WEBVTT - Masters in Business: Janus Capital Group Bill Gross (Audio 2) 0:00:03.040 --> 0:00:07.880 This is Masters in Business with Barry Ridholts on Bloomberg Radio. Hi, 0:00:08.080 --> 0:00:10.840 this is Barry Ridholts. You're listening to Masters in Business 0:00:10.840 --> 0:00:15.960 on Bloomberg Radio, Bloomberg dot Com, Apple iTunes and everywhere else. 0:00:16.720 --> 0:00:19.880 This is the second half of our interview with Bill 0:00:19.920 --> 0:00:22.680 gross By. Now you should have listened to part one, 0:00:23.480 --> 0:00:27.200 in which he described going into the folks of Pacific 0:00:27.280 --> 0:00:31.400 Life quote unquote knees knocking and proposing they set up 0:00:31.400 --> 0:00:35.320 a standalone bond shop. Uh, the early days at PIMCO, 0:00:35.400 --> 0:00:38.640 who his mentors were. That's a fascinating conversation. If you 0:00:38.680 --> 0:00:41.240 haven't heard it, I suggest you find that and listen 0:00:41.320 --> 0:00:46.599 to that first. This half is really the latter days, 0:00:46.640 --> 0:00:51.440 and he describes um how PIMCO grew to be the 0:00:51.479 --> 0:00:57.480 monster it effectively became. He describes his creation of portable Alpha. 0:00:57.480 --> 0:00:59.160 I don't know if you knew that that's essentially a 0:00:59.240 --> 0:01:04.800 Bill gross invention. He describes why and how stability leads 0:01:04.800 --> 0:01:08.160 to instability, and we get to talk about our mutual 0:01:08.280 --> 0:01:12.640 friend Paul McCulley, who brought Himan Minsky to his attention. 0:01:12.760 --> 0:01:18.840 Who Minsky essentially as a person who explains why stability 0:01:18.920 --> 0:01:23.520 leads to instability. People become complacent, they become more more aggressive, 0:01:23.520 --> 0:01:26.560 they take more risks, and eventually that that has a 0:01:26.560 --> 0:01:29.360 bad ending. And he talks about the FED and QUEI 0:01:29.800 --> 0:01:33.240 and what it was like in the midst of the crisis, 0:01:33.360 --> 0:01:36.280 what it was like to when the FED said They're 0:01:36.280 --> 0:01:39.520 gonna go and buy mortgage backed securities. How come nobody 0:01:39.560 --> 0:01:42.280 else did. People didn't trust the FED, they didn't believe it. 0:01:42.640 --> 0:01:45.120 He made a bet that the FED was telling the truth, 0:01:45.240 --> 0:01:48.680 and it netted him ten billion dollars in returns for 0:01:48.760 --> 0:01:53.920 the total return fun shareholders. So he also says some 0:01:54.320 --> 0:01:58.200 very very interesting things about his exit from PIMCO. He 0:01:58.320 --> 0:02:02.000 still is is small learning from that. He feels blindsided. 0:02:02.520 --> 0:02:04.840 He was stunned. He didn't know that a founder slash 0:02:04.920 --> 0:02:10.200 c I O slash shareholder can be unceremoniously dumped. He 0:02:10.240 --> 0:02:12.680 says he was fired from PIMCO, and he thinks PIMCO 0:02:12.720 --> 0:02:15.200 made a mistake. They should have let him. They should 0:02:15.200 --> 0:02:18.520 have accepted his offer, in Bill's words, to step down 0:02:18.600 --> 0:02:21.440 from total return, just from run the closed end funds 0:02:21.960 --> 0:02:25.239 and and sort of sail off into the sunset ala 0:02:25.320 --> 0:02:29.440 Peter Lynch. But that didn't happen, and I think, um, 0:02:29.480 --> 0:02:31.480 he feels he still has something to prove, and that's 0:02:31.480 --> 0:02:35.040 how he ended up at at Janice Capital. So anyway, 0:02:35.080 --> 0:02:37.840 this is the second half. Um, it's another hour, and 0:02:37.880 --> 0:02:42.359 again you'll find Gross to be very forthcoming, very intelligent, 0:02:42.520 --> 0:02:46.239 and very articulate. I found it to be a fascinating conversation, 0:02:46.320 --> 0:02:49.160 and I think you will also with no further ado. 0:02:49.560 --> 0:02:55.760 Here is Bill Gross. This is Masters in Business with 0:02:55.880 --> 0:03:01.560 Barry Ridholts on Bloomberg Radio. What is the state of 0:03:01.600 --> 0:03:05.440 the US economy and what do you think about what's 0:03:05.440 --> 0:03:09.679 happening in Europe and Japan? Well, the entire