The emperor has no clothes. He never did. He was a great marketer who had the benefit of a 30-year bull market in bonds. Until the financial crisis. Then things changed. That's when it became clear that he had ZERO understanding of the monetary system, government finance, sovereign money and central banking.
BREAKING NEWS: Bill Gross to sue PIMCO for "hundreds of millions" over his ouster http://t.co/JOqmqxAiza
— Bloomberg Business (@business) October 8, 2015
6 comments:
http://www.theguardian.com/science/occams-corner/2015/oct/08/penicillin-scientific-postcard-george-osborne
Shilling?
Gross/PIMCO did not make their money by being right on the direction of interest rates; they did it via finding good structures (residential MBS, futures arbitrage). His commentary was always marketing, and it is unclear how it aligned with PIMCO's positioning. Since he has a fiduciary responsibility to his investors, he should not announce what the fund is going to do.
Here's another one Mike (more recent):
"I see the Dow trading back to the low, 17,000s,"
http://mikenormaneconomics.blogspot.com/2015/08/i-see-dow-trading-back-to-low-17000s.html
Brian,
Isn't the kind of business Gross was in - bond investing - always going to be "marketing"? It's not as if you can predict the direction of interest rates. And even if you could, somebody could dump a whole load of bonds, mess up your trade and leave you in the poor house. Or am I completely wrong? It's not as if the guys and gals at Pimco haven't read Stigum and Fabozzi.
Or is it a case of regular bond analysis not being enough, and an endogenous money appreciation would help, like it did with Paul McCulley? Never could figure out why Gross didn't listen to McCulley, who always struck me as about as just about the cleverest thing on Wall Street/Newport Beach.
John,
His monthly letters were marketing letters, designed to raise the profile of PIMCO (and now, whatever the name of his new employer is). What would be interesting would be internal strategy documents, which would say what the people there actually think about markets. Of course, those documents are not publicly available.
But yes, it's hard to predict the direction of rates. I've not seen a lot of people able to do it consistently - certainly over short spans of time. You need to find other niches in relative valuation to make money consistently. The standard way of doing it is to load up on corporate bonds, and hope nobody defaults on you.
He may be a shameless shyster but Gross's emulation of Janus's two faces is unnecessary.
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