1 00:00:00,080 --> 00:00:06,040 Speaker 1: M This is Mesters in Business with very Renaults on 2 00:00:06,240 --> 00:00:10,920 Speaker 1: Bluebird Radio. This week on the podcast, we have an 3 00:00:10,920 --> 00:00:15,640 Speaker 1: extra special guest. I'm trying to to maintain low tones 4 00:00:15,760 --> 00:00:20,080 Speaker 1: and I'm trying to keep my insane enthusiasm down, but 5 00:00:20,760 --> 00:00:25,120 Speaker 1: holy cow, Bill Gross, the Bond King, spent three hours 6 00:00:25,160 --> 00:00:29,720 Speaker 1: talking with us literally about everything. Um, this is a 7 00:00:29,760 --> 00:00:34,559 Speaker 1: pretty amazing conversation. He does not hold anything back. He 8 00:00:34,720 --> 00:00:38,479 Speaker 1: names names, he calls people out. He I don't even 9 00:00:38,520 --> 00:00:40,600 Speaker 1: want to say he has scores to settle because he 10 00:00:40,640 --> 00:00:44,920 Speaker 1: did that in his book. Uh. He explains what made 11 00:00:44,960 --> 00:00:50,640 Speaker 1: PIMCO such a unique place, how they accumulated a trillion dollars, 12 00:00:51,159 --> 00:00:57,040 Speaker 1: essentially creating the concept of institutional bond trading before Pimco, 13 00:00:57,880 --> 00:01:01,680 Speaker 1: bond trading was by appointment only that this didn't exist before. Then, 14 00:01:02,080 --> 00:01:06,240 Speaker 1: we cover everything from card counting to inflation, to the FED, 15 00:01:06,840 --> 00:01:09,759 Speaker 1: to his book, to Marry Child's book The Bond King 16 00:01:10,160 --> 00:01:15,280 Speaker 1: about him. Really there were no comments left unturned, and 17 00:01:15,319 --> 00:01:19,880 Speaker 1: we also revealed what his thoughts were about when his 18 00:01:20,120 --> 00:01:25,880 Speaker 1: bonus was revealed by a certain podcast host about eight 19 00:01:25,920 --> 00:01:29,640 Speaker 1: years ago, and and how that came about his and 20 00:01:29,720 --> 00:01:37,000 Speaker 1: Muhammadalarian's multibillion dollar bonus pool, how that thing could even exist, 21 00:01:37,040 --> 00:01:40,280 Speaker 1: how Alliance allowed them to do it, and and how, 22 00:01:40,400 --> 00:01:44,880 Speaker 1: after almost being a parlor game of speculation, how those 23 00:01:44,920 --> 00:01:49,320 Speaker 1: billions of dollars in who got what bonus pool was 24 00:01:49,400 --> 00:01:56,240 Speaker 1: finally revealed. This was an absolutely fascinating conversation and an 25 00:01:56,320 --> 00:02:01,080 Speaker 1: extra special guest. So, with no further ado, iye conversation 26 00:02:01,720 --> 00:02:08,920 Speaker 1: with PIMCO co founder Bill Gross. This is Mesters in 27 00:02:09,000 --> 00:02:15,320 Speaker 1: Business with very renaults on Bluebird Radio. My extra special 28 00:02:15,360 --> 00:02:18,600 Speaker 1: guest this week is the bond King, Bill Gross, the 29 00:02:18,680 --> 00:02:23,120 Speaker 1: co founder of Pimco. At one time, Bill's total return 30 00:02:23,200 --> 00:02:27,040 Speaker 1: fund was nearly three hundred billion dollars. It was the 31 00:02:27,080 --> 00:02:32,040 Speaker 1: world's largest mutual funds. Gross controlled more bond money than 32 00:02:32,120 --> 00:02:35,160 Speaker 1: anybody else in the world. He advised the U. S. 33 00:02:35,240 --> 00:02:38,679 Speaker 1: Treasury on the role of sub progme mortgage bonds in 34 00:02:38,720 --> 00:02:42,200 Speaker 1: the O eight oh nine crisis. He was named morning 35 00:02:42,240 --> 00:02:47,200 Speaker 1: Stars Fund Manager of the Decade. They observed no other 36 00:02:47,280 --> 00:02:51,240 Speaker 1: fund manager made more money for more people than Bill Gross. 37 00:02:51,240 --> 00:02:55,480 Speaker 1: He is the author of several books, including Bill Gross 38 00:02:55,600 --> 00:03:00,560 Speaker 1: on Investing and most recently his book I'm Still Standing 39 00:03:01,120 --> 00:03:06,000 Speaker 1: Bill Gross and The Pimco Express. Bill Gross. Welcome back 40 00:03:06,560 --> 00:03:10,120 Speaker 1: to Masters in Business. Thank you, Barry. Actually I'm I'm 41 00:03:10,160 --> 00:03:13,600 Speaker 1: sitting talking to you, but I'm standing in life. So um, 42 00:03:13,639 --> 00:03:16,840 Speaker 1: that's why the title applies, I think. But it's good 43 00:03:16,880 --> 00:03:19,000 Speaker 1: to be here, it's good to have you back. And 44 00:03:19,120 --> 00:03:22,480 Speaker 1: in fact, um, I owe you a debt of gratitude 45 00:03:22,520 --> 00:03:26,880 Speaker 1: because when you came on the show, you know it's 46 00:03:26,880 --> 00:03:29,960 Speaker 1: got to be six seven years ago. You were really 47 00:03:30,040 --> 00:03:33,200 Speaker 1: the first big name that said, all right, let's let's 48 00:03:33,400 --> 00:03:37,200 Speaker 1: try this podcast thing out, and you open the floodgates. 49 00:03:37,280 --> 00:03:41,800 Speaker 1: So if I'm lacking in any objectivity, let me disclose 50 00:03:41,880 --> 00:03:45,960 Speaker 1: that right up front. But but let's talk about your career. 51 00:03:46,160 --> 00:03:50,240 Speaker 1: Starting with Pacific Life. You're you're a junior guy there, 52 00:03:50,880 --> 00:03:55,800 Speaker 1: literally going into the vault taking bond certificates and clipping 53 00:03:56,360 --> 00:03:58,760 Speaker 1: coupons off of that. How do you get from that 54 00:03:59,360 --> 00:04:04,480 Speaker 1: sort of junior intern menial labor to launching a standalone 55 00:04:04,720 --> 00:04:08,760 Speaker 1: active bond shop. We'll let me add to that quickly. 56 00:04:08,840 --> 00:04:12,880 Speaker 1: I could only clip coupons for half of the day, 57 00:04:12,920 --> 00:04:15,800 Speaker 1: I guess the other half I was off making private 58 00:04:15,800 --> 00:04:23,000 Speaker 1: placements loans to fledgling companies such as Berkshire, Hathaway and Walmart. 59 00:04:23,120 --> 00:04:26,480 Speaker 1: I visited Sam Walton with his two kids as his 60 00:04:26,640 --> 00:04:32,640 Speaker 1: dog I struck. They had two walmarts in uh Bentonville, Arkansas, 61 00:04:32,680 --> 00:04:35,960 Speaker 1: and same thing with Buffett and Charlie Munger. So I 62 00:04:36,480 --> 00:04:40,240 Speaker 1: was doing some of that UM, but just to make 63 00:04:40,240 --> 00:04:45,839 Speaker 1: the transition, I guess the managing money. I did a 64 00:04:45,880 --> 00:04:49,160 Speaker 1: master's thesis at u C. L A and I just graduated, 65 00:04:49,200 --> 00:04:53,960 Speaker 1: and it was about convertible bonds, but also about Warrens 66 00:04:54,120 --> 00:04:58,599 Speaker 1: and UM an option related vehicles. So I was interested 67 00:04:58,600 --> 00:05:00,520 Speaker 1: in the bondmarket even though I want to get into 68 00:05:00,520 --> 00:05:04,640 Speaker 1: stocks and UM specific mutual in downtown l A had 69 00:05:04,680 --> 00:05:09,360 Speaker 1: a billion dollars worth of buns and m A broker 70 00:05:09,600 --> 00:05:14,240 Speaker 1: from Weeden and Company, Howard Rakoff, decided to visit and 71 00:05:14,360 --> 00:05:18,040 Speaker 1: tell me that somebody else in town was trading some 72 00:05:18,120 --> 00:05:22,280 Speaker 1: bonds from boxes. And in those days, as you know UM, 73 00:05:22,600 --> 00:05:25,880 Speaker 1: there weren't any computers or IBM three sixties, but we 74 00:05:25,920 --> 00:05:30,440 Speaker 1: only had one UM. You couldn't really buy and sell 75 00:05:30,760 --> 00:05:33,480 Speaker 1: on the wire, and so it was very difficult to trade. 76 00:05:33,520 --> 00:05:39,120 Speaker 1: But I convinced him to let me use five million 77 00:05:39,240 --> 00:05:42,080 Speaker 1: of their bonds and set up an active trading account. 78 00:05:42,080 --> 00:05:46,520 Speaker 1: And that was the beginning of PIMCO, and before PIMCO. 79 00:05:46,920 --> 00:05:52,159 Speaker 1: I've heard bond trading described as by appointment only. Is 80 00:05:52,160 --> 00:05:56,120 Speaker 1: it fair to say you and your team invented fixed 81 00:05:56,120 --> 00:06:00,720 Speaker 1: income trading? Am I am I overstating that? Um probably 82 00:06:00,760 --> 00:06:03,119 Speaker 1: just a little. Uh. There was a gentleman I forget 83 00:06:03,120 --> 00:06:05,480 Speaker 1: his name and Occidental life Insurance in l A there 84 00:06:05,560 --> 00:06:09,600 Speaker 1: was doing some of that. There was a Jim guy 85 00:06:09,920 --> 00:06:13,920 Speaker 1: from Lehman who later died that was doing some of that. 86 00:06:14,000 --> 00:06:16,440 Speaker 1: But I was certainly one of the first who I 87 00:06:16,520 --> 00:06:23,440 Speaker 1: was certainly one that pursued it and convinced at least 88 00:06:23,440 --> 00:06:26,520 Speaker 1: the executives of specific mutual that this could be turned 89 00:06:26,520 --> 00:06:30,480 Speaker 1: into a business. So maybe I should say PIMCO helped 90 00:06:30,560 --> 00:06:36,880 Speaker 1: to bring about institutional trading on a level that just 91 00:06:36,960 --> 00:06:40,919 Speaker 1: didn't exist before. You guys helped systematize it. Is that 92 00:06:41,080 --> 00:06:44,520 Speaker 1: Is that more accurate? Yeah? I think that's true. But 93 00:06:45,120 --> 00:06:48,280 Speaker 1: because back then, uh, you know, stocks were the vehicle 94 00:06:48,839 --> 00:06:53,160 Speaker 1: to trade, and even uh then, they weren't traded that actively. 