world, let's 0:03:09.760 --> 0:03:12.480 let's start there is suffering from a lack of aggregant 0:03:12.480 --> 0:03:18.840 demand and that that's almost so undefinable. I suppose it 0:03:19.639 --> 0:03:23.760 takes a textbook, has to be relatively useless, but it 0:03:24.040 --> 0:03:27.480 basically means that the the world is suffering from high 0:03:27.840 --> 0:03:31.680 debt levels, which um which in the past have promoted 0:03:32.000 --> 0:03:34.760 lots of demand over the past thirty years and can 0:03:34.840 --> 0:03:38.200 do so no longer. That the world is in the 0:03:38.600 --> 0:03:42.320 slow process of a demographic crawl towards older age, and 0:03:42.320 --> 0:03:45.160 we see that with Japan and Germany and certainly with 0:03:45.200 --> 0:03:48.480 the boomers in the United States, although our economy is 0:03:48.560 --> 0:03:52.240 less affected. UM. We see that with technology as robots 0:03:52.240 --> 0:03:56.080 replaced people uh you know, jobs from Apple and Google. 0:03:56.200 --> 0:03:58.600 God bless them. They're great companies, but they don't create 0:03:58.600 --> 0:04:02.119 a lot of jobs. They create gadgets and wonderful uh 0:04:02.440 --> 0:04:05.880 you know things to uh to to communicate with. UM. 0:04:06.160 --> 0:04:09.120 So the world has changed from the standpoint of aggregate demand. 0:04:09.160 --> 0:04:13.200 There's less of it because of debt, demographics, and technology, 0:04:13.520 --> 0:04:18.160 other influences and so, UM, you know, we are fighting 0:04:18.320 --> 0:04:22.760 what Summers called structural headwinds. We're fighting what I call 0:04:22.880 --> 0:04:27.080 the new normal. Uh. The world uh you know, in 0:04:27.120 --> 0:04:29.520 the developed world cannot grow the way it used to grow. 0:04:29.560 --> 0:04:33.200 It's probably a one to growth rate. UM. You know, 0:04:33.240 --> 0:04:37.040 shouldn't if Europe ever, you know, get out of the whole. Uh. 0:04:37.080 --> 0:04:41.880 In emerging market countries that they've got their own problems 0:04:41.960 --> 0:04:47.000 commodity based, commodity related and dependent upon UH capital inflows 0:04:47.040 --> 0:04:50.320 which now are being pulled back, and so their growth 0:04:50.400 --> 0:04:56.200 rates while underdeveloped and having less debt on their balance sheet. 0:04:56.240 --> 0:05:00.000 And developed countries have problems of their own that from 0:05:00.040 --> 0:05:03.320 a financial standpoint, limit their ability to grow. So that 0:05:03.480 --> 0:05:08.279 the the globe, Yes, still grows. The I m F 0:05:08.360 --> 0:05:11.200 puts out forecast of three plus and a lot of 0:05:11.200 --> 0:05:14.400 that's China. But um, so it still grows, but it 0:05:14.400 --> 0:05:17.320 glows much more slowly. And and so from the standpoint 0:05:17.360 --> 0:05:21.839 of the US, what we're seeing now at at three 0:05:21.880 --> 0:05:25.080 plus is a little bit of a mirage. You know. 0:05:25.160 --> 0:05:28.720 I I believe in the one to two percent structural 0:05:28.760 --> 0:05:32.560 growth rate that we will you know, very quickly move 0:05:32.640 --> 0:05:36.560 back down towards. And that's not all that bad relative 0:05:36.560 --> 0:05:38.840 to everybody else, but it's not what we're used to. 0:05:39.080 --> 0:05:44.280 And in terms of corporate profits and and growth and 0:05:44.279 --> 0:05:49.120 and PE ratios, etcetera, etcetera. It's really a suggestion that 0:05:49.240 --> 0:05:52.360 the as I mentioned in my investment outlook last month, 0:05:52.440 --> 0:05:57.440 the the good times are over and returns this year 0:05:57.600 --> 0:06:01.000 in my opinion may h and any cases have minus 0:06:01.000 --> 0:06:03.440 signs in front of them as opposed to positive signs. 