Tuesday, September 30, 2014

With Gross's departure maybe Morningstar should upgrade Pimco, not downgrade it

Morningstar downgraded Pimco's Total Return Fund today, from a gold rating to bronze, because of the departure of Bill Gross.

But wait...wasn't Gross doing poorly? Didn't he get pretty much everything wrong over the past few years with respect to his trades and bond outlook? We documented a lot of his comments on this blog.

Wasn't it Gross who tweeted, "Who's gonna buy them now?" suggesting that there would be no one to buy Treasuries once the Fed ended its Quantitative Easing that it had been doing at the time?

It almost seemed like Gross became very dogmatic in recent years, like a Peter Schiff or something, with a questionable lack of understanding of the bond market, the Fed's role and sovereign money. (Recall his misguided, "America is like a spendthrift family" analogies.)

If that's the case, why downgrade Pimco? Maybe some better performance is in store.

I take nothing away from Gross; he's compiled an amazing long-term track record and his marketing savvy when it came to building Pimco was amazing, but...

Let's not mistake a 30-year bull market in bonds for genius and let's also take into account that the guy was saying some pretty wacky stuff.

Hey Morningstar...maybe you got this all wrong.

1 comment:

Matt Franko said...

Krugman opines: "liquidity trap denial..."