95 00:06:54,040 --> 00:07:00,880 Speaker 1: Hands were basically bought and ultimately matured. I guess the 96 00:07:00,920 --> 00:07:04,480 Speaker 1: big banks in the East and New York, in Boston 97 00:07:04,600 --> 00:07:09,000 Speaker 1: and Chicago, and so we have a bond trading was 98 00:07:09,000 --> 00:07:11,200 Speaker 1: was an active thought. No one thought that you could 99 00:07:12,280 --> 00:07:15,120 Speaker 1: sell one bond by another and make some money. Um. 100 00:07:15,440 --> 00:07:19,080 Speaker 1: And so it was innovative and I was glad to 101 00:07:19,120 --> 00:07:22,520 Speaker 1: be part of it. So in the book, you describe 102 00:07:22,760 --> 00:07:27,200 Speaker 1: how PIMCO grew in the nineteen eighties and nineteen nineties. Well, 103 00:07:27,240 --> 00:07:32,000 Speaker 1: we'll talk about the latter years later, but that period, um, 104 00:07:32,160 --> 00:07:36,000 Speaker 1: following everything that Chairman Paul Vulker had done with the 105 00:07:36,000 --> 00:07:40,440 Speaker 1: bond market, that really was a perfect storm to to 106 00:07:40,680 --> 00:07:44,480 Speaker 1: plow into the fixed income space. Tell us about the 107 00:07:44,560 --> 00:07:49,239 Speaker 1: growth of PIMCO in the nineteen eighties and nineteen nineties, okay, 108 00:07:49,480 --> 00:07:52,200 Speaker 1: And and so you're right, Uh, we started at a 109 00:07:52,200 --> 00:07:55,320 Speaker 1: great time, not in the seventies because the bear market 110 00:07:55,360 --> 00:08:01,600 Speaker 1: didn't really end until eighties three, depending on you know, 111 00:08:01,640 --> 00:08:07,080 Speaker 1: the maturities of bond. But um, you know it's it's 112 00:08:07,080 --> 00:08:10,040 Speaker 1: set up the premise for total return in bonds where 113 00:08:10,080 --> 00:08:13,200 Speaker 1: you could not only get a coupon, get an inters payment, 114 00:08:13,240 --> 00:08:16,800 Speaker 1: but get a capital gain. And when you're starting at 115 00:08:17,200 --> 00:08:21,720 Speaker 1: close to fifteen percent for a third year treasury, um, 116 00:08:21,800 --> 00:08:26,400 Speaker 1: you know, it was it was fairly easy ultimately to 117 00:08:27,040 --> 00:08:30,600 Speaker 1: get a capital gain, and so that helped us. We 118 00:08:30,600 --> 00:08:35,719 Speaker 1: were also helped by legislation from the Congress. Um A 119 00:08:35,840 --> 00:08:42,679 Speaker 1: built that legislated RISKA, which basically mandated that mentioned managers 120 00:08:43,520 --> 00:08:49,840 Speaker 1: had to diversify UM and not just diversified between UM, 121 00:08:50,160 --> 00:08:53,040 Speaker 1: you know, the obvious, but also diversified between east coast 122 00:08:53,120 --> 00:08:56,319 Speaker 1: and west coast. And so this little company called a 123 00:08:56,440 --> 00:08:59,800 Speaker 1: T and T, the biggest in the world, came according 124 00:09:00,640 --> 00:09:04,280 Speaker 1: UM Lady in the seventies and like what they saw, 125 00:09:04,280 --> 00:09:07,240 Speaker 1: and they heard pim go, and that really was the 126 00:09:08,040 --> 00:09:10,839 Speaker 1: beginning of it all. I mean, who who wouldn't open 127 00:09:10,880 --> 00:09:14,000 Speaker 1: the door to a person or to a company that 128 00:09:14,040 --> 00:09:16,440 Speaker 1: had just been hired by A T and T. But 129 00:09:16,600 --> 00:09:19,800 Speaker 1: this is more than just lucky timing for a couple 130 00:09:19,800 --> 00:09:22,560 Speaker 1: of reasons that I want to go into. We'll talk 131 00:09:22,600 --> 00:09:25,840 Speaker 1: a little later about some of the technical aspects that 132 00:09:26,000 --> 00:09:30,600 Speaker 1: pim go really figured out to generate fixed income out alpha. Well, 133 00:09:30,640 --> 00:09:33,280 Speaker 1: we'll circle back to that. I want to talk a 134 00:09:33,320 --> 00:09:38,359 Speaker 1: little bit about your investment outlooks. These were highly regarded. 135 00:09:38,679 --> 00:09:42,040 Speaker 1: People thought they were both insightful and well written. And 136 00:09:42,080 --> 00:09:44,839 Speaker 1: this is at a time when you know, we kind 137 00:09:44,840 --> 00:09:48,640 Speaker 1: of take it for granted today that so many people 138 00:09:48,720 --> 00:09:53,520 Speaker 1: write about financial investing and strategies. When you started doing 139 00:09:53,559 --> 00:09:57,680 Speaker 1: the investment outlooks each month. That was somewhat unusual, wasn't 140 00:09:57,720 --> 00:10:01,640 Speaker 1: it tell us about that? Yeah, it was unusual. And 141 00:10:01,679 --> 00:10:04,080 Speaker 1: I thought about it from a business context, and I said, 142 00:10:04,520 --> 00:10:08,440 Speaker 1: you know, if I want to be successful at Pinco, 143 00:10:08,520 --> 00:10:11,440 Speaker 1: if we want to grow as a company, you've gotta 144 00:10:11,480 --> 00:10:13,839 Speaker 1: say hello. And the best way to say hello is 145 00:10:13,920 --> 00:10:17,400 Speaker 1: to write these investment outlooks. I mean, I mean, there 146 00:10:17,400 --> 00:10:20,719 Speaker 1: were a few. Um, there was a famous guy, you know, 147 00:10:21,240 --> 00:10:25,800 Speaker 1: Barton Biggs from Morgan Stanley. There was a real good writer, 148 00:10:25,920 --> 00:10:28,800 Speaker 1: and I don't think Jim Grant had started yet, but 149 00:10:28,840 --> 00:10:31,280 Speaker 1: he was a excellent writer in the time. So I 150 00:10:31,320 --> 00:10:33,920 Speaker 1: wasn't the only one. But I I thought that if 151 00:10:33,920 --> 00:10:38,480 Speaker 1: I can inject some personal uh then yettes into my 152 00:10:38,920 --> 00:10:41,880 Speaker 1: uh forecast for the bond market, the people would read 153 00:10:41,920 --> 00:10:45,120 Speaker 1: it because they didn't really read these things that came 154 00:10:45,120 --> 00:10:49,000 Speaker 1: out of First Boston and Solomon Brothers and so on, 155 00:10:49,080 --> 00:10:53,800 Speaker 1: and so I, uh, I decided to take a little risk. Um. 156 00:10:53,840 --> 00:10:56,839 Speaker 1: You know. One of the things that I wrote at 157 00:10:56,840 --> 00:11:00,199 Speaker 1: the beginning of my book a quote It said, the 158 00:11:00,520 --> 00:11:05,760 Speaker 1: talent is helpful in writing, but guts are absolutely necessary. 159 00:11:05,920 --> 00:11:09,400 Speaker 1: And so I decided to have a few guts and 160 00:11:09,559 --> 00:11:13,160 Speaker 1: opened myself up to people and something like that, and 161 00:11:13,360 --> 00:11:17,640 Speaker 1: some didn't, but you know, the reputation grew well. I 162 00:11:17,840 --> 00:11:20,320 Speaker 1: want to point out first you were you the o 163 00:11:20,480 --> 00:11:24,320 Speaker 1: G the original gangster when it came to financial writing, 164 00:11:24,440 --> 00:11:29,880 Speaker 1: because of course there were lots of professional writers and 165 00:11:30,000 --> 00:11:34,680 Speaker 1: journalists writing about it, but as far as I recall, 166 00:11:35,640 --> 00:11:39,439 Speaker 1: you might be one of the earliest people who were 167 00:11:39,559 --> 00:11:44,880 Speaker 1: managing money. To describe what you were doing, I want 168 00:11:44,880 --> 00:11:47,440 Speaker 1: to say it was Howard Marks and you pretty much 169 00:11:47,480 --> 00:11:50,959 Speaker 1: you were the guys that were putting out regular commentary. 170 00:11:51,320 --> 00:11:55,680 Speaker 1: Before you know, anybody could could go online and find 171 00:11:56,320 --> 00:11:59,720 Speaker 1: letters from Warren Buffett or or things that Ray Dalio wrote, 172 00:11:59,840 --> 00:12:04,280 Speaker 1: or any one of thousands of other professional money managers. 173 00:12:04,280 --> 00:12:06,720 Speaker 1: When you began. I don't think there were many other 174 00:12:06,760 --> 00:12:10,920 Speaker 1: money managers putting out written commentary the way you guys were. You. 175 00:12:11,160 --> 00:12:14,360 Speaker 1: Buffett and Marx are kind of the three that that 176 00:12:14,400 --> 00:12:19,480 Speaker 1: blazed this trial. I think so. And you know, one 177 00:12:19,480 --> 00:12:24,160 Speaker 1: of my positive attributes is that I I wasn't afraid 178 00:12:24,200 --> 00:12:29,400 Speaker 1: to take risk and to take chances and so um. 179 00:12:29,440 --> 00:12:32,600 Speaker 1: You know, there were those that PIMCO and Marketing and 180 00:12:32,600 --> 00:12:34,960 Speaker 1: so on that would suggest that you can't do that 181 00:12:35,080 --> 00:12:38,400 Speaker 1: because people would just jump on your ideas in front run. 182 00:12:38,480 --> 00:12:41,760 Speaker 1: But you know, I'm I'm tearing with in a lot 183 00:12:41,800 --> 00:12:43,959 Speaker 1: of things. But it wasn't paring Wood, not in terms 184 00:12:43,960 --> 00:12:50,200 Speaker 1: of um thinking that no one really cared and so 185 00:12:50,200 --> 00:12:53,240 Speaker 1: so why not why not tell people what I thought? 186 00:12:53,360 --> 00:12:57,240 Speaker 1: And uh, I think it worked. So it's no doubt 187 00:12:57,240 --> 00:12:59,400 Speaker 1: it worked because the firm did well in the eighties 188 00:12:59,440 --> 00:13:02,640 Speaker 1: and nineties. Is at what point did you come to 189 00:13:02,760 --> 00:13:06,280 Speaker 1: the realization, Hey, this is kind of a one of 190 00:13:06,320 --> 00:13:09,360 Speaker 1: a kind company and it's going to be special. Did 191 00:13:09,400 --> 00:13:12,000 Speaker 1: you ever imagine you would have a trillion dollars in 192 00:13:12,080 --> 00:13:17,000 Speaker 1: assets under management? Well, of course not, UM at some 193 00:13:17,080 --> 00:13:24,400 Speaker 1: point I did when we were but um no, My 194 00:13:24,400 --> 00:13:30,160 Speaker 1: my objective was was to grow the company two Um 195 00:13:31,280 --> 00:13:35,000 Speaker 1: you know, have a fiduciary responsibility to clients in terms 196 00:13:35,000 --> 00:13:40,240 Speaker 1: of products and not not charging them too much or 197 00:13:40,280 --> 00:13:43,840 Speaker 1: inventing products that ripped them off. Um. But I also 198 00:13:43,960 --> 00:13:47,400 Speaker 1: want to uh or wanted to be famous. I mean 199 00:13:47,440 --> 00:13:52,280 Speaker 1: that's that's in my book and in the other Child's 200 00:13:52,280 --> 00:13:57,120 Speaker 1: book as well. And um, you know, growing into a 201 00:13:57,120 --> 00:14:02,400 Speaker 1: trillion and ultimately into two trillion is uh was very 202 00:14:02,440 --> 00:14:08,959 Speaker 1: productive in terms of being famous, and I guess ultimately infamous. So, 203 00:14:09,040 --> 00:14:12,319 Speaker 1: now that you look back, which is more important in hindsight, 204 00:14:12,760 --> 00:14:18,400 Speaker 1: money power of fame? Well, I never enjoyed my power, 205 00:14:18,600 --> 00:14:22,040 Speaker 1: and I've enjoyed some of the money, but after a 206 00:14:22,040 --> 00:14:27,000 Speaker 1: certain point, it's not that productive unless you give it away. 207 00:14:27,160 --> 00:14:31,280 Speaker 1: And so I think, ultimately, if those are the three choices, 208 00:14:31,320 --> 00:14:35,600 Speaker 1: and I did offer those to potential recruits, who, by 209 00:14:35,640 --> 00:14:38,760 Speaker 1: the way, would never answer the questions because they were 210 00:14:38,760 --> 00:14:42,360 Speaker 1: afraid that any of the answers would be view negatively. 