0:06:03.480 --> 0:06:06.400 So you don't think that five percent print in GDP 0:06:06.560 --> 0:06:10.640 is sustainable? Oh god no, um, But but that's what 0:06:10.680 --> 0:06:13.200 they want. That that's what the Fed. The FED wants 0:06:13.200 --> 0:06:15.920 five percent nominal GDP. That's their target because if the 0:06:15.920 --> 0:06:19.159 economy can grow at five percent, it can continue to 0:06:19.160 --> 0:06:22.279 to pay off you know, it's it's interest rate bills, 0:06:22.520 --> 0:06:26.840 both publicly and privately. UM. If it only grows at 0:06:26.920 --> 0:06:31.839 three percent or three percent two percent, then uh, an 0:06:31.839 --> 0:06:34.440 economy like the United States, a levered economy like the 0:06:34.520 --> 0:06:37.719 United States, has a difficulty in terms of pain you know, 0:06:37.839 --> 0:06:41.560 for its past consumption. It's past credit. UM. It's just 0:06:41.680 --> 0:06:47.920 that simple and um. You know we shall see. You know, 0:06:47.960 --> 0:06:52.400 since since Lehman Brothers credit private credit credit I mentioned 0:06:52.400 --> 0:06:54.440 in the first segment, that had grown from one trillion 0:06:54.480 --> 0:06:57.520 to fifty eight trillion has grown about a three to 0:06:57.640 --> 0:07:01.719 four percent clips. Some in some sectors higher like with 0:07:01.800 --> 0:07:05.440 the government and their deficits, some cases lower like with 0:07:05.480 --> 0:07:09.080 mortgages and in private consumers. But in any case, that's 0:07:09.080 --> 0:07:13.200 been growing at three to four percent UM. The the 0:07:13.360 --> 0:07:16.920 economy needs credit to grow three for four percent needs 0:07:16.960 --> 0:07:23.880 nominal GDP or else um uh assets um in order 0:07:23.920 --> 0:07:26.520 to make the cover to make the interest rate UM, 0:07:26.800 --> 0:07:29.400 they start to be sold, and that that's the beginning 0:07:29.400 --> 0:07:32.800 of a debt deflation that all central banks want to prevent. 0:07:33.120 --> 0:07:36.440 I want to avoid deflation. Let you mentioned you mentioned 0:07:36.840 --> 0:07:41.960 aggregate demands. Leads me to a conversation I add with 0:07:42.040 --> 0:07:47.200 your colleague Paul McCulley, who was defending what the Federal 0:07:47.280 --> 0:07:52.560 Reserve had done on the basis that Congress had abdicated 0:07:52.600 --> 0:07:59.440 their responsibility. We normally see following a financial crisis, big stimulus, 0:08:00.080 --> 0:08:03.520 a lasting stimulus, and a lot of hiring on the 0:08:03.520 --> 0:08:06.720 state and federal level. We didn't get this time. If anything, 0:08:07.200 --> 0:08:09.760 we saw a contraction on the state and local level. 0:08:10.360 --> 0:08:13.920 And while we had a i want to call it 0:08:14.000 --> 0:08:16.880 a eight hundred billion dollars stimulus, half of it were 0:08:17.320 --> 0:08:19.880 temporary tax cuts and on a big chunk of it 0:08:20.000 --> 0:08:24.360 was temporary extension of unemployment. So you were really left 0:08:24.400 --> 0:08:27.400 with like a two or a three hundred billion dollar stimulus, 0:08:27.400 --> 0:08:29.760 and he was talking about a two to three trillion 0:08:29.800 --> 0:08:35.319 dollar stimulus. Let's talk a little bit about Congress this cycle. 0:08:35.440 --> 0:08:38.760 Did they do what they should have done following the crisis? 0:08:38.960 --> 0:08:43.080 And did I'm paraphrasing Paul, did the Fed really have 0:08:43.240 --> 0:08:46.360 no option? Was it, Hey, we're the only game in town. 0:08:46.400 --> 0:08:49.679 If we don't do something, we're just gonna spiral to 0:08:49.920 --> 0:08:53.640 really bad places. I'm with Paul there with the exception 0:08:53.720 --> 0:08:56.679 that they shouldn't have gone blow one percent, and that's 0:08:56.480 --> 0:09:00.280 the problem now. And I'm with Krugman and Summers and 0:09:00.440 --> 0:09:03.040 uh and McCauley in in terms of the need for 0:09:03.480 --> 0:09:07.400 fiscal stimulation and the lack of it as you just 0:09:08.320 --> 0:09:13.040 described it, there's there's no doubt that at these interest rates, uh, 0:09:13.200 --> 0:09:16.680 you know, the government could be financing a multitude of 0:09:16.960 --> 0:09:21.800 infrastructure uh projects. And then we have the Republican view 0:09:21.800 --> 0:09:24.520 and the democratic view in terms of the uh, the 0:09:24.679 --> 0:09:29.600 productivity of public investment. But you know, let's face