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Posts Tagged ‘Bond King’

Size Matters

May 6th, 2019 by Kurt L. Smith

Through much of my career in the bond market bigger truly was better. Nobody was bigger or better than Bill Gross of PIMCO. His bond fund was mammoth and if you had something worthwhile to sell, one call to Big Bill was all that was needed to get the deal done. He was legend, true or not.

Big Bill also had quite a tail wind. As the bond bull market began to gather momentum in the early 1980’s, Big Bill was ready. He knew performance would drive growth in assets and he knew the kinds of bonds that would perform well. His record speaks for itself.

During a bull market there should be little reason to sell. I am sure Big Bill culled some of his mistakes from his portfolios through the years, but largely one can buy and hold and never need to sell. Worthwhile performance led to growing assets and more funds available. Eventually the bond matures and this will only add to the money he continued to attract for decades.

Scaling from a small operation to a multi-trillion dollar behemoth, Big Bill and PIMCO, had a plan and executed it. He is more than worthy of the title Bond King. Needless to say his success has been studied and will continue to be studied as a great success in money management.

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Rates Rise; Who Cares?

March 8th, 2017 by Kurt L. Smith

These are heady times in the stock market. As market indexes set historical all-time highs, who cares about bonds? Stocks are all the buzz.

Back in August my letter was First Bonds, Now Stocks. “If you liked the bond market rally this year, then I think you will really enjoy the stock market rally which appears to be gathering steam.” Gather it has. The Dow Jones Industrial Average traded at 17,063 on June 27th, 2016; on March 1st, 2017 it was 21,169 for a 24% rise.

Meanwhile the bubble on Bonds did indeed burst as ten year Treasury yields bottomed at 1.32% on July 6, 2016, before doubling to 2.64% on December 15th. So while stocks were gaining steam, bond prices were indeed weakening as yields doubled. As the Dow rallied, ten year Treasury bonds sank, producing an 11% price loss into the December yield highs. The long bellwether Treasury bond was down 22% in price over the same period.

Both the rise in stock prices and the fall in Bond prices were expected. After bond prices bottomed in December we expected prices to bounce and indeed the bounce appears to be over such that prices are trending lower again as the yield on the ten year treasury is back over 2.50%.

January’s Letter, Lines In the Sand noted Big Bill Gross’s line at 2.60% for the ten year treasury.  At just over 2.50% as March begins, we are within striking distance. (more…)

Too Big To Sell

March 4th, 2015 by Kurt L. Smith

As a long-time reader you know that I believe the bear market in Bonds began in June 2012. This is a “considerable” length of time ago, to use the parlance of the Federal Reserve, but when you are describing the end of an almost thirty year bull market run for Bonds, well, the longer they are, the harder they fall. (more…)

Big Bill Takes A Walk

October 9th, 2014 by Kurt L. Smith

Bill Gross leaving PIMCO is beyond newsworthy.  While one expects to see successful founders, particularly billionaires, decide to hang it up and go do something different, Big Bill didn’t do that.  Big Bill dropped a bombshell: he’s moving to Janus.

 

Big Bill was not a superstar in money management; he is a supernova.  Like Peter Lynch of Fidelity’s Magellan mutual fund, Big Bill became a brand, the face of an entire asset class.  And because everything is bigger in Bonds, Big Bill brought in big money, as in a trillion dollars or two.  Big Bill is considered The Bond King! (more…)

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