Bill Gross became known as the Bond King during his legendary, multi-decade run at Pimco, eventually growing the company to manage trillions of dollars. Of course, that success coincided with a remarkable bond bull market -- a bull market that came to a screeching halt over the course of the last two years. So what does Gross think of markets today? And could there ever be a new bond king in this environment? During a live episode of the Odd Lots podcast, taped at the Future Proof conference in Huntington Beach, California, Gross talked about the state of the market, reflected on his career, discussed the things that make him happy today, and addressed old rivals and competitors.
Hello, and welcome to another episode of the All Thoughts Podcast. I'm Tracy Alloway and I'm Joe.
Why isn't thal Joe.
We are at the future Proof Conference in the glorious Huntington Beach and we have a very very special guest. This is something that we recorded live on stage on a beach. We've never done that before.
Never on a beach before. Truly extraordinary moment, beautiful Huntington Beach. It really is kind of like a festival here, and this was a really fun conversation to do.
Yeah, so we are speaking with Bill Gross, the bond king himself. Obviously he has a lot of thoughts on the state of the bond market now, but we're also going to talk to him about his career and how investing in trading debt has actually changed over the decades.
Yeah, really fun conversation.
Take a listen, Bill, you brought out the sungloves.
Huh I did. It's been ten years. Last time it didn't work too well, But.
Try it again.
It'll be good this time. I want to start out with you know, we're in the midst of what seems like another interest rate cycle of some sorty. No one really knows how long it's going to last. There aren't that many people around nowadays who have lived through different interest rate cycles. And you actually started your career in the nineteen seventies in an era of stagflation, in an era where the Fed was hiking. We didn't have derivatives to hedge duration risk, We didn't have Bloomberg terminals, we had quotrons.
What was that like, Well, it was much different. You know, bear markets are not as much fun as bull markets, depending upon your position. But you know, interest rates got fifteen percent and eighty one, eighty two somewhere in there. And the interesting thing is that they were almost self hedging because the duration of a thirty year treasury at fifteen percent was about four and a half to five years. It was it was like a five year today or close to it, and so at fifteen percent with a very short duration, it meant that interest rates could go up to eighteen percent and you still wouldn't lose money. It was a it was a golden opportunity when you think back.
And you know, obviously, as Tracy mentioned, you started at PIMCO in the early seventies, and so there were several years of bond bear market before the Great bull market, which we'll talk about. What did you learn then about like surviving in a bear market for an asset class.
Well, you know, it depends on who you're investing for. If you're looking for a client and trying to glow a business, then you have to be aware the relative performance is important, but if it's a significant bear market, that absolute performance is crucial as well. Investors and clients will just leave no matter how good you were relative to the market. So I think that was keyback then, relative performance. And then you know, stepping on the accelerator in eighty one eighty two and buying a secular bull market, and it was a bull market.
So nowadays we kind of take for granted that people actively trade bonds, you buy and sell them, But when you started out, that wasn't the case at all. Walk us through the thought process and the opportunity that you saw in trading bonds.
Right, Well, there were no real computers, no clearing house, overnight types of trades. You. As a matter of fact, I pimp Go, which was owned by Pacific Mutual Downtown LA. We had a billion dollars in a vault and I was hired not for Pimco but really for private placements. And one of my jobs, twenty five percent of the eleven thousand dollars I made each year, was to go down into the vault and to actually clip coupons. You've you've heard a coupon clipping. I did a lot of that. Uh and and back in the day, because the bonds were in the vault, it was pretty hard to get them to New York. It took two or three days to get them to New York. Like I say, there were there were IBM three sixties, but nothing in terms of connectivity. And so you know, the physical trading of bonds and stocks was was very difficult and allowed for for ill liquid mar makes.
Talk to us more about you know, you mentioned anyone and then you like pressed down the accelerator and rode this incredible wave, right, this incredible roughly I guess forty years basically bull market in bonds.
But talk to us.
You know, if you look at your career and you think the bond king, like talk to you about the role of timing and how crucial that was. And when you think about the success that you had at pimp Co, etc. Are like just being there at the right time, and the role of I guess a little bit of luck.
Right, Well, it the key of Pimpco for us, said Pimpco. It wasn't just me. We had a lot of smart people, and more and more as as time went on. But the key was was really a book that I forget who wrote it.