it, 0:09:29.640 --> 0:09:32.559 there's lots of areas in terms of roads and um 0:09:33.040 --> 0:09:36.360 other large projects that the government must do and and 0:09:36.640 --> 0:09:39.320 has done rather efficiently in the past. And so let's 0:09:39.960 --> 0:09:43.440 let's borrow money cheaply at two on a tenure basis 0:09:43.520 --> 0:09:46.200 and use that money to uh, you know, to to 0:09:46.400 --> 0:09:52.400 create jobs and to to repair obvious deficiencies and uh, 0:09:52.520 --> 0:09:56.800 you know, our private infrastructure and public infrastructure. So yeah, 0:09:56.800 --> 0:10:00.200 I think we've fallen down from a fiscal standpoint. Did 0:10:00.240 --> 0:10:04.719 the monetary authorities have no other choice? Um? Probably not, 0:10:05.480 --> 0:10:10.040 But with the the exception of of going going to zero, 0:10:10.120 --> 0:10:13.880 I think they could have stopped center at one. You know, 0:10:13.960 --> 0:10:18.199 certain countries have looked at and issued fifty year bonds 0:10:18.760 --> 0:10:21.400 to finance their long term debt. Is that something that 0:10:21.440 --> 0:10:24.280 makes sense for the United States now that rates are 0:10:24.280 --> 0:10:26.360 this low? Yeah, I think someone we're looking at it. 0:10:26.600 --> 0:10:29.720 I mean, they put out feelers and uh uh, you know, 0:10:29.760 --> 0:10:35.640 they bring in private companies like like Pimco, not Channis 0:10:35.679 --> 0:10:39.440 at the moment, but and asked them as to the 0:10:39.559 --> 0:10:42.600 you know, to the viability of a fifty year bond 0:10:42.600 --> 0:10:44.439 and who would be a buyer, and doesn't make sense? 0:10:44.480 --> 0:10:48.840 And yeah, certainly from the standpoint of pension funds which 0:10:48.840 --> 0:10:53.920 are terribly um in many cases still underfunded and mismatched. 0:10:54.120 --> 0:10:58.360 Uh yeah, fifty years maybe a little long, but you know, 0:10:58.840 --> 0:11:04.000 their problems emanated from the fact that there liabilities were 0:11:04.160 --> 0:11:09.000 always much longer than their assets and um, and now 0:11:09.040 --> 0:11:12.600 they're in many cases they're terribly underfunded. So sure, a 0:11:12.600 --> 0:11:14.920 fifty year piece of paper would make sense from the buyer. 0:11:15.400 --> 0:11:20.800 It would probably come at a Yeah, let me take 0:11:20.840 --> 0:11:22.280 that back. I'm not sure whether they would come at 0:11:22.280 --> 0:11:25.200 a premium to a to a thirty year piece of 0:11:25.240 --> 0:11:29.120 paper because of the convexity inherent in it. But in 0:11:29.160 --> 0:11:33.000 any case, it would be cheap and half something like that. 0:11:33.160 --> 0:11:36.360 Probably less, you know, probably less, Yeah, probably closer to 0:11:36.440 --> 0:11:38.439 this is my money for half a century giving two 0:11:38.440 --> 0:11:42.160 point seven five? Is that right? Right? Um? Or three percent? 0:11:42.320 --> 0:11:44.640 And so it would be very cheap financing for a 0:11:44.720 --> 0:11:48.960 government and could be put to productive us. So I 0:11:49.000 --> 0:11:51.240 want to get to a lot of the questions that 0:11:51.320 --> 0:11:54.520 people had asked on Twitter. But let's I would be 0:11:54.559 --> 0:11:56.920 remiss if we didn't talk a little bit about that 0:11:57.040 --> 0:11:59.559 unpleasantness last year. So let's let me fire a few 0:11:59.640 --> 0:12:04.200 questions is about this and I'll ease into it. Um. 0:12:04.480 --> 0:12:07.559 And this is a question actually came from Twitter, which 0:12:07.800 --> 0:12:11.240 was you're reputed to be a tough guy to work for? 0:12:11.880 --> 0:12:15.880 True false? Um, you know, in some ways, but because 0:12:15.880 --> 0:12:18.439 a leader has to be exacting. I mean, this is 0:12:18.480 --> 0:12:21.920 a business of money, of dollars and cents, and mistakes 0:12:22.640 --> 0:12:25.000 can be very costly. And if you don't have a 0:12:25.840 --> 0:12:29.840 leader looking out for mistakes and berating those that make 0:12:30.200 --> 0:12:34.160 significant mistakes, then what have you? You've got a loose 0:12:34.240 --> 0:12:38.240 company that ultimately is not doing a service to its clients. 