211 00:14:42,480 --> 00:14:48,080 Speaker 1: And I'm certain you know I would choose fame again, 212 00:14:48,160 --> 00:14:52,240 Speaker 1: and I, um, I was. I was cognizant at the 213 00:14:52,320 --> 00:14:57,760 Speaker 1: time that fame can turn into infamy, that you could 214 00:14:57,800 --> 00:15:02,720 Speaker 1: fly too close to the sun, etcetera, etcetera, from objective standpoints. 215 00:15:02,760 --> 00:15:05,120 Speaker 1: But I must say I didn't think it could happen 216 00:15:05,160 --> 00:15:07,880 Speaker 1: to me because I was always on the up and up, 217 00:15:07,920 --> 00:15:11,640 Speaker 1: always on us, always open and and why would anybody? Uh? 218 00:15:12,360 --> 00:15:18,600 Speaker 1: And I think, ultimately, um, that was hige opening to me. 219 00:15:19,400 --> 00:15:25,320 Speaker 1: But I do it again. Really interesting. Let's talk a 220 00:15:25,360 --> 00:15:31,280 Speaker 1: little bit about the way PIMCO grew and generated profits 221 00:15:31,320 --> 00:15:36,440 Speaker 1: for clients. You describe a lot of very technical aspects 222 00:15:36,480 --> 00:15:42,440 Speaker 1: to bond management and trading, which all contributed to fixed 223 00:15:42,480 --> 00:15:45,800 Speaker 1: income alpha, which I think a lot of people reading 224 00:15:45,840 --> 00:15:50,200 Speaker 1: your latest book might not have realized all the ways 225 00:15:50,280 --> 00:15:55,880 Speaker 1: that you guys generated out performance. The question I asked is, 226 00:15:56,240 --> 00:15:58,840 Speaker 1: how is it possible with all this money laying around? 227 00:15:59,640 --> 00:16:02,760 Speaker 1: Nobody he thought of this before? Why didn't anybody else 228 00:16:02,800 --> 00:16:09,560 Speaker 1: try and systematize total return of fixed income portfolios? Well, 229 00:16:09,600 --> 00:16:12,520 Speaker 1: I think, Barry, I mean, a lot of bond managers 230 00:16:12,560 --> 00:16:16,440 Speaker 1: were and probably still are very conservative. That's their job 231 00:16:16,520 --> 00:16:21,080 Speaker 1: to protect principle, and therefore on the sales side, on 232 00:16:21,160 --> 00:16:24,880 Speaker 1: the wall street side, they were facing the clientele that 233 00:16:26,200 --> 00:16:31,000 Speaker 1: didn't really want to accept any of their suggestions whatever 234 00:16:31,040 --> 00:16:34,400 Speaker 1: they were. Um, yeah, it was just the other way 235 00:16:34,520 --> 00:16:38,200 Speaker 1: for me and for PIMCO. And you know, we were 236 00:16:38,520 --> 00:16:41,960 Speaker 1: very innovative from the standpoint of new products. We were 237 00:16:42,200 --> 00:16:46,680 Speaker 1: one of the first to buy financial futures. Uh. We 238 00:16:46,680 --> 00:16:50,480 Speaker 1: were one of the first to to buy mortgages. A 239 00:16:50,560 --> 00:16:54,240 Speaker 1: fan amame mortgage. I mean, most most bond managers didn't 240 00:16:54,240 --> 00:16:56,920 Speaker 1: want to go through the problem of segregating principle and 241 00:16:57,040 --> 00:17:00,720 Speaker 1: interest in determining performance. That took along time and a 242 00:17:00,880 --> 00:17:03,960 Speaker 1: separate staff, and so we did that and then of 243 00:17:04,000 --> 00:17:09,679 Speaker 1: course into later into global and UM tips and so on. 244 00:17:09,760 --> 00:17:14,639 Speaker 1: So the innovation was key. I think to Alpha generation, 245 00:17:15,400 --> 00:17:20,679 Speaker 1: the biggest key was the thrust of what we called 246 00:17:20,880 --> 00:17:27,160 Speaker 1: secular forecasting, secular outlooks. And I read a book early on, 247 00:17:28,640 --> 00:17:33,560 Speaker 1: just after a joint temco UM called Investing for the 248 00:17:33,640 --> 00:17:36,520 Speaker 1: Long Term. I forget who wrote it, but you know it. 249 00:17:36,640 --> 00:17:41,280 Speaker 1: It focused me on the dangers of trading for the 250 00:17:41,320 --> 00:17:45,200 Speaker 1: short term because fear and greed on the other side 251 00:17:45,720 --> 00:17:48,119 Speaker 1: get involved and you tend to make the decisions. And 252 00:17:48,160 --> 00:17:51,200 Speaker 1: so we approached it from the standpoint of three to 253 00:17:51,320 --> 00:17:54,359 Speaker 1: five years in terms of an outlook. We brought in 254 00:17:54,480 --> 00:17:58,399 Speaker 1: speakers that spoke to that, many of them you know, 255 00:17:58,440 --> 00:18:02,960 Speaker 1: feed officials or extra shoals, um, et cetera. And so 256 00:18:03,119 --> 00:18:06,199 Speaker 1: I think that really helped us to avoid you know, 257 00:18:06,280 --> 00:18:10,280 Speaker 1: the bad the bad months of the bad quarter by 258 00:18:10,320 --> 00:18:14,200 Speaker 1: looking at three to five years. So those were several 259 00:18:14,240 --> 00:18:16,679 Speaker 1: of the keys. And when you say investing for the 260 00:18:16,760 --> 00:18:20,800 Speaker 1: long run, you're not talking about Jeremy Seagull's stocks for 261 00:18:20,920 --> 00:18:25,440 Speaker 1: the long run. You're talking about something more specific. Yeah, 262 00:18:25,880 --> 00:18:30,520 Speaker 1: And it basically it involved forecasting interst rates, UM and 263 00:18:30,520 --> 00:18:33,359 Speaker 1: and to be fair, UM you know throughout the period 264 00:18:33,400 --> 00:18:37,000 Speaker 1: of time that the secular outlook for interest rates was down, down, down, 265 00:18:37,080 --> 00:18:42,240 Speaker 1: and um, you know during our annual secular forms that 266 00:18:42,320 --> 00:18:46,200 Speaker 1: we had where we brought in outside speakers and basically 267 00:18:46,240 --> 00:18:49,480 Speaker 1: set the tone for the next to all months. Um, 268 00:18:50,840 --> 00:18:53,919 Speaker 1: you know, for the most part, it was a bullish forecast, 269 00:18:54,000 --> 00:18:57,800 Speaker 1: which turned out to be true. If we uh had 270 00:18:57,840 --> 00:19:00,720 Speaker 1: a forecast that went the other way for the long 271 00:19:00,840 --> 00:19:04,320 Speaker 1: term for the next three to five years, and obviously 272 00:19:04,359 --> 00:19:08,240 Speaker 1: the company would have disappeared. But by focusing on that 273 00:19:08,440 --> 00:19:11,920 Speaker 1: forgetting about the day or the week of the months, 274 00:19:12,560 --> 00:19:16,119 Speaker 1: I think it became very successful in terms of positioning 275 00:19:16,119 --> 00:19:22,880 Speaker 1: a portfolio duration wise and volatility wise and credit wise. Huh. 276 00:19:23,040 --> 00:19:27,520 Speaker 1: Really intriguing. So so let's talk a little bit about 277 00:19:28,000 --> 00:19:30,840 Speaker 1: you know, you as a investor and trader. I'm I'm 278 00:19:30,920 --> 00:19:35,119 Speaker 1: kind of entranced by the way I've heard the Pimcote 279 00:19:35,600 --> 00:19:40,080 Speaker 1: trading floor described. Your desk was a horseshoe and the 280 00:19:40,119 --> 00:19:43,600 Speaker 1: traders and analysts were arranged in a really specific manner. 281 00:19:43,920 --> 00:19:48,280 Speaker 1: Tell us a little bit about about the thinking they're Well, 282 00:19:48,600 --> 00:19:50,920 Speaker 1: I thought it was pretty simple and I don't really 283 00:19:51,520 --> 00:19:56,760 Speaker 1: remember the horseshoe. Um, but you know, I was positioned 284 00:19:56,800 --> 00:20:00,640 Speaker 1: in the middle certainly, and the trade years of which 285 00:20:00,680 --> 00:20:07,280 Speaker 1: they eventually grew that were you know, basically positioned in pods. 286 00:20:07,359 --> 00:20:14,240 Speaker 1: The mortgage people, how yelped people, global people, m etcetera. 287 00:20:14,520 --> 00:20:19,000 Speaker 1: And uh, you know, they would work together and almost 288 00:20:19,040 --> 00:20:25,320 Speaker 1: independently day to day. But I would check and others 289 00:20:25,440 --> 00:20:27,680 Speaker 1: would check in terms of what they were doing, make 290 00:20:27,760 --> 00:20:32,080 Speaker 1: suggestions and so on it as we walked around the floor. So, um, 291 00:20:33,119 --> 00:20:34,560 Speaker 1: it made a lot of sense. It was a big 292 00:20:34,600 --> 00:20:37,800 Speaker 1: trading room with I don't know how many square feet, 293 00:20:37,880 --> 00:20:42,680 Speaker 1: but I think functionally it really worked for so who 294 00:20:42,680 --> 00:20:45,119 Speaker 1: got to sit close to you and who sat further away? 295 00:20:45,240 --> 00:20:49,119 Speaker 1: Was that a function of how accurate, how active those 296 00:20:49,160 --> 00:20:52,840 Speaker 1: markets were, or was it, you know, just a seniority 297 00:20:52,880 --> 00:20:57,239 Speaker 1: basis you know, well it was both. Um. You know, 298 00:20:57,480 --> 00:21:01,600 Speaker 1: I remember that Scott Simon uh sat to the left 299 00:21:01,640 --> 00:21:06,360 Speaker 1: of me and and build powers, and I don't think 300 00:21:06,440 --> 00:21:08,800 Speaker 1: christ Allen has ever sat next to me. He was 301 00:21:09,000 --> 00:21:12,240 Speaker 1: he was content to be on the wing, so to speak, 302 00:21:12,280 --> 00:21:15,639 Speaker 1: and do his own thing. But but usually it would 303 00:21:16,400 --> 00:21:19,679 Speaker 1: be determined as well by who would who would be 304 00:21:19,800 --> 00:21:24,480 Speaker 1: quiet as supposed allowed. Um, you know, I liked quiet 305 00:21:24,920 --> 00:21:27,720 Speaker 1: to be able to think myself and somebody would allowed 306 00:21:27,800 --> 00:21:31,800 Speaker 1: voice talking to brokers or calling up their spouse. Uh, 307 00:21:32,240 --> 00:21:34,440 Speaker 1: you know, it just wasn't working for me in terms 308 00:21:34,480 --> 00:21:38,400 Speaker 1: of trading to so um. You know, it's the quiet 309 00:21:38,680 --> 00:21:42,040 Speaker 1: and function and seniority all sort of fit in and 310 00:21:42,119 --> 00:21:46,679 Speaker 1: I I didn't pick, somebody else picked, and I just 311 00:21:46,680 --> 00:21:49,359 Speaker 1: went along with it until the noise got too loud, 312 00:21:49,400 --> 00:21:52,000 Speaker 1: and then they were out and somebody else was in. 313 00:21:53,480 --> 00:21:56,399 Speaker 1: So So you mentioned the number of your colleagues in 314 00:21:56,480 --> 00:21:58,480 Speaker 1: the book, which we'll talk about in a little bit. 315 00:21:58,960 --> 00:22:02,480 Speaker 1: You're very general risk in giving lots of credit to 316 00:22:02,640 --> 00:22:06,480 Speaker 1: your colleagues for being major drivers of of the firm's success. 