Uh.
It was called Investing for the Long Term. It was it was about stocks, but I mentioned the long term, the secular movement of financial and instruments as opposed to cyclical, as opposed to short term trading. And it seemed to me that the bane of investor is emotion. And I'm the same way. I never thought of myself as a good trader. I mean, if in Nvidia, you know, hits five hundred, I'm just as likely to buy it as to sell it and then regret it the next day. But in any case, if you take a longer term view and not go to sleep, but if you take a longer term view and know that forces in the economy, inflation, demographics, globalization, if you know that those are working in the favor of either a bull or a bear, then sticking with what we called a three to five year forecast, as opposed to a three to five day forecast was the key. And it does it hurt mentally when you're long and you should be short for a short period of time. Yeah, it does, but you just you have to you have to stay with that mind frame of a longer term secular market.
How did the way you trade it actually change as PIMCO grew larger because I imagine you know, at one point PIMCO has hundreds of billions of dollars under management, trillions even, and there are pros and cons to that, right, like you get first allocation of debt, but maybe it's hard to hug your benchmark because you are gigantic.
And that's true. So you know, as we grew larger and larger, clients would always say, well, how can you keep doing this at one hundred billion or two hundred billion or five hundred billion, because your size, you know, is prohibitive in terms of liquidity. It wasn't because we found the futures market, we found the foreign markets, we found markets that that added liquidity, and actually we'd stay in this trading room and this this is not a good joke for for now, but I'll tell it anyway, that the client. Uh, the client would say, how can you do it? And then we tell them how we did it. And then we go back in the trading room and and look at each other and they say, you know, how we do it. We just add a zero to the ticket.
Yes, ticket, I mean, I know we're gonna talk. We're gonna, you know, at some point, like talk about this current market a little bit. But maybe it's like a sort of sag, you know. Obviously there were a lot of in the inflation of the late seventies and early eighties. There were a lot of false dawns right where they thought they had defeated inflation and the FED was like, Okay, we're going to like we're gonna be able to bring raids down, and then inflation shot up and they it took them a long time before they like it's good for good. Did it feel today when like similar to that or do you feel like, does it feel like the late seventies, this inflation, or did it feel like substantively different what we've experienced over the last few years.
Well, the late seventies influenced by seventy one seventy two when Nixon went off the gold standard and it was easy error and then easy for central banks to print money. There was also OPEC, and once they got going, it was hard to stop. You know, I think the FED and other central bankers are more aware now, hopefully they are, they weren't two years ago. So it's hard to make that claim. But it's it's a market these days that can be controlled to some extent with higher interest rates, but not necessarily, not necessarily, and we're seeing that right now because the you know, the the real five year note, the real five year note in terms of interest rates, was bottomed at minus two hundred basis points. It's now a plus two fifty. It's gone up four hundred and fifty basis points in the last year and a half, which is incredible and to my way of thinking, when we start talking about stocks, it's definitely a negative influence in terms of valuations and pees, but the market doesn't seem to recognize it.
Wait, when you say the economy can't be controlled through interest rates as much as it once maybe could be, can you expound on that. Why is that the case?
Well, you've you've got you've got foreign markets which didn't exist really in size back then, and they have an influence on the treasure market. All it's it's usually the other way around, and pretty decent uh uh size. And you've you've got you've got demographics that are important now with the boomers myself and others that are spending their savings, and that uh has a significant effect in terms of supply relative to demand. You didn't have that demographic influence back then. And then you know, globalization crept up in the last ten years or so made for higher productivity, and now it's going the other way. So they're just other forces to think about and and and that's what Powell is doing. He's trying to He's trying to gauge the appropriate real interest rate that will produce two percent inflation, which I think is a is a dream, but uh, that's what he says he's going to do, and that's what he tries to do. And that's why you know FED funds are five and a quarter to five and a half. We'll see what happens.
A lot of people think that rate cuts are coming, that we're in some like abnormally high level of interest rates and it's only a matter of time before like the FED is able to normalize and by normalize, what they mean is cut to something that maybe would be more familiar in the not you know, not go back to desert, but something that may be more familiar several years ago. Do you see that in the cards? Like, do you think that the Fed is going to be able to cut sometime soon and rates are going to come back down?