0:12:38.280 --> 0:12:40.600 So you know, I was always a stickler in terms 0:12:40.600 --> 0:12:43.880 of details, a stickler in terms of holding me needs 0:12:43.960 --> 0:12:48.000 and communication and going over the strategy. Um. You know, 0:12:48.240 --> 0:12:49.920 I thought that that was important. I thought that was 0:12:49.960 --> 0:12:53.199 my duty to clients to get it right. And so 0:12:53.240 --> 0:12:58.240 if they consider that to be an attitude, I guess rightly. So. 0:12:58.800 --> 0:13:01.680 On the other hand, I'm a pretty quiet guy. Um. 0:13:02.000 --> 0:13:05.400 I liked to, uh to sort of sit there and 0:13:05.440 --> 0:13:09.640 look at my Bloomberg screens and and do trades. And 0:13:09.679 --> 0:13:12.720 when it came to twelve o'clock hour, we would have 0:13:12.720 --> 0:13:14.920 an investment committee for two and a half hours, so 0:13:15.000 --> 0:13:17.120 that that would be my time to come together with 0:13:17.200 --> 0:13:21.720 the company. Uh you know. I I viewed myself as 0:13:22.120 --> 0:13:25.559 in many cases a mouse as opposed to a lion. 0:13:26.320 --> 0:13:30.280 Um in a mouse that sometimes roared, as opposed to 0:13:30.679 --> 0:13:34.000 a lion that, uh you know, was was constantly on 0:13:34.000 --> 0:13:37.840 the prowl. So yeah, I I tough but fair? Is 0:13:37.840 --> 0:13:41.559 that what you're sort of hinting at? Or I think so? 0:13:41.920 --> 0:13:43.880 I think I think a leader has to be tough. 0:13:43.960 --> 0:13:49.479 If if you sit around a table and you congenially, um, 0:13:49.520 --> 0:13:53.920 you know, look for a consensus, uh type of type 0:13:53.960 --> 0:13:56.559 of outcome, you're in trouble. You can't manage money. You 0:13:56.600 --> 0:13:59.360 can't manage money that way. At some point somebody has 0:13:59.400 --> 0:14:02.000 to step in and said, we're going in this direction 0:14:02.120 --> 0:14:05.840 and Uh, I studviewed that as as my job, and 0:14:05.880 --> 0:14:09.319 I think I did it well. So Alians bought PIMCO 0:14:09.400 --> 0:14:14.000 in nine for I think it was about five point 0:14:14.080 --> 0:14:16.559 nine billion. Am I getting those numbers more or less? Right? 0:14:17.280 --> 0:14:20.560 You hung around for another fifteen years, which is very 0:14:20.640 --> 0:14:24.800 unusual in the world, certainly of technology, when when the 0:14:24.840 --> 0:14:27.280 founders are bought out, they tend to go on to 0:14:27.400 --> 0:14:30.400 the next thing. But you stayed at PIMCO and managed 0:14:30.440 --> 0:14:34.360 it for another fifteen years. How did that happen? They 0:14:34.400 --> 0:14:37.360 pretty much left you free reign to do what you wanted. 0:14:38.440 --> 0:14:40.840 They did, and and it Uh. First of all, I 0:14:41.080 --> 0:14:44.480 gave them my promise, not for fifteen years, but uh, 0:14:45.320 --> 0:14:47.560 you know, for a certain long period of time that 0:14:47.680 --> 0:14:51.320 I'd stick around. At the time, I was only hive 0:14:51.480 --> 0:14:54.160 so and you were the brand. You were the most 0:14:54.200 --> 0:14:57.480 recognizable guy, right, So I gave them a promise. I 0:14:57.520 --> 0:15:00.640 remember earlier ten years before, a Japanese company had come 0:15:00.680 --> 0:15:03.080 by and they've been worried about what they called the 0:15:03.080 --> 0:15:05.120 black box. They didn't know what was in the box. 0:15:05.200 --> 0:15:07.080 And you know, if if Gross ever left, what was 0:15:07.160 --> 0:15:10.680 in the box? Um? And and so I told all 0:15:10.680 --> 0:15:13.120 the answer, Yeah, that was it was good to go 0:15:13.240 --> 0:15:17.040 and for a good number of years. Um, and I 0:15:17.760 --> 0:15:22.120 you know, I fulfilled that that promise for them and 0:15:22.120 --> 0:15:25.520 and for myself. You know, I still want to manage 0:15:25.560 --> 0:15:29.600 money and so um uh. You know, it wasn't strange. 0:15:29.640 --> 0:15:33.720 I wasn't motivated ever by money. It's nice to have money. 