317 00:22:07,040 --> 00:22:10,320 Speaker 1: Tell us about some of these colleagues and how they contributed, 318 00:22:11,000 --> 00:22:14,679 Speaker 1: uh to Pimco's growth. Well, they were, you know, we 319 00:22:14,760 --> 00:22:19,400 Speaker 1: hired some really smart pupil and really aggressive people, um, 320 00:22:19,440 --> 00:22:23,120 Speaker 1: obsessive people that really loved to do what they're doing. 321 00:22:24,240 --> 00:22:28,080 Speaker 1: Chris Dialis was one of the first. He was my 322 00:22:28,600 --> 00:22:32,560 Speaker 1: co portfolio manager, so to speak, from the early eighties. 323 00:22:32,600 --> 00:22:34,880 Speaker 1: He wanted to be a baseball player for the Angels, 324 00:22:34,920 --> 00:22:40,080 Speaker 1: but decided to take our dollar offer and he came 325 00:22:40,200 --> 00:22:44,320 Speaker 1: and he had gone to the university of Chicago and 326 00:22:45,960 --> 00:22:48,840 Speaker 1: you know, studied there about options and so on, and 327 00:22:50,040 --> 00:22:57,879 Speaker 1: ultimately became instrumental in terms of bringing financial futures to 328 00:22:57,880 --> 00:23:02,679 Speaker 1: to the portfolios and suggesting some very creative ideas in 329 00:23:02,800 --> 00:23:07,080 Speaker 1: terms of Jenny May futures, which you know, some say 330 00:23:07,160 --> 00:23:10,679 Speaker 1: we broke the market. But he was one. And then 331 00:23:10,720 --> 00:23:16,800 Speaker 1: there was another gentleman, Chang Hong Zoo um that came 332 00:23:16,840 --> 00:23:20,919 Speaker 1: to us from Wells Fargo in San Francisco. He ultimately 333 00:23:21,000 --> 00:23:23,679 Speaker 1: left after ten years to go back to China with 334 00:23:23,760 --> 00:23:27,400 Speaker 1: his family and head up you know, a key position 335 00:23:27,440 --> 00:23:33,920 Speaker 1: in the Chinese Central Bank. I think, Um, but he um, 336 00:23:34,000 --> 00:23:37,480 Speaker 1: you would make lots of suggestions and investment committee in 337 00:23:37,560 --> 00:23:43,680 Speaker 1: terms of convexity and yield curve strategies, Euro dollar futures, etcetera. Um. 338 00:23:43,720 --> 00:23:46,560 Speaker 1: He was perhaps the smartest guy on the floor, including me, 339 00:23:46,680 --> 00:23:49,879 Speaker 1: and you know so I think a lot of his 340 00:23:49,920 --> 00:23:54,800 Speaker 1: strategies are due to his suggestions. Um. You know, there 341 00:23:54,840 --> 00:23:57,720 Speaker 1: was a high yield gentleman, Ben Trotsky who was really 342 00:23:57,720 --> 00:24:01,120 Speaker 1: a master of that. All of our mortgage people, uh, 343 00:24:01,440 --> 00:24:05,159 Speaker 1: Bill Powers and John Higg and Scott Simon that I 344 00:24:05,240 --> 00:24:09,160 Speaker 1: mentioned were really smart and their performance and mortgages through 345 00:24:09,200 --> 00:24:12,399 Speaker 1: the years in terms of their own portfolios just float 346 00:24:12,440 --> 00:24:16,359 Speaker 1: over into the total return funds. So all of these 347 00:24:16,800 --> 00:24:20,159 Speaker 1: people and there are a lot other ones. Um, you know, 348 00:24:20,520 --> 00:24:23,840 Speaker 1: we were a team. And you know, the term bond 349 00:24:23,920 --> 00:24:30,200 Speaker 1: king was I guess that's more of a pr acceptance 350 00:24:30,280 --> 00:24:32,960 Speaker 1: than anything else. I don't think there was a king. 351 00:24:33,040 --> 00:24:36,000 Speaker 1: I was a leader, um, and certainly a leader of 352 00:24:36,000 --> 00:24:40,560 Speaker 1: the investment committee, and in terms of accepting a standard 353 00:24:40,600 --> 00:24:45,639 Speaker 1: portfolio for those to manage. But lots of smart people, 354 00:24:45,800 --> 00:24:49,880 Speaker 1: and um, I think it theired acknowledgement in my book, 355 00:24:50,359 --> 00:24:55,320 Speaker 1: So lots of these colleagues eventually became successful, they became 356 00:24:55,440 --> 00:24:58,720 Speaker 1: very wealthy, and they, you know, hit the eject button 357 00:24:58,760 --> 00:25:03,000 Speaker 1: and retired. You stuck around for forty three years. That's 358 00:25:03,040 --> 00:25:06,720 Speaker 1: a long time. What led to that longevity that's pretty 359 00:25:06,800 --> 00:25:11,720 Speaker 1: unusual these days. I think it was because I loved it. Uh. 360 00:25:12,240 --> 00:25:18,600 Speaker 1: And you know, the the standard, the standard idea that 361 00:25:18,680 --> 00:25:21,880 Speaker 1: you should do what you love is fine. It can't 362 00:25:21,920 --> 00:25:25,719 Speaker 1: really apply to the billions of people. Uh. You know 363 00:25:25,760 --> 00:25:29,920 Speaker 1: throughout the world. They all can't find jobs that they love. 364 00:25:30,000 --> 00:25:33,360 Speaker 1: They can't all paint, they can't all write music. But 365 00:25:34,080 --> 00:25:36,919 Speaker 1: this was an area that I loved in terms of 366 00:25:37,680 --> 00:25:42,160 Speaker 1: buying and selling and competing and making money and becoming famous, 367 00:25:42,200 --> 00:25:46,119 Speaker 1: of course. And so I think I stuck around for 368 00:25:46,240 --> 00:25:49,000 Speaker 1: that long until I was seventy two at PEMCO or 369 00:25:49,040 --> 00:25:54,080 Speaker 1: seventy one, simply because I loved coming in. Um. It 370 00:25:54,240 --> 00:25:58,960 Speaker 1: just it made my week. Um And you know, PEMCO, 371 00:25:59,040 --> 00:26:01,800 Speaker 1: we would have them in from committee until from twelve 372 00:26:01,880 --> 00:26:05,720 Speaker 1: to three every day, but after three, and certainly in 373 00:26:05,720 --> 00:26:08,199 Speaker 1: the summertime, I could just go across the street and 374 00:26:08,240 --> 00:26:10,720 Speaker 1: hit some balls and to play golf too. So I 375 00:26:10,880 --> 00:26:15,920 Speaker 1: wasn't a one way uh horse writer. I guess I 376 00:26:16,280 --> 00:26:19,680 Speaker 1: could do a lot of things, but managing money and 377 00:26:19,760 --> 00:26:25,080 Speaker 1: investing and talking about it, writing about it was something 378 00:26:25,160 --> 00:26:28,840 Speaker 1: I truly enjoy. So let's talk a little bit about 379 00:26:29,520 --> 00:26:33,879 Speaker 1: the two thousands. You guys, really, because of what you 380 00:26:33,880 --> 00:26:38,040 Speaker 1: were positioned, got a very early warning look at what 381 00:26:38,119 --> 00:26:40,600 Speaker 1: was going on in the bond market and the housing market. 382 00:26:41,280 --> 00:26:46,520 Speaker 1: You were pretty well positioned before, during, and after the 383 00:26:46,560 --> 00:26:49,840 Speaker 1: financial crisis of O eight oh nine. How did you 384 00:26:49,920 --> 00:26:55,199 Speaker 1: manage to to accomplish that well? I give most of 385 00:26:55,240 --> 00:26:58,520 Speaker 1: the credit in this case to Paul McCulley, and Paul 386 00:26:58,560 --> 00:27:01,080 Speaker 1: still around. He's on TV, he's got that long hair 387 00:27:01,119 --> 00:27:06,320 Speaker 1: in that southern drawl. Um, but at least the yes. 388 00:27:07,520 --> 00:27:12,359 Speaker 1: But he was an economist at heart, and he was 389 00:27:12,400 --> 00:27:15,160 Speaker 1: a permanent member of the Investment Committee, and he would 390 00:27:16,320 --> 00:27:22,000 Speaker 1: speak about Himan Minsky and his theory about stability turning 391 00:27:22,040 --> 00:27:26,439 Speaker 1: into instability. And then as the housing market roared and peaked, 392 00:27:27,000 --> 00:27:33,000 Speaker 1: we became sensitive to um the potential for instability. I 393 00:27:33,040 --> 00:27:36,800 Speaker 1: had a brother in law who was a mortgage banker 394 00:27:36,960 --> 00:27:40,040 Speaker 1: on a small scale, and we would have dinner sometimes 395 00:27:40,040 --> 00:27:43,000 Speaker 1: he would tell me about no docks and flyer loans 396 00:27:43,040 --> 00:27:47,439 Speaker 1: and so on, before anyone at the FED knew anything 397 00:27:47,480 --> 00:27:51,439 Speaker 1: about that. And so I decided to take ten of 398 00:27:51,480 --> 00:27:54,960 Speaker 1: our credit analyst and send them out throughout the country 399 00:27:54,960 --> 00:27:57,240 Speaker 1: and pretend that they were buying houses and to see 400 00:27:57,280 --> 00:28:02,240 Speaker 1: what was going on. UH. They came to h and said, Hey, 401 00:28:02,280 --> 00:28:07,480 Speaker 1: this this stuff is danger these subprime mortgages, etcetera, etcetera. 402 00:28:07,480 --> 00:28:11,199 Speaker 1: And so we were wise to this. Early on. We 403 00:28:11,240 --> 00:28:17,640 Speaker 1: avoided portfolios of subprime mortgages and UH yields in general, 404 00:28:17,760 --> 00:28:22,760 Speaker 1: anticipating crisis at some point. So I I think our 405 00:28:22,800 --> 00:28:27,240 Speaker 1: Investment Committee, and again Paul McCully was the leader in 406 00:28:27,320 --> 00:28:32,720 Speaker 1: this regard, really helped in terms of anticipating what might 407 00:28:32,800 --> 00:28:36,600 Speaker 1: happen at some point that did happen. Huh, to say 408 00:28:36,600 --> 00:28:39,800 Speaker 1: the least full disclosure. I know McAuley really well. We've 409 00:28:39,800 --> 00:28:41,960 Speaker 1: gone fishing together in Maine. I've had him on the 410 00:28:42,000 --> 00:28:46,240 Speaker 1: show before, and full credit to him for giving Minsky's 411 00:28:46,280 --> 00:28:51,080 Speaker 1: work a wider modern um audience. So, given that you 412 00:28:51,120 --> 00:28:55,640 Speaker 1: were positioned so well during the financial crisis, how did 413 00:28:55,680 --> 00:28:59,320 Speaker 1: the relationship with the U. S. Treasury developed? Tell us 414 00:28:59,320 --> 00:29:04,880 Speaker 1: a little bit about that. Well, UM, I guess it's 415 00:29:05,400 --> 00:29:08,920 Speaker 1: this sounds delicate, but it shouldn't be. Um. You know, 416 00:29:09,000 --> 00:29:11,760 Speaker 1: almost all of us don't. Weren't in touch with the Treasury. 