Tag Archives: Bill Gross

Bill Gross leaves PIMCO…Should you sell your funds?

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Pimco1Dear Mr. Market:

They say all news gets priced into the stock market. Proponents of the Efficient Market Theory believe that there is “perfect information” in the stock market. Any information or insight that is available is there for all to see therefore negating any possible edge in beating the market. All that being said, no matter how clear your crystal ball is, nobody expected the shocking news we received on Friday.

Bill Gross, the co-founder of Pacific Investment Management (PIMCO) in Newport Beach, quit and packed his bags to join Janus Capital this past Friday. Gross has long been known as the “King of Bonds” and considered to be the nation’s most prominent bond investor. Until last year he was responsible for managing the largest mutual fund in the world – the PIMCO Total Return Bond Fund (PTTRX). That title now goes to the Vanguard Total Stock Market Index but PTTRX is still the world’s largest bond mutual fund. So…what happened here and was the writing on the wall?

As alluded to above PTTRX, and PIMCO in general, has been suffering for quite some time. PIMCO isn’t the only bond fund manager who has struggled with outflows but the sheer volume has opened some eyes. From May to August of 2014 PIMCO has had over $70 billion in assets liquidated and withdrawn. Over the past 72 hours (only 1 trading day including the weekend) the firm has already seen $10 billion bolt for the door! Continue reading →

Fool’s Gold

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images-2Dear Mr. Market:

It’s been a while since we saw you get so upset with the gold bugs. Today marked the worst two day slide to gold in 30 years. Your temper really punished gold holders with a 13% hit.

Do you remember August 23, 2011? What happened that day? Maybe if you were a Virginia resident you might remember since that was the day a 5.8 magnitude earthquake hit the area. For those wondering, that was the strongest earthquake in the United States east of the Rocky Mountains since 1897. Back to our question though…What’s so important about August 23, 2011?

Investors sometimes have short memories but nothing specific really happened on this day; it’s what was happening that summer that we want to bring back into focus. Since we recently wrote an article about “Sell in May and Go Away” let’s actually go back to that very point in time.  After a positive month of stock market returns in April of 2011, the S&P 500 dropped -1.35% in May, -1.83% in June, and another -2.15% in July. Continue reading →