0:15:33.840 --> 0:15:36.920 It's nice to have a nice home or two, uh, 0:15:36.960 --> 0:15:40.880 and to have the privilege of not worrying about, you know, 0:15:41.000 --> 0:15:44.640 wearing next paychecks coming. But it was never money that motivated. 0:15:44.880 --> 0:15:51.720 It was always, um, it was always clients and the 0:15:51.760 --> 0:15:55.800 recognition from them that I was doing a good job. 0:15:56.280 --> 0:15:59.000 That's what I always always working for and still am 0:15:59.160 --> 0:16:03.640 so when so full disclosure for those of you who 0:16:03.640 --> 0:16:09.200 are listening. I had written a column last year about 0:16:09.320 --> 0:16:13.600 the bonus structure at PIMCO, which you responded to by saying, thanks, 0:16:13.720 --> 0:16:15.880 now I got to get a bodyguard for you revealing 0:16:15.920 --> 0:16:23.200 all that, But you challenged the track record of I 0:16:23.240 --> 0:16:26.200 had mentioned in the article that the two thousand and 0:16:26.240 --> 0:16:30.440 eleven total return never return, never recovered. You challenge that, 0:16:30.560 --> 0:16:33.640 and it turned out it did recover. The track record 0:16:33.800 --> 0:16:37.000 wasn't as people had said. But what struck me as 0:16:37.120 --> 0:16:40.920 quite fascinating was you directed me to look at the 0:16:40.960 --> 0:16:43.880 closed end funds you were managing, and the people at 0:16:43.960 --> 0:16:47.920 morning Star could not stop gushing. You know, they said, well, 0:16:48.000 --> 0:16:51.080 total Return has had a great track record. It's not 0:16:51.200 --> 0:16:53.840 in the top decile in the past couple of years, 0:16:53.880 --> 0:16:57.240 but these closed end funds were ranked one to three, 0:16:57.280 --> 0:17:00.760 four and six, five of the five of the top 0:17:00.840 --> 0:17:04.760 six in the entire peer group, they were ninety ninercentile. 0:17:05.880 --> 0:17:09.439 It raises a question, why not say, hey, you guys, 0:17:09.480 --> 0:17:12.600 take over total Return. It's too big for me. I'm 0:17:12.640 --> 0:17:15.760 happy to just run. Um, I'm happy to just run 0:17:15.760 --> 0:17:22.159 the closed end funds. Why not? UM? I guess you 0:17:22.160 --> 0:17:26.240 should have been my agent. Um that because by Barry 0:17:26.480 --> 0:17:29.639 the truth be told, and you're looking for some truth here. Um, 0:17:29.720 --> 0:17:33.200 that's exactly what I did say. UM. I said, if 0:17:33.520 --> 0:17:36.959 for some reason, you're dissatisfied with me from the standpoint 0:17:36.960 --> 0:17:41.280 of personality, here from the standpoint of business direction, if 0:17:41.320 --> 0:17:45.960 you think you want to pursue a different direction as 0:17:45.960 --> 0:17:49.639 opposed to you know what I called burgers and bonds, 0:17:49.680 --> 0:17:54.760 the plane vanilla total return type of product. Uh, then fine, Um, 0:17:54.800 --> 0:17:59.440 you know I'll I'll step down from the executive committee 0:17:59.480 --> 0:18:05.040 from a compensation committee and just manage the closed in funds. Uh. 0:18:05.359 --> 0:18:09.240 You know, I I love I love that area because 0:18:09.280 --> 0:18:12.800 it's an area where individuals can buy them, you know, 0:18:12.880 --> 0:18:16.320 for a ten dollar ticket with the Schwab or whoever 0:18:16.320 --> 0:18:19.760 their broker is. And uh. And you know, if they 0:18:19.800 --> 0:18:23.200 can find a good one like the ones you mentioned, Uh, 0:18:23.320 --> 0:18:26.200 you know, they can profit enormously in the bond work. 0:18:26.240 --> 0:18:28.600 And so I said, hey, I'd be willing to do that. 0:18:28.680 --> 0:18:34.280 But for some reason, still unbeknownst to me, they didn't 0:18:34.280 --> 0:18:36.880 think that was a good idea, and they they did 0:18:37.000 --> 0:18:40.479 fire me. Barry did Now, you technically quit before they 0:18:40.520 --> 0:18:42.720 fired you, but you knew it was coming. You said 0:18:42.760 --> 0:18:45.560 I'm getting out before they formally. Did you not have 0:18:45.600 --> 0:18:49.720 an inkling this was coming? That this blind side you well? 0:18:49.880 --> 0:18:52.359 And you