417 00:29:11,800 --> 00:29:16,600 Speaker 1: I mean I talked to um Timothy Geitner once over 418 00:29:16,640 --> 00:29:19,720 Speaker 1: the phone on a Sunday evening when he called me 419 00:29:19,800 --> 00:29:21,719 Speaker 1: up after he'd had a few beers and wanted to 420 00:29:21,760 --> 00:29:24,760 Speaker 1: know what was happening in the economy. But that's the 421 00:29:24,800 --> 00:29:28,600 Speaker 1: only time I can ever remember talking to the Treasury. 422 00:29:28,800 --> 00:29:32,080 Speaker 1: We weren't like black Rock and Larry Fink put nothing 423 00:29:32,080 --> 00:29:35,560 Speaker 1: wrong with that, but we were a company on the 424 00:29:35,600 --> 00:29:40,360 Speaker 1: West Coast that basically did our own research and weren't 425 00:29:40,360 --> 00:29:45,080 Speaker 1: in touch with Treasury officials unless they were FED officials 426 00:29:45,120 --> 00:29:52,200 Speaker 1: that had retired, like uh, you know Bernanke and Paul 427 00:29:52,320 --> 00:29:56,480 Speaker 1: Volker and h and others, And so I don't really 428 00:29:56,520 --> 00:29:59,560 Speaker 1: know how it developed. Uh it certainly wasn't a phone call. 429 00:29:59,600 --> 00:30:04,080 Speaker 1: They called us and and said can we UM helped 430 00:30:04,400 --> 00:30:11,000 Speaker 1: manage a portfolio of mortgages for them? And we said 431 00:30:11,040 --> 00:30:16,360 Speaker 1: short and uh so that was basically yet. And you know, 432 00:30:16,440 --> 00:30:21,720 Speaker 1: there was a rumor that we badgered them into guaranteeing 433 00:30:22,120 --> 00:30:27,160 Speaker 1: Fanny and Freddy mortgages. Nothing could be further from the truth. 434 00:30:28,120 --> 00:30:32,040 Speaker 1: Nobody made a phone call to badge her or to 435 00:30:32,040 --> 00:30:35,479 Speaker 1: to influence in any way. What we did see is 436 00:30:35,520 --> 00:30:38,760 Speaker 1: that of all the mortgages, that Fannie and Freddie were 437 00:30:38,760 --> 00:30:44,560 Speaker 1: the highest quality, and that they were yielding astronomical yields 438 00:30:44,600 --> 00:30:50,520 Speaker 1: relative to treasuries and much wider spreads and had ever occurred. 439 00:30:50,520 --> 00:30:54,400 Speaker 1: And so that was the fascination with Fannie and Freddy. 440 00:30:54,520 --> 00:30:57,120 Speaker 1: We did well with mortgages, and we did well during 441 00:30:57,120 --> 00:31:01,280 Speaker 1: the crisis and after the crisis to Pimpto went from 442 00:31:01,640 --> 00:31:06,440 Speaker 1: one trillion to two trillions because we had protected their money. 443 00:31:06,840 --> 00:31:10,400 Speaker 1: So we mentioned earlier the new book by Married Child, 444 00:31:10,440 --> 00:31:13,680 Speaker 1: The Bond King is out Um and I know you 445 00:31:14,200 --> 00:31:19,680 Speaker 1: participated in in responding to some questions about um at 446 00:31:19,720 --> 00:31:23,880 Speaker 1: least validating certain things or not factually. But it's pretty 447 00:31:23,880 --> 00:31:27,520 Speaker 1: easy to read that book and see that she's trying 448 00:31:27,560 --> 00:31:31,400 Speaker 1: to make the case that PIMCO was the largest holder 449 00:31:31,440 --> 00:31:34,800 Speaker 1: of Fannie and Freddie bonds and that you guys bully 450 00:31:34,920 --> 00:31:39,280 Speaker 1: the government into guaranteeing them. Make your case rebut that 451 00:31:39,320 --> 00:31:42,360 Speaker 1: premise was it simply, Hey, we never spoke to anyone 452 00:31:42,560 --> 00:31:46,000 Speaker 1: at Treasury about Fannie and Freddie exactly. I mean, how 453 00:31:46,040 --> 00:31:52,640 Speaker 1: could we relay our badger if um I or um 454 00:31:52,720 --> 00:31:57,480 Speaker 1: I guess Mohammed didn't pick up the phone and and 455 00:31:57,480 --> 00:32:01,640 Speaker 1: and Badger and Billie. First of all, we were bullies 456 00:32:01,720 --> 00:32:04,320 Speaker 1: in the trading room, but we weren't bullies from the 457 00:32:04,360 --> 00:32:11,680 Speaker 1: standpoint of uh, you know, Treasuries strategy. Were you bullies 458 00:32:11,760 --> 00:32:14,080 Speaker 1: or were you really just the eight hundred pound guerrilla 459 00:32:14,200 --> 00:32:17,040 Speaker 1: in the space? Yeah? I think so. You know, we 460 00:32:17,080 --> 00:32:18,920 Speaker 1: had a lot of money, we bought a lot of bonds, 461 00:32:19,040 --> 00:32:25,000 Speaker 1: and um you know that health our performance. But you know, bullies, No, 462 00:32:25,680 --> 00:32:27,280 Speaker 1: you can't be a bully if you don't pick up 463 00:32:27,280 --> 00:32:30,960 Speaker 1: a phone. So your counter to the book The Bond 464 00:32:31,000 --> 00:32:34,960 Speaker 1: King is no, we we didn't force the government to 465 00:32:35,040 --> 00:32:38,800 Speaker 1: guarantee these. The government did that cause for their own reasons. 466 00:32:38,840 --> 00:32:42,480 Speaker 1: Primarily they were desperate for liquidity, and they were desperate 467 00:32:42,520 --> 00:32:45,440 Speaker 1: for some degree of stability, and this is how they 468 00:32:45,440 --> 00:32:50,960 Speaker 1: achieved it. Is that a fair counter argument to our book? Um, 469 00:32:51,200 --> 00:32:54,560 Speaker 1: It certainly is. And one interesting sidelight. I mean, during 470 00:32:54,600 --> 00:32:58,880 Speaker 1: the crisis, as Congress was voting UM, I guess for 471 00:32:58,960 --> 00:33:05,160 Speaker 1: their in the Ollar package bailout package, you know, Warren 472 00:33:05,200 --> 00:33:09,280 Speaker 1: Buffett called me up and uh and told me about 473 00:33:09,280 --> 00:33:15,040 Speaker 1: a plan he had to contribute a hundred million in 474 00:33:15,600 --> 00:33:23,720 Speaker 1: equity hundred millions, hundred hundred million and equity and to UM, 475 00:33:23,760 --> 00:33:28,640 Speaker 1: you know, to basically buy subprime mortgages from the banks, 476 00:33:28,760 --> 00:33:31,400 Speaker 1: in other words, to take a load off their shoulders obviously, 477 00:33:31,440 --> 00:33:34,240 Speaker 1: to buy them that are at the right price. And 478 00:33:34,840 --> 00:33:39,240 Speaker 1: within thirty minutes after checking with our executive committee, I said, fine, 479 00:33:39,280 --> 00:33:44,080 Speaker 1: we'll do it. UM. The next day, however, you know, 480 00:33:44,120 --> 00:33:47,479 Speaker 1: the Treasury Secretary decided to go the other way, and 481 00:33:47,520 --> 00:33:53,880 Speaker 1: that's when they decided to to ask banks to to 482 00:33:54,080 --> 00:33:57,960 Speaker 1: issue preferred stock and the bailout took another form. But 483 00:33:58,440 --> 00:34:04,360 Speaker 1: that's about the only potential connection we had with um 484 00:34:04,440 --> 00:34:06,960 Speaker 1: the Treasury, and as I say, it never came to fruition, 485 00:34:06,960 --> 00:34:08,880 Speaker 1: and it was just like a forty eight hour idea, 486 00:34:09,840 --> 00:34:13,920 Speaker 1: really intriguing. Let's talk a little bit about this book, 487 00:34:14,280 --> 00:34:18,920 Speaker 1: which generated a little bit of controversy. People blamed you 488 00:34:19,000 --> 00:34:23,000 Speaker 1: for just seeking to settle scores. Tell us about the 489 00:34:23,040 --> 00:34:27,359 Speaker 1: book and what motivated you to sit down and write it. Well, 490 00:34:27,400 --> 00:34:30,920 Speaker 1: had written a book twenty years ago, and I didn't 491 00:34:30,920 --> 00:34:33,600 Speaker 1: really think at the time that I had another book 492 00:34:33,640 --> 00:34:38,080 Speaker 1: in me, sort of like Wroting writing novels. I guess, um, 493 00:34:38,560 --> 00:34:43,440 Speaker 1: after the first one, it's all downhill. But I was 494 00:34:43,480 --> 00:34:46,520 Speaker 1: in touch with Mary Childs for five or six years, 495 00:34:47,480 --> 00:34:54,160 Speaker 1: certainly after I left Tempt. We were not good friends, 496 00:34:54,200 --> 00:35:01,120 Speaker 1: but she would interview me occasionally, and so I was 497 00:35:02,440 --> 00:35:06,320 Speaker 1: alerted to the factor. I read something on Apple Books 498 00:35:06,320 --> 00:35:10,680 Speaker 1: that a book by Mary Childs was coming, you know, 499 00:35:10,760 --> 00:35:14,600 Speaker 1: twelve months in the future, and it had a prospective 500 00:35:14,600 --> 00:35:19,600 Speaker 1: cover on it described me on the cover as ruthless 501 00:35:19,800 --> 00:35:25,279 Speaker 1: and you know, having lost everything. And I I said 502 00:35:25,280 --> 00:35:29,319 Speaker 1: to myself, that's not who I am, as the look 503 00:35:29,360 --> 00:35:33,120 Speaker 1: in the mirror. And and so, you know, rather than 504 00:35:33,200 --> 00:35:36,200 Speaker 1: thinking about a lawsuit or any of that, I said, well, 505 00:35:36,239 --> 00:35:39,919 Speaker 1: the best way to count that and to give your 506 00:35:41,280 --> 00:35:45,719 Speaker 1: impression of pimpto and it's years and your part in it, 507 00:35:46,440 --> 00:35:49,320 Speaker 1: I was to wreat your own version. And I had time. 508 00:35:49,640 --> 00:35:51,680 Speaker 1: I'm not here in the desert. I played golf in 509 00:35:51,680 --> 00:35:55,960 Speaker 1: the afternoon. I uh get up at six in the morning, 510 00:35:55,960 --> 00:36:00,000 Speaker 1: and I managed my portfolios for five or six hours. 