NEW YORK (TheStreet) -- Bill Gross is to the capital markets as General Montgomery was to World War II -- competent, largely successful, and vastly overrated.
Gross, manager of
Pimco's Total Return Fund
since May of 1987, is regarded as one of the most prescient and successful bond investors in modern history.
Of course, the modern history of the bond market has been uniquely bullish. Any investor who bought 30-year Treasury bonds in May, 1987, locked in a near 9% yield in a declining interest rate environment -- booking both outsize coupon payments and the potential for capital gains.
One can argue that Gross' success is little more than luck and discipline -- and after several years of success --
. The more Gross has come to be viewed as a sage, the more impact his words have on the market, and as a result, the more influence he holds on public policy.
But recently, Gross' words have seemed contradictory at best -- and, at worst, disingenuous. And
his ability to influence public policy (at the protection of his own book)
is downright infuriating. Consider the following statements:
Bill Gross -- February 2009
policymakers must still be cognizant of the need to support asset prices
-- hopefully by inducing confidence and trust in private investors ...
if need be by the financing or purchase of assets themselves
Bill Gross -- January 2010
"What has become of the American nation? Conceived with the vision of liberty and justice for all,
we have descended in the clutches of corporate and other special interests
to a second world state defined by K Street instead of Independence Square. Our government doesn't work anymore, or perhaps more accurately, when it does, it works for special interests and not the American people."
Bill Gross -- September 2010
"I proposed a solution that recognized the necessity, not the desirability, of using government involvement
, which would take the form of rolling FNMA, FHLMC, and other housing agencies into one giant agency -- call it GNMA or the Government National Mortgage Association for lack of a more perfect acronym -- and
guaranteeing a majority of existing and future originations"
Bill Gross -- October 2010
"Well, let me be the first to acknowledge that the best route to prosperity is the good old-fashioned route (no, not the dated Paine Webber road map utilizing hoped-for paper gains of 12%+) but good old-fashioned investment in production.... What is more likely is a policy resort to reflation on a multitude of policy fronts: low interest rates and quantitative easing from the Federal Reserve, near double-digit deficits as a percentage of GDP from Washington.... And
the most likely consequence of stimulative government policies that strain to get us there will be a declining dollar and a lower standard of living
To summarize, Bill Gross was all for quantitative easing -- then against it -- then for it, as long as it protected his investments -- then accepting of the fact that these policies will likely hurt the average American (but probably not him).
As Co-Chief Investment Officer of Pimco, Bill Gross has a responsibility to deliver returns to shareholders. Similarly, American policy makers have a responsibility to protect the greater American good. In the opinion of this author, Americans -- by way of the representatives they elect -- would be better off if they stopped listening to Bill Gross.
-- Written by John DeFeo in New York City
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