Yeah? I don't think so unless recession comes with a capital R and it doesn't seem to be doing that. Let me give you my value metric for the ten ure. The tenure at four and a quarter for treasuries. So Powell wants to get FED funds down to two. Let's say is successful. Let's say power is successful, which would be seemingly very bullish for the market. And if Fed funds are at two and then the the R star as they call it, you know, the real Fed funds rate would be a two and a half. But then there's a term premium, Joe, a term premium that historically has been about one hundred and thirty basis points over FED funds. And we're talking about the term premium of the ten versus the short term rate. And why is there a premium for a ten versus a short term rate because it's riskier because it goes up and down and you can lose money, whereas you can't with a bill. So let's just say that power is successful gets to two are stars at two and a half term premium three and a half close to four? I mean at four quarter, we're basically anticipating the Fed being successful and containing inflation at a two percent level. And if he doesn't, then we certainly haven't got a bull market, and we certainly don't have a context where Powell and the Fed, you know, are likely to cut interest rates. I just don't see it. It's not that unsignificantly bearish, although we can talk about that in a second. But four and a quarter is not a bad level for now as long as inflation keeps going down. If it doesn't, then no.
No, I'm going to take you up on the bearish period offer in a second. But since you mentioned the term premium, when you look at the yield curve right now, the fact that it's inverted, what do you see? What's that telling you? Because I feel like there's a group of people who will say this time definitely isn't different. It's a tradition indicator of recession, and then there are a lot of people who will say times have changed. The term premium is a lot lower than it used to be. Maybe that's what's causing the inversion.
Well, I think it is, but that's another way of saying that the term premium, which appears to be close to zero, is wrong. But I've been baffled by the you know, the length and the extent of the negative curve. I mean, we had we had one in seventy nine, eighty eighty one, and it seemed to work for Volcar. Doesn't seem to be working that well now. And I think perhaps one of the reasons is that fiscal policy has been so expansive. I mean, we're looking at a two trillion dollar deficit this year. Last year it was three three and a half during COVID, and so you know, when you have phi school policy in such a deficit and people spending money, it's like bernank remember Bernanke with a helicopter. I'll be damned, but that's what we did. We threw money out of a helicopter. We threw trillions of dollars out of a helicopter. And so the last of it is just now being spent, and I I think the reason why term premiums are so low is that the economy is good and people have money to uh to invest.
All right, I'm gonna jump. What do you you said, you hinted, or maybe that you're there's something that you're bearish on.
What do you bearish on? You mean in terms of markets?
I don't know, you sent not burishing thing like I'll get back to that.
Oh well, in terms of bonds, So we have a deficit of uh close to two trillion, The outstanding treasury market is about thirty three trillion. I've read on Bloomberg and others, things of the Plug and other sources that basically say about thirty percent of the existing outstanding treasuries that's thirty three trillion. So ten trillion have to be rolled over in the next twelve months, including the two trillion that's new. So that's twelve trillion dollars worth of treasures that have to be financed over the next twelve months. And who's going to buy them at these levels? Well, some people are buying them, but it just seems to be a lot of money. And when you add onto that that Powell is doing quantitative tightening, as you know, and that theoretically is a trillion dollars worth of reduced well trillion dollars worth of added supply, I guess. And so it just it seems like a very dangerous time based on supply, even if inflation does come down. So I wouldn't necessarily be bearished, because I think the FED talks a good game, even though they don't play a good game. They talk a good game, and they seem to have convinced investors that interest rates will come down once we get close to two percent. I think that's a stretch.
You know, given that deluge of supply and the fact that you are going to need a lot more buyers to take that up at exactly the time when it seems like a lot of traditional foreign buyers of US debt have stepped away. Do you think financial repression comes back into play. We're already seeing the FED talk about higher capital rules for some of the banks, things like that. Is that a risk in your mind? I remember you talking about this way back in twenty eleven, twenty twelve.