511 00:36:00,120 --> 00:36:03,880 Speaker 1: And uh, I had time, and so I just started 512 00:36:03,880 --> 00:36:08,839 Speaker 1: writing in order to say that I'm still standing. I 513 00:36:08,880 --> 00:36:15,000 Speaker 1: haven't lost everything. And the ruthless part, I'm not sure 514 00:36:15,040 --> 00:36:18,840 Speaker 1: what she was referring to. I called her up and 515 00:36:18,840 --> 00:36:21,399 Speaker 1: I said, Mary, Uh, you know, I kind of get 516 00:36:21,400 --> 00:36:25,480 Speaker 1: the ruthless part. And I think she decided to take 517 00:36:25,520 --> 00:36:27,399 Speaker 1: it off the cover, right. I haven't read the book, 518 00:36:27,440 --> 00:36:31,799 Speaker 1: of course, because I'm too sensitive criticism, and I know 519 00:36:31,840 --> 00:36:35,200 Speaker 1: there's criticism in it. But the ruthless part, I I 520 00:36:35,239 --> 00:36:37,600 Speaker 1: just went overboard, and that's what set me off. And said, 521 00:36:38,400 --> 00:36:41,239 Speaker 1: write your own book, tell your own story, and hopefully 522 00:36:41,280 --> 00:36:47,200 Speaker 1: after five or six years, um. You know, the the 523 00:36:47,280 --> 00:36:52,400 Speaker 1: wounds as in time heals all wounds. UM had healed 524 00:36:53,760 --> 00:36:57,759 Speaker 1: pretty much and the scars, said, turned from red to white. Um. 525 00:36:58,480 --> 00:37:01,600 Speaker 1: And so I thought I could write in active book 526 00:37:01,680 --> 00:37:06,680 Speaker 1: about the pluses and the minuses each argument, Tempo's argument, 527 00:37:06,760 --> 00:37:11,920 Speaker 1: my argument why I left, and um why I wasn't 528 00:37:11,920 --> 00:37:16,280 Speaker 1: necessarily the bond kings. The company was full of bond 529 00:37:16,360 --> 00:37:19,840 Speaker 1: kings and bond queens for a long long time. Huh. 530 00:37:19,880 --> 00:37:23,920 Speaker 1: And and the book title does not have ruthless in it. 531 00:37:24,400 --> 00:37:26,680 Speaker 1: Um And for those people who may not be familiar 532 00:37:26,719 --> 00:37:31,480 Speaker 1: with Mary Child's um, she covered Pimco and the bond 533 00:37:31,560 --> 00:37:34,560 Speaker 1: market at Bloomberg News for a while. Before that, she 534 00:37:34,640 --> 00:37:37,680 Speaker 1: worked at the Financial Times, and now she's a co 535 00:37:37,880 --> 00:37:42,799 Speaker 1: host of Planet Money podcast at NPR. And we'll talk 536 00:37:42,840 --> 00:37:46,000 Speaker 1: a little later about a project she and I did together, 537 00:37:46,520 --> 00:37:50,399 Speaker 1: but let's talk about the book. You do not and 538 00:37:50,440 --> 00:37:53,560 Speaker 1: I think ruthless may not be the right word, but 539 00:37:54,480 --> 00:37:57,319 Speaker 1: you don't hold anything back in the book. I mean, 540 00:37:57,360 --> 00:38:02,160 Speaker 1: you are completely blunt and worthcoming an example, I want 541 00:38:02,280 --> 00:38:06,000 Speaker 1: to ask you about. You said your partner who negotiated 542 00:38:06,120 --> 00:38:11,880 Speaker 1: the Alliance purchase of Pimco skinned them alive. So so 543 00:38:12,000 --> 00:38:17,239 Speaker 1: that's a serious um line. Tell us about the Alliance 544 00:38:17,320 --> 00:38:22,080 Speaker 1: takeover of Pimco and how you guys managed to get 545 00:38:22,280 --> 00:38:25,840 Speaker 1: such a one sided deal that worked to the benefit 546 00:38:25,920 --> 00:38:30,439 Speaker 1: of the Pimco owners. And the company oh so much 547 00:38:30,480 --> 00:38:34,399 Speaker 1: so UM and Ken Covies no longer will this. But 548 00:38:35,760 --> 00:38:38,839 Speaker 1: he was brilliant. He was He was a leader in 549 00:38:38,920 --> 00:38:43,279 Speaker 1: terms of negotiating with Alliance. And by the way, all 550 00:38:43,320 --> 00:38:49,200 Speaker 1: ants when they bought Pimco, they um, they only bought 551 00:38:49,719 --> 00:38:54,279 Speaker 1: it specific mutual held onto it for you know, a 552 00:38:54,360 --> 00:38:59,120 Speaker 1: year or two, and they left with us the people 553 00:38:59,239 --> 00:39:04,280 Speaker 1: the partners UH of the profits going forward which still 554 00:39:04,320 --> 00:39:09,359 Speaker 1: exists and UM. And so that basically meant that what 555 00:39:09,400 --> 00:39:12,200 Speaker 1: they were paying for was was about a sixth of 556 00:39:13,080 --> 00:39:20,080 Speaker 1: PIMCO in terms of the ongoing revenue stream. But to 557 00:39:20,120 --> 00:39:24,040 Speaker 1: talk about proving what he did, he basically suggested to 558 00:39:24,120 --> 00:39:26,640 Speaker 1: them and we would suggest to him. And yes, we 559 00:39:26,640 --> 00:39:31,680 Speaker 1: were very ruthless from the standpoint of, UM, you know, 560 00:39:31,960 --> 00:39:36,359 Speaker 1: trying to strike a very good deal if we're ever 561 00:39:36,400 --> 00:39:41,360 Speaker 1: going to sell part of the company and UM, Poopy 562 00:39:41,360 --> 00:39:44,680 Speaker 1: would will always tell them and I would participate in 563 00:39:44,719 --> 00:39:49,640 Speaker 1: the discussions that these people needed to be incentivized. UM. 564 00:39:49,680 --> 00:39:53,759 Speaker 1: Not that of the profit pool wasn't incentive enough. But 565 00:39:54,120 --> 00:39:58,279 Speaker 1: Poopy would say, UM, you know, these partners will be 566 00:39:58,640 --> 00:40:03,080 Speaker 1: there twenty five now that we fifties WI, this won't 567 00:40:03,080 --> 00:40:08,680 Speaker 1: be enough to keep incentivizing the existing partners and to 568 00:40:08,760 --> 00:40:12,399 Speaker 1: bring a new partners. So he devised what he called 569 00:40:12,440 --> 00:40:16,399 Speaker 1: a B share UM sort of a fake equity UH 570 00:40:16,760 --> 00:40:20,359 Speaker 1: type of plan where partners would be given a certain 571 00:40:20,400 --> 00:40:22,759 Speaker 1: amount of B shares and and that the value of 572 00:40:22,760 --> 00:40:26,920 Speaker 1: those shares ten five, ten years forward when they could 573 00:40:26,920 --> 00:40:32,600 Speaker 1: be cashed in, would be based upon multiples ten twelve, fourteen, 574 00:40:32,719 --> 00:40:40,759 Speaker 1: sixteen time multiples of existing earnings. And basically, when I 575 00:40:40,800 --> 00:40:44,680 Speaker 1: say he skinned them, Alliance had no idea that what 576 00:40:44,840 --> 00:40:48,000 Speaker 1: they would be pain in terms of those multiples and 577 00:40:48,000 --> 00:40:51,720 Speaker 1: in terms of the performance of that we're anywhere close 578 00:40:51,800 --> 00:40:56,080 Speaker 1: to would eventually occurred. And um, it was a brilliant idea. 579 00:40:56,200 --> 00:40:59,920 Speaker 1: He uh pulled the wool over their eyes. They were 580 00:41:00,800 --> 00:41:05,279 Speaker 1: I guess star struck with you know, buying Pempco and 581 00:41:05,920 --> 00:41:11,759 Speaker 1: looking forward to um wonderful publicity. But it was really 582 00:41:11,800 --> 00:41:14,840 Speaker 1: that B share plan that made made me more money 583 00:41:14,880 --> 00:41:18,760 Speaker 1: and made partners more money than the existing thirties represent 584 00:41:18,920 --> 00:41:22,880 Speaker 1: profit pool. It was a total billions and billions of 585 00:41:22,920 --> 00:41:27,440 Speaker 1: dollars in terms of B share payoffs. And you you 586 00:41:27,600 --> 00:41:30,279 Speaker 1: don't again, you don't hold back, you say in the 587 00:41:30,320 --> 00:41:33,960 Speaker 1: book quote none of us were worth what we were paid. 588 00:41:34,239 --> 00:41:40,040 Speaker 1: Unquote explain if if you're generating billions and dollars of profits, 589 00:41:40,080 --> 00:41:44,680 Speaker 1: what should you have been paid. Well, there's a certain 590 00:41:44,719 --> 00:41:47,160 Speaker 1: logic of that. I mean, our our fees weren't excessive. 591 00:41:47,239 --> 00:41:50,200 Speaker 1: We were charging thirty five basis points on average. We 592 00:41:50,400 --> 00:41:52,680 Speaker 1: just grew and grew and grew and grew and grew. 593 00:41:53,400 --> 00:41:57,040 Speaker 1: And one of the beauties of working at PEMCO was 594 00:41:57,040 --> 00:41:59,640 Speaker 1: that it was small. We kept our expenses down and 595 00:41:59,760 --> 00:42:03,560 Speaker 1: our people low. You know, companies like Bank of America 596 00:42:03,640 --> 00:42:06,880 Speaker 1: had two hundred and fifty thousand people. We had two thousand, 597 00:42:06,920 --> 00:42:10,640 Speaker 1: five hundred or a hundreds of their size, with profits 598 00:42:10,640 --> 00:42:14,640 Speaker 1: about the same size, and so um. You know, that 599 00:42:14,760 --> 00:42:19,680 Speaker 1: was part of our strategic brilliance as well. I guess 600 00:42:19,800 --> 00:42:24,839 Speaker 1: Jim Muzzy and early on Bill Pondlock, the original partners, 601 00:42:24,320 --> 00:42:28,279 Speaker 1: uh you know, simply thought that we should keep expenses 602 00:42:28,280 --> 00:42:30,960 Speaker 1: and people low. With that we could manage without a 603 00:42:31,040 --> 00:42:34,920 Speaker 1: lot of people, and so you know, that generated huge 604 00:42:34,960 --> 00:42:39,760 Speaker 1: bonuses where we're worth it. Uh you know, I simply 605 00:42:39,800 --> 00:42:43,479 Speaker 1: said that I don't think anybody's worth uh that type 606 00:42:43,520 --> 00:42:49,720 Speaker 1: of money. Um, yeah, maybe maybe Bezos and Elon Musk 607 00:42:50,120 --> 00:42:53,200 Speaker 1: in terms of their creativity but it's just it was 608 00:42:53,239 --> 00:42:55,759 Speaker 1: too much money. You know, as as I left him go, 609 00:42:56,200 --> 00:43:01,280 Speaker 1: our executive secretaries were making five hundred million dollars um um. 610 00:43:01,600 --> 00:43:05,120 Speaker 1: Our our our head corporate lawyer, you know that the 611 00:43:05,200 --> 00:43:08,960 Speaker 1: ge lawyer uh was making one or two million dollars. 612 00:43:08,960 --> 00:43:11,720 Speaker 1: Our our lawyer was making ten to twelve million dollars. 613 00:43:11,760 --> 00:43:14,120 Speaker 1: It's like we didn't know we had so much money. 