Bill Gross urges investors not to be fooled by market mirage post-US election

Billionaire investor Bill Gross has warned that the US economy is walking a fine line after a market boom since the election of Donald Trump, and urged fellow investors not to get carried away with the market "mirage" taking place in the country.

In his monthly letter to clients of his investment firm Janus Capital, Gross suggested that the recovery from the financial crisis has been slow, but recapitalisation of banks and job growth point towards solid management from the Federal Reserve

Nonetheless, "the U.S. and indeed the global economy is walking a fine line due to increasing leverage and the potential for too high (or too low) interest rates to wreak havoc on an increasingly stressed financial system," he said.

"Be more concerned about the return of your money than the return on your money in 2017 and beyond."

Gross referred to Fed chair Janet Yellen as a "modern day Goldilocks", but warned that a system with such high leverage was "like a truckload of nitroglycerin on a bumpy road".

All three major US stock indices have hit all-time highs in the months following Trump's victory, with the Dow Jones surpassing the 20,000 mark for the first time in its history.

The President has promised to boost the economy by lowering taxes on businesses and cutting regulation in order to stimulate growth.

"The Trump mirage of 3-4 percent growth and the magical benefits of tax cuts and deregulation" will not be a long-term solution for US markets, Gross added.

Gross' fund at Janus capital has underperformed this year thus far, gaining just 0.56% and well below the S&P 500 which has gained 5.55%.