September 27, 2006
Bet the Front-End of the Curve
Empty Nesting / Successful Investing, by Billionaire Gross ($1,200,000,000 and counting)
Gross gives some typically Boomerish (i.e. deeply selfish) parenting advice and sings the praises of the front end of the yield curve:
The art of investing has been obvious for as long as there was money to invest. Identifying winning securities/scenarios, wagering appropriately according to risk/reward, and being able to meld mass/individual psychology into an evolving game plan are the likely keys to the kingdom.
Don’t forget that his monthly Investment Outlooks are written to help meld mass psychology into his evolving game plan, i.e. why is he touting the front end of the yield curve now?
Cat: | Time: 3:23 pm (utc+8)
September 27th, 2006 at 6:56 pm
One thing that we must consider is the possibility that Mr. Gross never earned a dime of excess “alpha” for himself or anyone.
Isn’t it entirely possible that his own wealth is simply the result of marketing and OPM (other people’s money)— that his wealth comes almost entirely from sharing in fund fees that are paid to him in equal measure whether his forecasts are right or wrong?
Might it not be that his monthly `outlooks’ are really derived simply by adopting the trend of the prior month, by doing a sort of `cold reading’ of the bond market (http://en.wikipedia.org/wiki/Cold_reading)?
If so then his fame is entirely due to doofus financial journalists simply assuming that he actually generated wealth, his own and for others, effectively through trading (he who forecasts trades on what he forecasts, they may assume)— failing to note that his `outlooks’, being concurrent rather than leading, can’t be used to trade for profit.
Are the monthly outlooks not simply a marketing scheme? Isn’t he just a bond salesman who has become wealthy over the years by increasing the amount of money under his firm’s management by attracting new customers, rather than by generating outsized growth of the assets of long-term customers?
September 27th, 2006 at 9:00 pm
Mike: I agree with your take and think that Gross has become fabulously rich by “hugging the index” and gathering assets … he’s done spectacularly well as have so many others involved in the “world’s largest skimming operation.”
September 28th, 2006 at 6:17 am
CM & Mike: DITTO! The GoodFellas at work.
September 28th, 2006 at 8:44 am
good post
andrey
September 28th, 2006 at 9:41 am
Wasn’t Gross the one that said that the Dow was headed for 5,000? I think that’s you need to know about the guy to know that he is no messiah!
September 28th, 2006 at 9:55 am
KS: The Dow 5000 call came to him after a particularly bad yoga session. ;-)
September 28th, 2006 at 11:10 pm
The Dow could yet revisit 5000 or on a best case scenario stay sideways for the next 10 years at least. Nothing fails like success.