614 00:43:14,120 --> 00:43:15,919 Speaker 1: We didn't know how to get rid of it, um 615 00:43:16,200 --> 00:43:20,080 Speaker 1: and um. We had this egalitarian type of attitude that 616 00:43:20,120 --> 00:43:22,319 Speaker 1: we should spread it out as much as possible. But 617 00:43:23,120 --> 00:43:27,480 Speaker 1: I don't think anybody there to deserve to make what 618 00:43:27,520 --> 00:43:31,120 Speaker 1: they were making. So we're gonna circle back to the 619 00:43:31,239 --> 00:43:35,720 Speaker 1: bonus structure. But unfortunately, at this point I have to 620 00:43:35,760 --> 00:43:42,040 Speaker 1: insert myself into our conversation. So you get fired from 621 00:43:42,040 --> 00:43:48,239 Speaker 1: pimco in and I save a bunch of UM your 622 00:43:48,320 --> 00:43:51,520 Speaker 1: I O s from previous dates, and in the train 623 00:43:51,640 --> 00:43:55,000 Speaker 1: home from work, I just read a bunch just you know, 624 00:43:55,040 --> 00:43:58,319 Speaker 1: across a couple of years. By the time I get 625 00:43:58,360 --> 00:44:01,760 Speaker 1: home that night, your voice is in my head. And 626 00:44:01,920 --> 00:44:05,960 Speaker 1: you know, whenever they arrest a painting forger, they always 627 00:44:06,000 --> 00:44:09,200 Speaker 1: say the same thing. Once I had his stroke down, 628 00:44:09,320 --> 00:44:13,319 Speaker 1: everything I painted looked like Picasso. Well, once I had 629 00:44:13,360 --> 00:44:17,040 Speaker 1: your voice in my head, whatever I wrote sounded like you, 630 00:44:17,120 --> 00:44:20,640 Speaker 1: and so for it was then called Bloomberg View. I 631 00:44:20,680 --> 00:44:26,879 Speaker 1: wrote your final investment outlook in your voice, Um, purposefully 632 00:44:26,920 --> 00:44:29,800 Speaker 1: making it outrageous. But you know, by the time it 633 00:44:29,880 --> 00:44:34,000 Speaker 1: got through the editing process, it was smoothed out enough 634 00:44:34,120 --> 00:44:38,200 Speaker 1: that it very much sounded like your voice, so much 635 00:44:38,239 --> 00:44:43,640 Speaker 1: so that PIMCO called Mary Child's asking her, Hey, how 636 00:44:43,680 --> 00:44:46,160 Speaker 1: the hell did you guys get bills last? I? Oh, 637 00:44:46,160 --> 00:44:49,400 Speaker 1: this is wrong, and it's in Bloomberg View. It's an 638 00:44:49,440 --> 00:44:52,960 Speaker 1: opinion piece. It's a satire, it's a parody. Um. And 639 00:44:53,000 --> 00:44:57,400 Speaker 1: so you and I began speaking about that. But before 640 00:44:57,480 --> 00:45:00,600 Speaker 1: we get into the bonus discussion, how us a little 641 00:45:00,600 --> 00:45:04,480 Speaker 1: bit about that day. What was it like after forty 642 00:45:04,520 --> 00:45:07,759 Speaker 1: three years to be sent to the principal's office and 643 00:45:08,200 --> 00:45:12,640 Speaker 1: sent home? Well, I was traumatic. I mean I was 644 00:45:12,719 --> 00:45:16,080 Speaker 1: the one of the founders. I was one of the 645 00:45:16,200 --> 00:45:22,120 Speaker 1: leaders of the Chief Investment Officer. The performance was flat 646 00:45:22,239 --> 00:45:27,799 Speaker 1: for twelve months, but you know, nothing tragic. And you 647 00:45:27,840 --> 00:45:32,880 Speaker 1: know the executive committee which was going to fire me 648 00:45:33,200 --> 00:45:39,359 Speaker 1: on Friday afternoon because they thought I was unsettling in 649 00:45:39,480 --> 00:45:44,480 Speaker 1: terms of my pursuit of insiders talking to the press 650 00:45:44,920 --> 00:45:49,560 Speaker 1: in any case, UM, you know, I I decided I'm 651 00:45:49,600 --> 00:45:52,719 Speaker 1: not walking that plank that I deserved better than this. 652 00:45:53,080 --> 00:45:56,439 Speaker 1: I even asked in the last a week or two 653 00:45:56,480 --> 00:46:00,799 Speaker 1: when when I knew that, you know, the inevitable was 654 00:46:01,440 --> 00:46:04,200 Speaker 1: coming up that Friday afternoon, I said, why don't you 655 00:46:04,239 --> 00:46:07,960 Speaker 1: just let me manage you know, a small portfolio closed 656 00:46:07,960 --> 00:46:11,760 Speaker 1: in fund, just so I can stay in it. Um. 657 00:46:12,200 --> 00:46:14,319 Speaker 1: They said, I don't even work in another building if 658 00:46:14,320 --> 00:46:18,080 Speaker 1: you want, UM, and they looked at me. They said, 659 00:46:18,120 --> 00:46:21,799 Speaker 1: it's not going to happen. And so I at the 660 00:46:21,840 --> 00:46:24,880 Speaker 1: time I couldn't understand that. Now, I sort of do 661 00:46:24,920 --> 00:46:27,160 Speaker 1: you know, when you when you kill the king, you 662 00:46:27,280 --> 00:46:31,120 Speaker 1: better make sure he's dead. And uh, they didn't want 663 00:46:31,160 --> 00:46:35,440 Speaker 1: any presence of Bill grows in the ongoing PEMCO. I 664 00:46:35,440 --> 00:46:40,120 Speaker 1: objectively understand that, but UH, to turn down uh an 665 00:46:40,200 --> 00:46:43,640 Speaker 1: offer to let me manage a few small portfolios and 666 00:46:44,040 --> 00:46:47,880 Speaker 1: maybe write some investment out looks, I couldn't believe it. Um. 667 00:46:47,920 --> 00:46:53,440 Speaker 1: I made a quick call to the Janice with Dick Wile, 668 00:46:53,520 --> 00:46:58,640 Speaker 1: who was heading that up and um ce at PIMCO 669 00:46:58,719 --> 00:47:01,879 Speaker 1: a few years before, and UH, he said sure, come 670 00:47:01,960 --> 00:47:05,920 Speaker 1: over And so I I didn't want to walk the plank. 671 00:47:05,960 --> 00:47:08,080 Speaker 1: I didn't want to go into that committee and be fired. 672 00:47:08,120 --> 00:47:14,880 Speaker 1: And so I left that night, walked down the floor 673 00:47:14,920 --> 00:47:19,120 Speaker 1: stairs for the last time, and uh, and the next 674 00:47:19,120 --> 00:47:22,640 Speaker 1: morning I was off to Denver. Um. I just I 675 00:47:22,640 --> 00:47:26,480 Speaker 1: didn't think it was the way you should treat somebody 676 00:47:26,600 --> 00:47:31,680 Speaker 1: that was a founder and responsible for much of their success. 677 00:47:32,120 --> 00:47:34,600 Speaker 1: And there was at the time a lot of sniping 678 00:47:34,640 --> 00:47:38,520 Speaker 1: in the news. They had said you had become disruptive 679 00:47:38,640 --> 00:47:41,799 Speaker 1: and we're a problem on the training floor and was 680 00:47:41,840 --> 00:47:45,040 Speaker 1: affecting morale, and there was a lot of personal stuff. 681 00:47:45,280 --> 00:47:48,160 Speaker 1: Hey Bill is a little unstable, And they trotted out 682 00:47:48,520 --> 00:47:51,239 Speaker 1: that picture from you at the morning Star conference with 683 00:47:52,040 --> 00:47:55,080 Speaker 1: the glasses, which I think we're or two I was 684 00:47:55,200 --> 00:47:58,560 Speaker 1: years before. You know, what was your reaction when this 685 00:47:58,760 --> 00:48:03,280 Speaker 1: became so you know, personal and to be blunt, so petty, 686 00:48:03,360 --> 00:48:11,000 Speaker 1: on on all around. Well, it wasn't good. Um, you know, 687 00:48:11,480 --> 00:48:13,960 Speaker 1: I guess like in a divorce, and this was a divorce. 688 00:48:15,440 --> 00:48:18,759 Speaker 1: Both sides started picking at each other, you know, wore 689 00:48:18,840 --> 00:48:23,400 Speaker 1: the roses type of thing. Um. So of you know, 690 00:48:23,960 --> 00:48:27,840 Speaker 1: I didn't enjoy what they were leaking to the press. 691 00:48:27,880 --> 00:48:31,319 Speaker 1: I never talked to the press, by the way, but 692 00:48:31,560 --> 00:48:34,120 Speaker 1: I didn't enjoy that. They said the performance was bad, 693 00:48:34,280 --> 00:48:39,160 Speaker 1: that I was erratic, etceteratera etera. I was always somewhat 694 00:48:40,320 --> 00:48:45,520 Speaker 1: not erratic, but always uh quirky, somewhat of a quirky character. 695 00:48:45,719 --> 00:48:49,160 Speaker 1: And I don't think that had changed. But but there 696 00:48:49,160 --> 00:48:52,480 Speaker 1: had been you know, two or three people that our 697 00:48:52,600 --> 00:48:57,560 Speaker 1: lawyers eventually discovered that we're leaking, leaking information to the 698 00:48:57,600 --> 00:49:01,680 Speaker 1: press and favoring Muhammad supposed to me in terms of 699 00:49:01,680 --> 00:49:05,360 Speaker 1: why he left, and I I didn't think that was nice, 700 00:49:05,400 --> 00:49:11,879 Speaker 1: and so uh that ultimately, and to be fair, as 701 00:49:11,960 --> 00:49:15,160 Speaker 1: I wrote in my book, you know, one of the 702 00:49:15,200 --> 00:49:19,560 Speaker 1: main reasons I think that they fired me, what was 703 00:49:19,760 --> 00:49:22,839 Speaker 1: I was in favor of low fees and they were 704 00:49:22,840 --> 00:49:26,759 Speaker 1: in favor of high fees. You know, Dan Iverson and 705 00:49:26,840 --> 00:49:31,840 Speaker 1: the mortgage department had created, uh, you know, products that 706 00:49:32,000 --> 00:49:35,880 Speaker 1: had two and twenty hedge fund types of types of 707 00:49:35,920 --> 00:49:37,719 Speaker 1: seas and we're making a lot of money. I was 708 00:49:37,760 --> 00:49:40,719 Speaker 1: making some of it. But it just seemed to me 709 00:49:40,760 --> 00:49:46,240 Speaker 1: in terms of buduciary responsibility that low fees were something 710 00:49:46,320 --> 00:49:49,799 Speaker 1: we owed to clients and we weren't hedge fund managers. 