Discussion in 'Wall St. News' started by ajacobson, Feb 4, 2019.
"never confuse brains with a bull market."
Gross was never a financial genius to start with. he successfully used the media to create an aura.
now, he is not a fool because the media and others are dumping on him.The bottom line Gross is laughing all the way to the bank as a very rich man.
The effective duration of his fund somehow fell to minus 4.58 years at one point, even though the prospectus on Janus’s website says the “fund’s.
can you explain this?
I beg to disagree. His concept of searching for structural and secular advantages in trading/investing is a game changer for me personally.
I followed him closely until he left PIMCO. You should read up on his earlier investment style and will see that his structural advantage allowed him to make billions.
I read comments that he made money as Bond King because he happened to be in the one of the longest bull market in bonds history. When interest rates start rising, he lost his magic. NOt sure if these are fair comments as I am not much into bonds.
What puzzles me with his under-performance is that he under-performed when his fund size was much much smaller in Janus compared to Pimco. It should be easier to manage a smaller fund and it really much much smaller. Why did he do poorly when the job became easier? Any elites here can explain?
please explain negative bond duration and how it affected his performance.
I know these two facts: IO backed by mortgages has negative duration, and PIMCO was a big player in this. But I don't know how any of these affected his performance.
You are asking the wrong person. I don't know what negative bond duration is.
However, he started making tons of money when he recognized that long duration mortgages were overpriced (home owners wanted the certainty of a fixed term mortgage and were willing to pay higher rate than the long rate modeled by financial forecast). That was the structural element. Then he also forecasted that basic interest rates were on a down trend and that was the secular element of his equation.
He went long MBS and paid for it with short term loans and the rest is history.
But you are right, the secular element is now against this strategy and the MBS issue in the past decade messed up the structural element too and I don't know if he changed his strategy as a result. At his age and with what he is worth, he deserves to retire instead of fighting with OPM.
IMF Backs Fed
The International Monetary Fund agrees with the Federal Reserve's decision to stop raising interest rates for now. The IMF's new top economist, Gita Gopinath, said the pause would "provide a lot of support to the economy." Citing growth problems in the Eurozone and China, which led the Fed to watch out for "cross-currents," Gopinath said: "We endorse the Fed view of having a data-driven approach." Financial Times
Are you saying that the up trend in interest rate and quantitative tightening have stopped?
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