Well, I think it is all of the new rules the you know, in terms of the intermediate banks UH which followed on from Silicon Valley Bank the new rules and Schwab, by the way, not to if Schwab's out there, Chuck and I played golf once in a while, so sorry about that. The banks have gone overboard in terms of duration. I mean, Schwab basically takes all all their money market instruments and not all, sorry, but a lot and puts it into long term bonds. And that's how they've gotten caught. And that's how Silicon Valley got caught. And so you know, the repression, uh you know, it hasn't necessarily in terms of what I read, come in the form of duration, but it's come in the form of increased capital and increased debt. A lot of these intermediate banks have been ordered or will be ordered to issue six or seven billion dollars worth of debt in order to absorb you know, what happened to six to twelve months ago. So I think that's a that's an effect of what we have. We have a financial system that that's that's dependent upon asset prices going up. If you if if you remember anything I said today, we we have an asset we have an economy that's based on asset prices, going up. If they don't go up, there are problems. There are problems because there's so much debt and there's such high expectations in terms of PE ratios and the like that if this asset based economy, which is depends upon higher stock prices, depends upon higher or relatively high bond prices, it's it's precarious at some point. Not I I'm not saying get out, I'm just saying that assets have to go up or else the economy will not do well.
Since you mentioned duration, how would you manage or hedge duration risk right now? And you can't just say that you wouldn't take it on. If I gave you one hundred dollars to invest in bonds, how would you hedge that duration risk?
You know, Pimpko was always successful. Most people didn't realize it until the books came out. Pimko is always a great believer in selling volatility. Selling volatility has an alpha, pretty consistent alpha over time momentum. It doesn't always work, obviously when black swans appear, but momentum is like an insurance company, and so that's the way Buffett works. Buffett doesn't say that's the way it works. But that's the way it works. He takes that float and he sells volatility by investing in longer term stock options, et cetera, et cetera. I would and what have I done? I would sell a put n a call on a say, a ten year treasury the t y contract tyz C three trades are around one hundred and nine. You know, I just sell one hundred and eight put one hundred and ten call for thirty days, and the volatility is decent, not as high as it has been, but it's decent, and you just you just bring those premiums down to the bottom line as long as the market doesn't take off like a firecracker one way or the other.
So Tracy poses this hypothetical to you. It's like, okay, how do you how would you hedge this duration? But listening to like, I'm just wondering, like why should anyone buy a bond? And the reason that you know, as you said, like at the long end is almost already priced in a sort of success from the Fed, like already pricing in a sort of good scenario. There's upside risk. There's this deluge of issuance, and unlike say for the last at least the last fifteen years going up until twenty twenty one and longer, like we're not even getting these sort of like inverse correlation to equities in the portfolio. So you no longer get that sort of like beautiful sixty forty portfolio where something in your portfolio is green on the day and green on the quarter.
So why why on a bond? Well that's a good question. So say you buy a ten year Apple or ten year Amazon, you know, at five and a quarter bless and minus, and this is you know, I've been in this business a long time and I've been taxed sensitive, but I haven't I'm not a real estate guy. All my buddies at the country club are in real estate and they've never paid a tax in their life for having paid taxes, so I'm thinking about this, and so I've paid a lot of taxes. So it's so, say you aren't five and a half from an Amazon tenure, and say you live in California and New York, just say so, that's a fifteen percent hook right there, and the federal is probably forty percent plus or minus depending upon what your bracket is. So so take it up to fifty five, So the government takes fifty five of the five fifty and fifty five times five fifty fifty five five, it's probably like six, well fifty five times sweet five is it's like six twenty five whatever. You start to lose it when you're seventy nine anyway, So the government's taking like fifty five percent right away. And say, say you're trying to build a a state leads something for your grandkids, and yeah, you can set up a trust et cetera, et cetera, but that costs money too, But the estate tax is forty percent, and so they so if you got forty five left and you got forty percent on the state tax, that's sixteen seventeen percent, and so you're you're basically up to seventy percent that that government takes. That government takes seventy percent of your money and you get thirty percent. And so why why would you risk thirty percent one hundred percent of your money for a thirty percent payoff at five and a half. It doesn't make any sense, and it didn't make it certainly didn't make any sense two years ago or a year and a half ago when interest it's for zero, So you got to beat the taxman in one form or another. I'm not a pro at that. You know, Go buy a Go buy an office building in New York.
I guess I heard they have their own problem buildings some other.
Yeah, Bill, you kind of alluded to this. But you're managing your own money now, and you're invested in a lot of different things. So stocks, bonds, MLPs, what's your favorite thing to trade now?
