(Bloomberg) — The rally that’s helped US stocks almost double in value over the past five years is tapering off, and investors should expect low but positive returns on their investments, according to Bill Gross.

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The billionaire investor recommends keeping exposure to the stock market at average levels, while focusing portfolios more on defensive stocks with a small position in bonds.

“No bear market, but it’s not the same bull market anymore,” Gross, the co-founder and former chief investment officer of Pacific Investment Management Co., wrote in his latest investment outlook.

Gross’s comments add to a steady drumbeat of warnings the furious rally that’s pushed the S&P 500 (^GSPC) to record highs may be running out of steam. A small-but-growing cohort of market watchers have cast doubt on the AI frenzy, which has been one of the biggest contributors to the surge in stocks, while others have warned that the forthcoming US presidential election could test investor optimism.

In the note, Gross lists negative headwinds, such as high valuations, geopolitical risks and an unsustainable government deficit, against positives forces, including inflation nearer to the Federal Reserve’s target and AI investment spending.

Among the negatives, Gross also cited potential increases in corporate taxes if Democrat Kamala Harris wins the election on Nov. 5 and her party takes a majority in Congress. Reports that Warren Buffett is now hoarding a record amount of cash also serve as a warning about the “bumpy road ahead,” Gross said.

Gross retired from the money-management business in 2019 and has since shared investment thoughts and trade ideas on his website and social media.

Gross’s favorite investments include Annaly Capital Management (NLY), a high-yielding mortgage REIT, DWS Municipal Income Trust (KTF), a close-end muni fund, and master limited partnerships (MLPs), which are tied to oil and gas contracts. He also likes Allete Inc, (ALE) a utility company that is a buyout target.

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