 2014, moving over to Janus Capital after building PIMCO into a world-class mutual fund company. So the timing of this announcement could be viewed as a bit self-serving since he argues that the best way to profit from his predicted sea change in interest rates is to participate in the type of transactions he will be making in his new fund.

That aside, the more important question is, is Bill Gross right this time? And if so, what does that portend for investors in the years (and decades) to come? To be fair, he is hardly the first person to make this assertion, as most market analysts agree that it is only a matter of time until interest rates begin heading back up now that Quantitative Easing has come to an end here in the U.S.

However, the future direction of interest rates is only one variable in a complicated formula. The rate at which they increase is also critical to understanding the impact rising rates may have on asset values, as is the overall global economic landscape within which these events are taking place.

A slow and steady rise in interest rates would not necessarily be disastrous for our stock and bond markets; certainly prices of previously issued bonds with low coupon rates would gradually decline as rates increase, but if held to maturity then those losses would not be realized. And to the extent some amount of investor capital is invested in high-dividend paying stocks that might otherwise be in bonds (since they currently offer higher yields than most investment-grade bonds), it is safe to assume that some of that money will find its way back into the fixed income market as rates rise.

All other things being equal, the combined impact of those developments would drive down stock and bond prices. But if nothing else, the financial engineers on Wall Street have proven that they can be remarkably adept at adjusting to consumer preferences. In the modern era of “synthetic securities” that allow investment bankers to separate each component of a bond into discrete trading vehicles, it is not difficult to imagine that all sorts of new financial products will emerge designed to capitalize on rising rates.

In other words, it may turn out that the overall level of demand for stocks and bonds won’t really change that much, just which TYPE of stocks and bonds are in demand. In that case the name of the game will remain what it has always been – being among the first to recognize where new capital is going, and getting there early enough to capture appreciation created by investors piling in behind you.

That is the benign scenario that is being mostly ignored by the mainstream financial media. The more pessimistic scenario that the media prefers (since it is more sensationalistic and therefore sells more copy) is built upon the supposition that interest rates could quickly increase, yanked upward by rampant inflation that our Fed is unable to control. In that case the stock and bond markets would most likely decline substantially, with investors pouring money into cash to preserve capital.

That scenario is clearly not out of the question, and must be taken seriously by every stock and bond investor. But I think it is fair to say that our Fed has proven itself to be a worthy steward of our national economy, avoiding the economic collapse that many market pundits called for in the dark days following “The Great Recession” only a few short years ago. 

Over 30 years of stock market experience has taught me many things, not the least of which is that it rarely pays to be a pessimist when it comes to investing. Certainly, there have been relatively brief periods of time when bailing out of the stock or bond markets would have avoided short term loss, but timing those types of moves correctly is extraordinary difficult.

One of these days (or years) Bill Gross may be proven correct, but the cost of waiting for it to happen may end up being more than the actual damage.