know, I'd have to say in the last 0:18:53.119 --> 0:18:56.440 few weeks that it blindsided me. I had no idea 0:18:56.680 --> 0:19:02.000 that an executive committee could fire a founder and the 0:19:02.760 --> 0:19:07.480 titular leader of the of the company. UM. I found 0:19:07.480 --> 0:19:10.200 out about two months later. I was visiting a neighbor 0:19:10.280 --> 0:19:12.879 who was sick and he's eighty years old now and 0:19:12.920 --> 0:19:16.040 he's a retired Air Force general. But we had a 0:19:16.160 --> 0:19:19.520 nice discussion about his situation, and then I was as 0:19:19.560 --> 0:19:21.560 I was leaving, he said, well, he said, you should 0:19:21.560 --> 0:19:23.800 have come to see me six months ago. And I said, 0:19:23.840 --> 0:19:26.920 what was that, General? And he said, because I could 0:19:26.920 --> 0:19:29.120 have told you the first rule of the military. And 0:19:29.160 --> 0:19:34.200 I said, what's up? And he said, what's your back? Lieutenants. Yeah, 0:19:34.240 --> 0:19:36.320 a lot a lot of guys got fragged right back 0:19:36.400 --> 0:19:39.080 in the in the old days. Um so now you're 0:19:40.000 --> 0:19:43.639 now you're a janice. You're running an unconstrained fund. Obviously 0:19:44.880 --> 0:19:49.760 much different. Are you doing anything different? Not from an 0:19:49.800 --> 0:19:54.640 asset management perspective, but from a business perspective, from an 0:19:54.920 --> 0:19:59.120 interacting with colleagues perspective. What sort of mark did PIMCO 0:19:59.200 --> 0:20:02.520 leave on you? Are you changing anything or is it? Hey, 0:20:02.520 --> 0:20:04.600 it's a different world. It's a reboot and I'm going 0:20:04.680 --> 0:20:07.000 to do what I do best well at the end. 0:20:07.040 --> 0:20:09.840 Constraint is different. I was I was running unconstrained Pimpco. 0:20:09.920 --> 0:20:13.280 But unconstrained allows you to uh it to be long 0:20:13.320 --> 0:20:16.080 and to be short. I suppose it's not a hedge fund. 0:20:16.119 --> 0:20:19.800 It's not highly levered, but you know it does has 0:20:19.880 --> 0:20:24.600 flexibility and it it's not duration or maturity focused like 0:20:24.640 --> 0:20:29.040 the total return product. It is, as you've just pointed out, 0:20:29.160 --> 0:20:32.600 much smaller at two billion. It does allow a lot 0:20:32.640 --> 0:20:37.200 more flexibility. It does permit, uh, you know, the incorporation 0:20:37.240 --> 0:20:41.000 of an idea that can't really be traced by the 0:20:41.119 --> 0:20:44.479 street or or jumped in front of And so for 0:20:44.560 --> 0:20:47.920 all those reasons, it's it's it's it's a much more 0:20:48.080 --> 0:20:53.159 manageable situation. It is smaller. Um. You know, Janis has 0:20:53.200 --> 0:20:56.840 a large operation in Denver. I use their credit research 0:20:57.480 --> 0:20:59.040 uh team. As a matter of fact, I'm going to 0:20:59.119 --> 0:21:03.960 recommend one of their bond funds at at Barrens in 0:21:04.080 --> 0:21:07.280 just a few hours at the roundtable, five star funds. 0:21:07.280 --> 0:21:13.080 So they've got you know, excellent credit research that I utilize. UM. Yeah, 0:21:13.080 --> 0:21:17.920 they're not as advanced in terms of derivatives. Uh, and 0:21:18.160 --> 0:21:21.200 we'll bring that up to speed. We've we've got Myron 0:21:21.240 --> 0:21:24.840 Shoals by the way, uh and uh you know several 0:21:24.880 --> 0:21:27.840 other people that are really advanced in terms of uh 0:21:28.480 --> 0:21:32.600 obviously derivative thinking and exposure. And so you know, the 0:21:32.640 --> 0:21:37.200 attempt is not to rebuild PIMCO two. I don't want 0:21:37.200 --> 0:21:40.520 to have twenty one floors, uh, you know, right next 0:21:40.560 --> 0:21:43.520 to the PIMCO building, but but certainly to to build 0:21:43.520 --> 0:21:48.280 a structure that adds value for clients. And that that's 0:21:48.280 --> 0:21:50.520 the biggest concern very I got at the moment, is 0:21:50.560 --> 0:21:54.359 that with return so low and with with fees doing 0:21:54.400 --> 0:21:57.919 what they're doing not coming down