Bill Gross feels like "crying in his beer" for having bet so heavily against U.S

Discussion in 'Wall St. News' started by tmarket, Aug 29, 2011.

  1. Bill Gross, the manager of the world's largest bond fund, feels like "crying in his beer" for having bet so heavily against U.S.


    PIMCO says betting against debt was a mistake: report

    NEW YORK | Mon Aug 29, 2011 6:26pm EDT
    (Reuters) - Bill Gross, the manager of the world's largest bond fund, feels like "crying in his beer" for having bet so heavily against U.S. government-related debt earlier this year, the Financial Times reported on Monday.

    Showing a more bearish view on the U.S. economy, Gross said PIMCO had initially dumped all of its U.S. debt holdings in March as he expected economic growth to be higher, resulting in inflation down the road.

    That decision greatly undermined the performance of PIMCO's Total Return Fund (PTTRX.O). As Treasuries prices rallied, the fund lost 0.97 percent in the past four weeks, while the benchmark Barclay's U.S. Aggregated Bond Index rose 0.23 percent in the same period, according to Lipper data.

    So far this year, the fund has returned 3.29 percent, less than the 4.55 percent recorded by the Barclay's benchmark index.

    "When you're underperforming the index, you go home at night and cry in your beer," the Financial Times, in its online edition, quoted Gross as saying. "It's not fun, but who said this business should be fun. We're too well paid to hang our heads and say boo hoo."

    Gross, who oversees $1.2 trillion at PIMCO, said it was "pretty obvious" he wishes he had more Treasuries in his portfolio right now.

    "I get that it was my/our mistake in thinking that the U.S. economy can chug along at 2 per cent real growth rates. It doesn't look like it can."

    When U.S. Treasuries yields fell to 60-year lows earlier this month, Gross said investors were pricing a higher probability of recession in the United States. In May, he had said the only way PIMCO would purchase Treasuries again was if the United States headed into another recession.

    He told the Financial Times that his view on the U.S. economy significantly changed earlier this month after the Federal Reserve promised to keep interest rates low for at least another two years earlier.

    "Freezing rates for two years, that was a pretty significant statement in terms of the vulnerability of Treasuries to go down in price and up in yield," Gross said.

    (Writing by Walter Brandimarte; Editing by Dan Grebler)
  2. Samsara


    Very interesting.

    Thank you for posting this.
  3. J Ski

    J Ski

    Dear Bill,
    Don't feel bad buddy, sometimes you win, sometimes you lose.
    And crying in your beer won't help things either.
    The salt from your tears will make the beer foam.
    Besides you still have $11,640,000,000,000 to play with.
    I wouldn't worry to much if I were you.
    And if you do need some bread, banks got you covered baby.
    (Wall Street aristocracy got $1.2 trillion in secret loans).
    Shhhh, this is between you and me, I don't think anybody body
    really knows how much money the Aristocracy got.

    P.S. I know the money's not lost, I mean it's not like you lost
    it like when you wake up, and say damn, where's that 5 bucks
    I was saving for cigarettes.
  4. The US will grow all less than 1% per year for the next 15 years. No ifs or buts.

    With a diminishing manufacturing base, there is no labor demand. The US is facing a prolonged period of high structural unemployment.

    Im surprised Gross got that so wrong.
  5. We have talked about Gross here in the past. IMO, it is crazy that a fixed income manager of his size and caliber went against the FED when unemployment was rising and the economy was deteriorating. What is more interesting though in this case is that he and his chief economist were almost every day trying to make their position a self-fulfilling profecy by trying to convince everyone that bond prices must go down. Instead, since th S%P announcement, bonds had one of the best rallies.
  6. You were also one of the people who thought bonds should go down. You remember that post where you found your theory good, and mine (opposite of yours) a nonsense. I bet you were a follower of Bill Bross without thinking things through. You see, the US could borrow more (more demand) but this does not mean that the supply would not rise faster.

    You critiqued Bill Gross, and you forgot yourself :)
  7. 1.2 trillion invested in one asset class in one direction: long.
    wow, investors must think, such pool funds cannot be invested more wisely...
  8. joneog


    Over the last decade Total Return has outperformed the benchmark by like 2000bp.
  9. What he should have realized is that the US government is backed by the Chinese government. It is real simple, because we owe them so much money they can not afford to let the system fall.
    A debtor will make sure that at a minimum the intial capital is returned. I just went through the same process on a micro level. I had to take a debt laden bussiness and turn it around to get my money back out of the place. Letting the US fall would leave a huge void in China's market. I love to hear people say how that whole global system will fall apart. They do not realized that the powers that be will not let it happen. There will be varying degrees of turmoil but not a cataclyism. The flash crash was a prime example. All run ups in gold and oil are staved off so the level of disruption is manageable.

  10. Provide link pls.

    Here are my posts about bonds and Gross:

    "Don't have any doubts who will win in a war between Gross and US Treasury"

    ON 05/18/2011: "IMO Gross maybe has setup up himself for his biggest loss ever, probably the first, by shorting treasuries in a game he is not the major player, i.e. in a game controlled by the FED."

    I have warned Mr. Gross and you long ago, consistently.

    Now, I will have to put you on ignore because I do not like dellusional individuals like you.
    #10     Aug 30, 2011