Idea? Unfortunately, uh, you know, oil is at a cyclical peak. Maybe it goes higher. I hope it does. But there's master limited partnerships mainly in uh, the oil and gas pipeline areas. At some point ten fifteen years ago Congress, somebody paid off a congressman and he inserted it into a bill, and so MLPs, you know, basically our partnerships just like real estate, it's the way, it's a way to get even with your real estate golf buddies. And so what it is is that you don't pay any taxes until you sell it. Okay, just like real estate, they don't pay any taxes even when they even in real estate, guys sell it, they transfer it to another property. They don't pay any taxes. They don't pay taxes ever. Anyway, So these MLPs, and they're about six or seven or eight of them, they turned pretty frequently. The largest one is called Energy Transfer. It's et it's the biggest in the country. It yields nine percent, And is that safe? It's been pretty steady, and as it dependent upon oil prices, yeah, the price of the stock is affected to some extent of oil goes down. But so so I've got an MLP with energy transfer it a nine percent yield that I don't pay taxes on until I sell it or it pops into a state, and I don't think you even get taxed then. And all of these MLPs are like eight eight and a half nine percent, And you know that suggests that there's a lot of risk there, and I suppose there is. They've gone down and they'll go down again. But from a tax standpoint, I really like them. About forty percent of my portfolios or in oil and gas MLPs. The other symbols would be MMP, MAGELLAN, MPLX, NS A new Star. There's like eight of them. Just get your Bloomberg and hit r V for relative value and it'll show you everything you should invest in.
We asked Bill to give you tips on terminal function.
No, I love so I love like you know the exact price of the part of the Treasury futures curve whar it's trading right now. It various tickers in their yields of MLPs. So you're still like, you're getting up at five thirty every day, still and just as active as ever.
Yeah, And I know that's sort of stupid. And people say smell the roses, and I think I do. My wife Amy and I play golf in the afternoon. That that that's smelling the roses. But in the morning, what else would I do. I'm not gonna watch the morning talk shows, and so yeah, I get up and I watch I watch the market and it's fun. You know, I told you this back. But there's a good definition of happiness. It's not the only definition. You've got plenty, I'm sure, but one definition says you need someone to love, that's for sure. You need something to do and something to look forward to. And so for me, the market is something to do in the morning and something to look forward to. I look forward to in video and the earnings announcement. I'm hanging at one o'clock Pacific time just waiting for that announcement, and I go, what are you doing? Why is this so important to you? But I guess it is.
I love that of the three things you need to be happy, the market.
Is two of them for you. All right.
Well, on a related note, I remember in one of your very famous investment outlooks, you said that you didn't consider yourself a good trader. So fast forward many years do you think you're a good trader?
Now?
Have you gotten better? No?
I'm not a good trade. I'm as emotional as everybody else. And that's the bread. You can't be emotional, and so you know, take Buffet. Buffett's is not emotional. He's funny, he's a great personality, but I don't see him as an emotional person. He's just tried, tried in terms of how he looks at markets and the timing. He looks at markets going forward, and so it kicks the emotion out of there. Yes, he's got to be right if he thinks the market's going up or going down. He's got to be right on a long term, but the emotions out of there. And so you know, I've found for myself, I'm very emotional. If I make a trade during a day and it closes lower than worry about it. I'm not in a good mood. Amy knows, sorry, but I'm not a good trader. I am a good long term secular investor. I have a good sense of what makes for markets in the law long term.
You mentioned do you see forty percent by the way of your of what you in the MLPs these days? What are the other big or what's the other sixty percent?
Like, what are the.
Other long term things that you want to bet on right now?
Well, so you know, there's a lot of not totally safe arbitrage situations that that you'll ten to twenty percent. I mean you all know the Microsoft activision deal that probably in two weeks will be approved by the UK. The trades at ninety two. They're going to pay ninety five. That's three points for a month I think it's a month, and that's a third six percent annualized return. There are others. There's there's there's a new one called Capri which is Amy told me about this because they they sell Jimmy Choose. I'm sure some of the women know Jimmy Choose Versace and uh, there's there's one other company anyway they're being acquired by a private entity. You know, there's a ten to fifteen percent discount in a relatively safe industry. It's not a high tech industry, and there's there's quite a few others where a five to ten fifteen percent return relative safety can can be achieved, And so I look for those, and uh, you know, it's better than five percent treasures, but certainly riskier as well.