very much, maybe in 0:21:57.960 --> 0:22:01.720 the hedge fund world to some extent it um you know, 0:22:01.840 --> 0:22:05.200 I I I worry about the plight of the investor 0:22:05.600 --> 0:22:08.000 and uh, you know, if they can only earn three 0:22:08.080 --> 0:22:11.760 or four percent annulate, um, I think they need a 0:22:11.800 --> 0:22:15.280 good deal. Uh maybe not Roosevelt's new deal, but they 0:22:15.280 --> 0:22:17.480 need a good deal and you know, I hope to 0:22:17.520 --> 0:22:21.440 bring that to them through Janis. So anything you've learned 0:22:21.480 --> 0:22:26.600 personally in terms of the business side, the interpersonal relations side, 0:22:26.680 --> 0:22:28.960 do you watch your back? You mentioned what do you 0:22:29.000 --> 0:22:34.200 take away from the the exit to to the new gig? Yeah, 0:22:34.200 --> 0:22:36.720 I think that although although no, I'm not going to 0:22:36.800 --> 0:22:39.679 be in a position. I told Dick Weyle, who who's 0:22:39.720 --> 0:22:43.280 the CEO at Janis that you know, he's running the business. 0:22:43.320 --> 0:22:45.320 I don't want to be part of those committees. I 0:22:45.359 --> 0:22:48.480 just want to manage money, um. And so that aspect 0:22:48.640 --> 0:22:51.480 is is out of the picture, and I'm not sure 0:22:51.520 --> 0:22:54.840 there's uh uh too many people have got to watch 0:22:54.880 --> 0:22:57.199 behind my back. I think Dick has my back in 0:22:57.280 --> 0:23:02.480 terms of a strong wind behind me and so um, 0:23:02.520 --> 0:23:05.399 you know a lot of confidence there. But you know, 0:23:05.600 --> 0:23:08.240 I think that was my big mistake at PIMCO, as 0:23:08.320 --> 0:23:16.000 I simply assumed that, uh that executives cannot be so 0:23:16.480 --> 0:23:20.480 uh stupid as to to do what they did. So 0:23:20.600 --> 0:23:22.639 let's in the last few minutes we have because I 0:23:22.640 --> 0:23:24.320 know you gotta get to barons. We have to get 0:23:24.359 --> 0:23:26.280 you out of here in ten minutes. Let me go 0:23:26.359 --> 0:23:29.520 to Twitter and fire some Well, this will be the 0:23:29.640 --> 0:23:32.639 rapid round part. I'll go to the favorite questions that 0:23:32.680 --> 0:23:36.399 had come up from Twitter. Here's one from George Caracas. 0:23:36.400 --> 0:23:39.480 What are two or three interests or activities unrelated to 0:23:39.600 --> 0:23:43.280 investing that have influenced your approach to investing. We obviously 0:23:43.320 --> 0:23:47.520 talked about about blackjack. What else? Well, I think stamps 0:23:47.560 --> 0:23:52.960 did um really yeah? And and bonds influence stamps but 0:23:52.240 --> 0:23:55.720 uh yeah. When I started collecting stamps, I took the 0:23:56.080 --> 0:24:02.480 the approach of each uh press a stamp, the value 0:24:02.520 --> 0:24:06.440 of ones having a provenance much like a money painting 0:24:07.240 --> 0:24:10.679 um or a picasso, and I tracked them in time 0:24:10.760 --> 0:24:13.199 for you know, the last century in terms of their 0:24:13.200 --> 0:24:16.359 sales prices and auction prices, much like uh, you know, 0:24:16.400 --> 0:24:18.439 going back in terms of the FED and looking at 0:24:18.520 --> 0:24:22.040 historic interest rates where they bottomed in World War Two, UH, 0:24:22.200 --> 0:24:25.800 caps and UH and monetary policy and all of that. 0:24:25.880 --> 0:24:29.160 And so I took a historic approach to two stamps 0:24:29.320 --> 0:24:32.720 and tracked the progress of prices up and down during 0:24:32.720 --> 0:24:37.679 recessions and recoveries, etcetera, etcetera, and uh, I think became 0:24:37.720 --> 0:24:41.159 a real good buyer of stamps at the right price. 0:24:41.760 --> 0:24:43.840 Problem with stamps is, how do you know what a 0:24:43.880 --> 0:24:45.960 little piece of papers worth? It's the same thing as 0:24:45.960 --> 0:24:48.359 that with a Picasso. How do you know what what 0:24:48.520 --> 0:24:55.760 a you know, a picture of you know, Picasso's blond 0:24:55.800 --> 0:24:59.040 haired girlfriend looks like, uh, what is it worth? Um? 0:24:59.359 --> 0:25:01.080