In her new book, The Bond King, Mary Childs goes deep on Pimco’s Bill Gross.
Some highlights:
- The guy basically invented active bond investing as we know it today.
- His track record was phenomenal.
- He made some amazing calls in his career, most notably the pain that would be inflicted on markets in 2008.
- He made some terrible calls in his career, including the “new normal” that would spell doom for the stock market and selling all of his treasuries in 2011 over worries about government debt.
- During Gross’s heyday, Pimco sounds like a VERY difficult place to work. My personality would not mesh well with the nasty emails, political in-fighting and sleeping in my car so I could work from 3am to 6pm some days.
There were also plenty of stories about the erratic behavior Gross exhibited in the waning days at Pimco.
I was at the infamous sunglasses speech at the Morningstar conference in 2014.
This one was…interesting.
Maybe you need to be a little out there to be as wildly successful as Gross was in his illustrious investing career.
Childs discussed in her book his biggest driving force was not money (he ended up a billionaire) or power but fame and notoriety:
When he interviewed potential Pimco employees, he liked to ask, “Which would you like to have the most: money, power or fame?” Candidates would shift nervously, wondering what he wanted them not to be. “It was always a delicate answer, because whichever one you said would open a vulnerability,” Gross says. They were always embarrassed, and they always said money or power. Gross would then gladly share his own answer. He would tell anyone who asked. “I was obsessed from the beginning,” he says. “From the get-go, my motivation was to be famous.”
His biggest accomplishment might be becoming famous for managing bonds of all things.
Gun to my head and I had to pick one of the three, I would probably choose money.
But I work in finance and know a lot of very wealthy people. Money does not solve all of your problems and there are always going to be people richer than you.
Power seems like the next step up from money which is probably why so many wealthy people go into politics but power tends to corrupt.
Bill Murray once summed up being famous as follows:
I always want to say to people who want to be rich and famous: ‘try being rich first‘. See if that doesn’t cover most of it. There’s not much downside to being rich, other than paying taxes and having your relatives ask you for money. But when you become famous, you end up with a 24-hour job.
Bill Gross did become famous but some of that fame came about for all the wrong reasons.
Gross was brilliant but also a little off-kilter, had swagger but also lacked self-awareness and built one of the most successful investment shops in the world but also got booted when his performance began to unravel at the end.
Josh, Michael and I had Mary come on The Compound to talk about her new book, how Gross changed the investment industry and lots of wild stories:
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