Income Funds / Bill Gross / Pimco

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Oct 27, 2009 6:23 pm

Couple of questions for you:  1. I'm curious what intermediate bond funds you use? I've been using PIMCO total return fund. Although it's done a great job for years, does it still have room to run? What else do you use?

2. When Bill Gross talks, people listen. Is he really THAT good? I know before the election he sent a letter to Obama with the salutation of "Dear Mr. President."  That took some balls. My concern is that he's had some pretty scary things to say about the dollar, the US debt, etc.
As always, your thoughts are appreciated.
Oct 27, 2009 6:48 pm

Bill Gross DOES know what he's talking about.  With that being said, take a look at the returns for the past 10 years.  He is the mark of consistency.  Yes, he will occassionally bang out a 10%+ year, but that fund is about consistent, positive returns.  If you are thinking of dumping it because it has no more "room to run", then you probably own it for the wrong reason.  That fund should be the bread and butter on your table.  It's the part of your portfolio you never get rid of.  6.5% year after year, with very low STD DEV and a decent yield is what it's all about.

Oct 27, 2009 8:16 pm

Bill Gross is the best money manager most people have never heard of.  The man is brilliant, and his monthly market updates provide some very valuable insights.

Oct 27, 2009 9:17 pm
Jack the Bear:

Bill Gross is the best money manager most people have never heard of.  The man is brilliant, and his monthly market updates provide some very valuable insights.

 






So if they've never heard of Bill Gross, then who have they heard of?  I'm not being condescending, I just can't think of many (any?) fund managers more well known than him.  Maybe Bill Miller (but he's not better).  Definitely Peter Lynch, though he's been retired for years.  Not sure how you categorize Warren Buffet.  But also more well known.  John Templeton?  Mario Gabelli?
 
Personally, I think Jean Marie Eveilliard was the best money manager people never heard of.  He's sort of half/semi un-retired consulting for his former fund (First Eagle Global).  He was absolutely lights out for decades.  Hopefully his proteges follow suit.
 
Sorry to digress from the topic.
Oct 28, 2009 12:47 am

I think by 'most people' he means most investors/clients/prospects.

I would agree that most people do not know who Gross is offhand; however, they don't know virtually any managers. 

They are more likely to know industry icons (Bogle/Lynch), entertainment/self help types (Cramer/Orman/Ramsey), or fund families rather than individual managers.

Getting back to the original post...Gross is a brilliant guy.  My only question with him is if he's a bit too self serving with his perspective on the equity mkts in his 'New Normal' outlook; although, given the current environment, it's also hard to discount that POV too much.

Oct 28, 2009 8:06 am

SBmss - exactly my point. Although he's brilliant, I wonder if he is getting a little self serving, perhaps showboating. You have to understand that the reason that some of these guys' forecasts come true is simply because they PREACH them. With the power that someone like Gross possesses, imagine how he can profit from market movements that HE HIMSELF creates. 

Oct 28, 2009 10:15 am

I agree, Gross can be self-serving with his views.  However, he has also been the beneficiary of a crummy market tha past 10 years.  I am curious how he looked throughout the 90's (his views vs. reality).  Bottom line, he can put his money where his mouth is.  He has beaten that equity markets handily the past 10 years, with significantly lower volatility.

Oct 28, 2009 11:08 am

I'll bet on Bill Gross any day.  PIMCO Total Return is not all the largest bond fund out there but one of the best.

 
I also agree with B24 on Jean Marie Eveillard.  First Eagle Global is the fund I use as my core equity holding for clients.  That fund has been amazing and I think it will continue to be.  It is amazing how so few people have heard of it yet it's a huge $20B fund. 
 
Wether Gross is self serving or not does not matter.  The fact is, the guy can make money and do it over the long haul.
Oct 28, 2009 9:11 pm
B24:

I agree, Gross can be self-serving with his views.  However, he has also been the beneficiary of a crummy market tha past 10 years.  I am curious how he looked throughout the 90's (his views vs. reality).  Bottom line, he can put his money where his mouth is.  He has beaten that equity markets handily the past 10 years, with significantly lower volatility.

 
No disrespect meant to Gross, (or to you B24), but havent MOST bond fund managers beaten the equity markets over the last 10 years?
 
No question the guy is great, but some credit goes to right time right place.
 
I think i read somewhere that they are planning to make a big push towards a bigger presence in equity funds.
Oct 29, 2009 9:06 am
Sportsfreakbob:
B24:

I agree, Gross can be self-serving with his views.  However, he has also been the beneficiary of a crummy market tha past 10 years.  I am curious how he looked throughout the 90's (his views vs. reality).  Bottom line, he can put his money where his mouth is.  He has beaten that equity markets handily the past 10 years, with significantly lower volatility.

 
No disrespect meant to Gross, (or to you B24), but havent MOST bond fund managers beaten the equity markets over the last 10 years?
 
No question the guy is great, but some credit goes to right time right place.
 
I think i read somewhere that they are planning to make a big push towards a bigger presence in equity funds.
 
Exactly, hence my comment... "However, he has also been the beneficiary of a crummy market the past 10 years".
 
I should also point out, he has done it with less volatility than most other bond managers.
Oct 29, 2009 9:26 am

If you compare him to other bond managers he blows them out of the water.  He is pretty much in the top quintile on all time horizons.

 
Forget equities, he is crushing the other bond managers as well.  There are only a small amount of funds even in his category
Oct 29, 2009 10:52 am

I suppose the real question isn't whether he's self serving but how can you leverage that?

 
 
Ultimately if Bill Gross says the market will move in one direction or the other and it does. Does that mean he's predicting the move or causing the move?
 
Who cares? The bottom line is that he's probably doing both but you benefit by listening and acting accordingly.
 
All the big names are market movers. You just have to know that. Whether they predict or cause is irrelavent.
 
Even Jim Cramer is a market mover now. Just listen to his 'friday speculation play' on any given Friday and then watch that equity for the next 6 weeks. Initially a spike will ensue then typically subside a bit, then often will go back up in time.
 
The often talked about, but prematurely discounted concept of investor psychology is a great mover of markets. Especially with the proliferation of information. With online trading for less than 10 dollars the norm, mobile media, multiple sources of information reporting in real time and the general coverage of 'the markets' it's even more of a factor than before. Add in the 4-second headline mentality of most people in the U.S. (they read a 4 second headline or watch a small segment on Kudlow and Company and now they are an expert in that area) knee-jerking is the 'new normal' to quote Mr. Gross.