I don't know if anyone's ever asked you this before, but are you ever tempted by private credit? It seems to be all the rage at the moment. I've heard one person describe it as bonds without the liquidity issues of publicly traded debt. Is that something that interests you?
Well? Well, no, I think I think you'd be most of you would be surprise. I'm I'm not well connected. I never was well connected. I came into Newport, I sat up my desk, I had my investment committee. I had great people working with me, but I didn't know many people in New York or Chicago, and I don't know many people now. I would if I wanted to invest in private equity, I wouldn't know where to go. So I'd say no.
Extremely plugged in to random like merger arbitrage opportunities. But I don't know all the fancy people with their private deals. Let's talk about a few other topics that are sort of in the news a lot of interest these days in China and whether there's like a going to be a sustained slow down there. But I feel like, you know, there's certain things that people talk about like every ten years and been warning that their model is going to implode, and it's like a permanent thing. Does it having followed these things for years, does it feel like there's something different going on globally or in China in particularly.
Yes, certainly in China. You know at PIMCA long ago we were onto this long ago, fifteen years too early. But China has during that there's stretch of success, been successful because of investment, not because of consumption. They don't consume seventy percent of the economy like we do in the US. Is probably more like forty forty five. And the trick for China has been to increase that to be more like you know, Western economies and certainly the US. Where they've gone wrong is that they've reached the sort of a dead end with their investment in housing and construction. They've built bridges to nowhere just to keep on building and to keep on investing and keep jobs plentiful. And so it seems like I say, at PIMCO, we were talking about this fifteen years ago and never happened, but it seems to be happening now. And so the Chinese miracle of six percent growth, I mean we would wonder how could that, how could that happen? How could that keep on happening with such a large economy, How could they grow at six or seven every year? And of course they did because they kept on building condos and apartments that are now vacant. So I think China's got a problem. They got a debt problem like most countries, like the US has a dead problem, Japan has a huge debt problem. But they've got a dead problem that they're going to have to figure out. And it always seemed to me that and this has been disproven because has grown and grown and grown successfully and become a not just an economic force but a geopolitical force. But so they've grown and grown and grown, but at some point it seems you just can't grow at six percent anymore. And and as we know, much of the world is dependent upon China, and not just their imports but their exports as well. So I would think the Chinese situation is a serious one and should be factored into to market expectations. But it isn't really. I mean, people, investors, once you get on the AI train, and that's okay. I'm a believer in that. I don't know much about it, but I have a sense that it will improve productivity by a half or maybe one percent a year. That's big time stuff. But once you get on the AI train, you know you're looking for twenty thirty hints. You know what. Peter Lynch used to say, five bangers or ten bangers. I never liked Peter Lynch, mainly because I thought he got out too early and people were always calling me the Peter Lynch of bonds, and I said that sucks.
Okay, all right, we did China, we did Ai, we did Peter Lynch. Shall I just throw out some more topics, Yeah, you could just appine on them. The Fitch down grade of the US credit rating.
Well, I think it reflects a certain reality, not that the US could ever default in terms of not being able to cover its bills. The Treasury just hands it off to the FED and the Fed prince money they have fed like the helicopter that BERNANKI talked about. So I don't think that's realistic, but it is. The interruptions are potentially realistic. As we know, every time you know it comes up for approval, there's there's something that takes place. And so I think from the standpoint of a downgrade W A plus, it's probably appropriate. But it doesn't there's no default ahead. It just maybe it affects the the CDs spread a little bit.
Sorry, I know I'm throwing out topic. Going back to bonds though for a second and speaking to the bond king, if the could we could there be another bond king in a bond bear market? Could there like or do you or if you're in bonds and it's like, does it just mean you're going to have to like move somewhere else? Could there be a great bond manager at a time if we don't have a great bond ball market.
