Bill Gross pioneered the bond investment management business as we know it today. Along the way, he was dubbed the Bond King and was named Morningstar Fixed Income Manager of the Decade (2000 – 2009) and Fixed Income Manager of the Year three times. Pimco, the firm he co-founded and where he served as its Chief Investment Officer until 2014, manages close to $2 trillion dollars today.
But eventually things went wrong. Gross was ousted from Pimco, victimized by its bad culture after making questionable investment decisions.
Bill Gross’s journey from a young securities analyst to the Bond King to his contentious resignation from the firm he co-founded is a fascinating story with many important lessons. Mary Childs’s book shares them all.
I was fortunate to interview Mary for our Wealthy Behavior podcast.
We discussed how Gross gained an advantage from being new to investment areas like mortgage-backed securities and derivatives. Mary shared Gross’s concept of structural alpha. We discussed how to find investors who can outperform and how to monitor them over time.
We talked about how Pimco saw the Great Financial Crisis coming and the lower risk way they profited from it compared to some of the more famous (and riskier) trades chronicled in books like The Big Short.
They were on top of the world. But it didn’t last. The Bond King conversation pivoted into why. Poor culture, too many yes-men, and bad bets were Bill Gross’s undoing.
Mary shares this and more, including the top investment lessons for individual investors that came out of her research.
We get an inside look at the wild ride of storied bond shop, PIMCO, with guest Mary Childs, author of The Bond King. Mary talks candidly about the lessons that individual investors can take away from the highs and lows of the Bill Gross/PIMCO story, from the genius of Bill as a trader and how he saw the great financial crisis coming before most, to his fame in becoming a household name and the adoration he craved the more famous he became, to the bold trade that signaled the early cracks in the kingdom, and the alleged culture of abuse that ultimately couldn’t survive all the drama.
If you ever thought bonds were boring, you’re going to want to hear this episode!