The Greatest Investors: William H. Gross

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Bill Gross

Born: Middletown, Ohio, in 1944
Affiliations:
  • Pacific Mutual Life Insurance Company
  • Pacific Investment Management Company (PIMCO)
Most Famous For: Considered the "king of bonds," Bill Gross is the world\'s leading bond fund manager. As the founder and managing director of the PIMCO family of bond funds, he and his team of bond professionals have more than $600 billion in fixed-income assets under management.

In 1996, he was the first portfolio manager inducted into the Fixed-Income Analyst Society Inc. (FIASI) hall of fame for his major contributions to the advancement of bond and portfolio analysis.
Among other investing traits, Gross is famous for his ability to change directions without hesitation in response to changes in the markets. In July 2005, SmartMoney.com\'s Nicole Bullock observed that "Gross doesn\'t adjust to market conditions – he changes them! His views on the bond market are widely followed by professional investors and the investing public worldwide."

Personal Profile
Gross is a Duke University graduate with a degree in psychology (1966). Part of his "informal" education included spending a summer playing professional blackjack in Las Vegas. After graduation, he served as a naval officer on a destroyer off the coast of Vietnam.

After the military, Gross headed for business school and obtained his MBA in 1971 from the University of California, Los Angeles. He received his Certified Financial Analyst (CFA) credentials while working as an investment analyst with Pacific Mutual Life in Los Angeles from 1971 to 1976.

His last assignment at Pacific Mutual from 1976 to 1978 was as an Assistant Vice President managing fixed income securities. Gross founded, and has been the managing director and chief investment officer, for Pacific Investment Management Company (PIMCO), the world's largest fixed-income management firm, since its inception in 1982.

Investment Style
In an October, 2005, commentary piece, MarketThoughts.com editor, Henry K. To wrote that Bill Gross "believes that successful investment in the long-run (whether in bonds or equities) rests on two foundations: the ability to formulate and articulate a secular [long-term] outlook and having the correct structural composition within one's portfolio over time."

Gross describes these foundations as having a three- to five-year forecast that forces an investor to think long term and to avoid the destructive "emotional whipsaws of fear and greed." He clearly states that "such emotions can convince any investor or management firm to do exactly the wrong thing during irrational periods in the market." (For related reading, check out When Fear And Greed Take Over and Mastering Your Trading Mindtraps.)

Secondly, he argues that "those who fail to recognize the structural elements of the investment equation [asset allocation, diversification, risk-return measurements and investing costs] will leave far more chips on the table for other more astute investors to scoop up than they could ever imagine."

Publications
  • "Bill Gross On Investing"by William H. Gross (1998)
  • "Everything You've Heard About Investing Is Wrong!: How To Profit In The Coming Post-Bull Markets" by William H. Gross(1997).
  • "Bond King: Investment Secrets From PIMC's Bill Gross" by Timothy Middleton,(2004).

Quotes

"Finding the best person or the best organization to invest your money is one of the most important financial decisions you'll ever make."

"Do you really like a particular stock? Put 10% or so of your portfolio on it. Make the idea count … Good [investment] ideas should not be diversified away into meaningless oblivion."

"The genius of Bill Gross, from the gaming tables to the high-tech world of bond trading, is his knowing, quantifying and playing risk." (Timothy Middleton, "The Bond King")

"Bill often has been characterized as the Peter Lynch of the bond markets. But based on his longevity … and the size of his assets under management … it would be more appropriate to characterize Peter Lynch as the Bill Gross of the equity markets." (Jack Malvey, Lehman Brothers, 1996)

Next: The Greatest Investors: Carl Icahn »


by

Richard Loth

Richard Loth
Richard Loth has more than three decades of international experience in banking (Citibank, Industrial National Bank, and Bank of Montreal), corporate financial consulting, and non-profit development assistance programs. During the past 12 years, he has been a registered investment adviser and a published author of books and publications on investing. Currently, he devotes his professional activities to educational endeavors, writing and lecturing, aimed at helping individual investors improve their investing know-how (see www.lothinvest.com)

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