See I sort of wrote this as I was leaving what which is a little I don't know what the right adjective for that is, but I shouldn't have said it, but I don't I think to be a I don't think there could be another Bond King, because my reputation is Bond King was first of all made by fortune. But they printed a four page article with me standing on my head doing yoga and I was supposedly the bond King, and that was good because it sold tickets. But I never never really believed it. The minute you start believing it, you're cooked. That the minute you start, you're at the three point line. You think you can't miss, you miss, And so I never really believed it. But you know, it was the function of a bull market for thirty years that was growing and Pimpko was doing well. And there are too many names I could mention a Pimpko that that that helped me along. But you know, today could there be a bond King. The Bond Kings and Queen's now are at the Fed. They rule, They determined for the most part which way interest rates are going, sometimes not so well, so they're in charge. And there was a time where you know, Pimpko was pretty much in it in two thousand and nine and eight, and those are my most proud moments where Pimpko was called upon by the Treasury and by Warren Buffett to help save the economy, and we did that because we were sizable, we had a reputation, and the government let us support them in the mortgage market and we made money at the same time. But I don't think so, and certainly so I nailed Peter Lins. I'll nail Jeff Gunlock because he nailed me. When I was leaving Pimpko, I went up to his house and said, you know, maybe I could work with you. We could be two bun kings. And he he trashed me for the next twelve months, you know, in the press and so on. Just just and I'm a sensitive.
Going We'll get you both on stage a lot of few.
Anyway, But so so if John, if Jeff Gunlock is a bond first of all, to be a bond king or a queen, you need a kingdom. You need a kingdom. Okay. Pimpko had two trillion dollars, okay, double lines got like fifty five billion. Come on, come on, that's no kingdom. That's like Latvia or for Estonia, whatever. Okay, and then his then look at his record for the last five, six, seven years, had a sixtieth percentile smack of a bond king. That doesn't.
There, I got your back, Jeff, Wow, Okay, keep going. I'm trying to think where to take the conversation next. All right, I want to ask a kind of serious question because we only have a few minutes left. But you've been very modest and humble sort of except for that last answer. Except for that last answer, you've sort of rejected parts of the bond king story. You've attributed a lot of your success to the bull run in bonds. You still think you're not a great trader. How do you want people to think of your legacy? When people think Bill Gross, what do you want them to think about? And I realized, you know you've written your own book on yourself, right, someone else has also written.
A book about you?
Like, what is what is the legacy that you want?
H Well, I think Pimpkoh was and and they're still close to two trillions, so there's still an important uh factor in the marketplace.
But but the growing of Pimpco from nothing I mean that. I mean you talk about careers where you're assisted by by this and by that and by parents and whatever. You know. I had nothing and Pimpko had nothing. And so to go from nothing to to two trillion dollars, you know, we we not only did something right, but we we did something for our clients. I mean Pimpco. The Pimco mantra was the client comes first, and and that sounds like bullshit, but it wasn't. We We traded for clients, not for ourselves, and we knew what we thought as it turned out that if we traded for clients, that that would redown to our own benefit. And so I'm proud of the growth. I'm proud of our Like I say, the financial crisis and how we helped to salvage the economy during those days, I'm not so proud of, you know, the aftermath with you know, Pimpco firing me. Still I still don't have no idea. I have no idea why a company a two trillion would fire a person and the next week they would lose five hundred billion dollars. I have no idea from a business standpoint why that would happen. But for some reason, you know, they thought my time was over, and I guess it was. But I'm certainly proud of not just the growth, but the importance of Pimpco in the capital markets and helping people along. I mean people come up to me. I don't have they still recognize me at seventy nine. I look in a mirror, I can't recognize myself, but they come up and they say, you know, you really helped me that total return fund. It made, it made my portfolio. And so those are those are the plauts and the compliments that I really treasure the most.
Bill Gross. Incredible to chat with you here on the beach and really appreciate you. Thank doing this interview though this is a blast.
Thank you. And I was going to say, like like in the US Open, we're at one o'clock in the morning where Djokovic or Coco or whatever they say, and thanks for staying so like, thank you. Well.
That was our conversation with Bill Gross, the Bond King, recorded live at the future Proof Conference on Huntington Beach. I'm Tracy Alloway. You can follow me at Tracy Alloway and.
I'm Joe Wisenthal. You can follow me at the Stalwart, Follow Bill at Real Underscore, Bill Underscore Gross. Follow our producers Kerman Rodriguez at Carman Arman and dash El Bennett at dashbot and check out all of our podcasts is Bloomberg under the handle at podcasts, and for more Odd Lots content, go to Bloomberg dot com slash odd Lots with a blog post transcripts. We have a weekly newsletter and chat with fellow listeners twenty four to seven in the discord Discord dot gg slash.
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