711 00:49:49,880 --> 00:49:54,959 Speaker 1: And so UM. Ultimately, I think the executive committee which 712 00:49:55,040 --> 00:50:00,520 Speaker 1: was formed with eight people, uh three of which were 713 00:50:00,840 --> 00:50:06,040 Speaker 1: portfolio managers, one uh Iverson who eventually led the the 714 00:50:06,200 --> 00:50:11,359 Speaker 1: coup as I called it. UM. You know, they went 715 00:50:11,680 --> 00:50:14,640 Speaker 1: in the direction of high seas as opposed to low 716 00:50:14,680 --> 00:50:18,160 Speaker 1: fees E T f s and UM and so on. 717 00:50:18,400 --> 00:50:22,000 Speaker 1: So UM there was a fundamental reason, but there there 718 00:50:22,080 --> 00:50:25,759 Speaker 1: was also other personal reasons. Um. I was seventy two 719 00:50:25,920 --> 00:50:28,959 Speaker 1: was the time to go. Um, not in my mind, 720 00:50:29,000 --> 00:50:33,040 Speaker 1: but in their mind because at seventy two, as I 721 00:50:33,120 --> 00:50:35,919 Speaker 1: wrote in my book, if you're not as sharp as 722 00:50:35,920 --> 00:50:39,279 Speaker 1: you are fifty two, and certainly not as sharp as 723 00:50:39,280 --> 00:50:43,200 Speaker 1: you you at seventy seven as you as you were 724 00:50:43,200 --> 00:50:47,120 Speaker 1: at seventy two. So so maybe there was some of that, 725 00:50:47,200 --> 00:50:50,760 Speaker 1: and I understand some of that. I just still don't 726 00:50:50,960 --> 00:50:55,200 Speaker 1: understand the exit and why they had to do it 727 00:50:55,280 --> 00:50:58,399 Speaker 1: that way. So let's talk a little bit about that. 728 00:50:58,480 --> 00:51:02,160 Speaker 1: Wore the roses so I got I don't remembered as 729 00:51:02,160 --> 00:51:05,560 Speaker 1: the facts or an email, but a spreadsheet that was 730 00:51:06,360 --> 00:51:10,920 Speaker 1: you know, the long debated and wondered about bonus pool 731 00:51:11,640 --> 00:51:15,960 Speaker 1: at PIMCO, and it had you earning about three hundred 732 00:51:15,960 --> 00:51:19,960 Speaker 1: million dollars a year in bonus. Um. Muhammad Alarian about 733 00:51:20,000 --> 00:51:23,799 Speaker 1: two hundred and forty million dollars in bonus uh, and 734 00:51:23,920 --> 00:51:28,080 Speaker 1: down the run a whole run of of literally billions 735 00:51:28,120 --> 00:51:33,040 Speaker 1: of dollars in excess compensation. So tell us about why 736 00:51:33,080 --> 00:51:37,200 Speaker 1: that was released and and did that have the intended 737 00:51:38,280 --> 00:51:43,439 Speaker 1: effect of really rattling the senior management at PIMCO and 738 00:51:43,440 --> 00:51:48,839 Speaker 1: and causing turmoil uh in the C suite. Well, I 739 00:51:48,840 --> 00:51:51,160 Speaker 1: think it might have had an effect. That was the intense. 740 00:51:51,560 --> 00:51:56,600 Speaker 1: I didn't have anybody in the company that could tell me, um, 741 00:51:56,640 --> 00:52:00,200 Speaker 1: whether or not their esteem coming uh, you know, out 742 00:52:00,200 --> 00:52:04,799 Speaker 1: of the years of many of the partners. But I, 743 00:52:05,400 --> 00:52:09,440 Speaker 1: you know, like I say, I had been fired. Uh. 744 00:52:09,640 --> 00:52:12,600 Speaker 1: They were talking in the press negatively about me, and 745 00:52:12,640 --> 00:52:15,439 Speaker 1: I didn't want to call up the press and talking 746 00:52:15,480 --> 00:52:20,799 Speaker 1: negatively about them. And so what I did was, I said, uh, well, 747 00:52:20,840 --> 00:52:24,399 Speaker 1: I know how I can get back at them, um. 748 00:52:24,480 --> 00:52:26,960 Speaker 1: And it was childish in a way, but it was 749 00:52:27,560 --> 00:52:31,000 Speaker 1: it was a way to you know, to stop taking 750 00:52:31,040 --> 00:52:33,200 Speaker 1: bunches and maybe throw one of them out. And so 751 00:52:33,320 --> 00:52:38,160 Speaker 1: I I took last year's bonus pool and I mailed 752 00:52:38,160 --> 00:52:43,160 Speaker 1: into eight random of partners UH in an envelope and 753 00:52:44,280 --> 00:52:47,520 Speaker 1: sent it as a package to PIMCO and I as 754 00:52:47,520 --> 00:52:51,759 Speaker 1: soon they ultimately distributed it. Um. You know, for the 755 00:52:51,800 --> 00:52:55,080 Speaker 1: most part, I assumed anyway the partners knew what other 756 00:52:55,160 --> 00:52:58,120 Speaker 1: partners were making. You know, that happens over drinks and 757 00:52:58,840 --> 00:53:01,520 Speaker 1: over the water cooler. But UM, it just made me 758 00:53:01,560 --> 00:53:04,880 Speaker 1: feel better that I could do something to counder what 759 00:53:04,960 --> 00:53:07,759 Speaker 1: they were doing. So in the book you said you 760 00:53:07,800 --> 00:53:10,400 Speaker 1: could hear the screams from the top floor all the 761 00:53:10,440 --> 00:53:14,360 Speaker 1: way uh your house. But let me just shed a 762 00:53:14,440 --> 00:53:19,080 Speaker 1: little color about what took place when when I got 763 00:53:19,120 --> 00:53:23,160 Speaker 1: the document, I walked it over um to some senior 764 00:53:23,280 --> 00:53:26,920 Speaker 1: editors at Bloomberg who walked it through legal and we 765 00:53:27,040 --> 00:53:30,640 Speaker 1: brought in, of all people, married Childs, who was covering PIMCO, 766 00:53:31,040 --> 00:53:34,280 Speaker 1: and UM. The plan was I would write the opinion 767 00:53:34,320 --> 00:53:38,359 Speaker 1: piece about how outrageous this was, and Mary would cover 768 00:53:38,440 --> 00:53:43,080 Speaker 1: it as straight news. Uh, and that after we had 769 00:53:43,239 --> 00:53:46,879 Speaker 1: vetted everything. And they, you know, to Bloomberg's credit, their 770 00:53:46,920 --> 00:53:51,520 Speaker 1: process is just absolutely fastidious and top notch. I was 771 00:53:51,640 --> 00:53:56,120 Speaker 1: very comfortable that we checked every box, both from a 772 00:53:56,280 --> 00:54:01,040 Speaker 1: journalistic side and the legal side. And UM, what they 773 00:54:01,080 --> 00:54:03,920 Speaker 1: did is they waited till eight p M East Coast 774 00:54:03,920 --> 00:54:07,120 Speaker 1: time after the Wall Street Journal and the New York 775 00:54:07,160 --> 00:54:11,320 Speaker 1: Times print editions had gone to bed, and they called 776 00:54:11,440 --> 00:54:15,840 Speaker 1: up Pimco to get a comment on it, and um, 777 00:54:16,120 --> 00:54:19,560 Speaker 1: they seem to not really believe that we had what 778 00:54:19,600 --> 00:54:23,600 Speaker 1: we had And so the next day both pieces ran 779 00:54:23,680 --> 00:54:26,640 Speaker 1: and all hell broke loose. That was the most read 780 00:54:26,840 --> 00:54:30,279 Speaker 1: pieces on the Bloomberg terminal for like six months. I 781 00:54:30,280 --> 00:54:34,239 Speaker 1: don't remember the exact date, but it absolutely blew up. 782 00:54:34,600 --> 00:54:36,920 Speaker 1: And I know it was a parlor game. People were 783 00:54:36,960 --> 00:54:41,560 Speaker 1: trying to guess what Pimco's bonus pool was. So now 784 00:54:41,600 --> 00:54:44,840 Speaker 1: that you look back at it, did did this accomplish 785 00:54:44,880 --> 00:54:46,799 Speaker 1: what you hoped? And you know, do you have any 786 00:54:46,840 --> 00:54:52,879 Speaker 1: regrets about that? You know? Were the roses era? Oh god, 787 00:54:53,280 --> 00:54:58,640 Speaker 1: God no, I mean I thought then I still think 788 00:54:58,719 --> 00:55:03,640 Speaker 1: now that it was just a little job to counter 789 00:55:03,800 --> 00:55:09,760 Speaker 1: their uppercuts and so, um, they really do any damage 790 00:55:09,840 --> 00:55:13,279 Speaker 1: to the structure of the company in terms of compensation, 791 00:55:13,600 --> 00:55:17,920 Speaker 1: I don't know, um, but since they were all very 792 00:55:18,760 --> 00:55:21,719 Speaker 1: good in terms of the executive committee in terms of 793 00:55:21,719 --> 00:55:25,960 Speaker 1: smoothing things, and I assume internally that you know, they 794 00:55:26,680 --> 00:55:28,799 Speaker 1: gave it an after that, but not not for a 795 00:55:28,840 --> 00:55:31,520 Speaker 1: six month. I'll tell you a funny story that I 796 00:55:31,920 --> 00:55:35,239 Speaker 1: never shared with you, but I might as well as 797 00:55:35,280 --> 00:55:39,080 Speaker 1: long as we're coming clean. Um. So, in order to 798 00:55:39,200 --> 00:55:43,879 Speaker 1: protect our source, spreadsheet was to the penny. I mean 799 00:55:43,920 --> 00:55:48,680 Speaker 1: it was really precise. It wasn't two hundred forty million dollars. 800 00:55:48,719 --> 00:55:52,680 Speaker 1: It was two hundred million, eight hundred and seventy seven thousand, 801 00:55:52,760 --> 00:55:56,520 Speaker 1: six hundred, you know, in forty three and fifty two cents. 802 00:55:56,920 --> 00:55:59,680 Speaker 1: But all right, let's make it to forty and it'll 803 00:55:59,719 --> 00:56:03,000 Speaker 1: pre text the source a little bit. And I don't 804 00:56:03,000 --> 00:56:05,880 Speaker 1: remember the gentleman's name who was the head of pr 805 00:56:06,120 --> 00:56:09,320 Speaker 1: at Pimco at the time, but I was very annoyed 806 00:56:09,360 --> 00:56:11,880 Speaker 1: that he would come out and say, oh, those numbers 807 00:56:11,880 --> 00:56:16,480 Speaker 1: are wrong and um, and he accused me of getting it, 808 00:56:16,880 --> 00:56:19,920 Speaker 1: not just that they weren't precise. Oh this is wrong. 809 00:56:19,960 --> 00:56:22,440 Speaker 1: Results doesn't know what he's talking about. It's all wrong. 810 00:56:22,840 --> 00:56:26,440 Speaker 1: So I recall sending an email to him with his 811 00:56:26,560 --> 00:56:30,600 Speaker 1: exact salary and bonus to the penny and said, next 812 00:56:30,640 --> 00:56:33,719 Speaker 1: time you say something wrong, I will release the salary 813 00:56:33,760 --> 00:56:36,279 Speaker 1: of every person of Pimco down to the penny. So 814 00:56:36,440 --> 00:56:40,400 Speaker 1: your career, most of us have followed your career for decades, 815 00:56:40,960 --> 00:56:44,480 Speaker 1: and there's a sense that you grew up kind of hard, scrabbled, 816 00:56:44,760 --> 00:56:47,960 Speaker 1: you didn't come from money. I'm I'm curious do you 817 00:56:48,239 --> 00:56:50,879 Speaker 1: today do you think of yourself as rich? Have you 818 00:56:51,400 --> 00:56:54,960 Speaker 1: wrapped your head around the fact that you're a billionaire, 819 00:56:54,960 --> 00:56:57,759 Speaker 1: because sometimes we we see some of the things you 820 00:56:57,920 --> 00:57:00,600 Speaker 1: write and say and do, and it's like he still 821 00:57:00,640 --> 00:57:04,200 Speaker 1: thinks he's that kid from you know, fifty sixty years ago. 822 00:57:04,680 --> 00:57:09,759 Speaker 1: I do, Um, you know, objectively, I know I'm a billionaire. 823 00:57:09,800 --> 00:57:13,400 Speaker 1: I see it every morning with my uh you know, 824 00:57:13,480 --> 00:57:19,040 Speaker 1: financial statement and my portfolios. But um, you know, I 825 00:57:19,080 --> 00:57:22,760 Speaker 1: think that comes from a certain insecurity. I and and 826 00:57:22,840 --> 00:57:25,800 Speaker 1: to be fair, you know, I've got a plane, I've 827 00:57:25,840 --> 00:57:29,840 Speaker 1: got several homes, and so that's typical of billionaires. But 828 00:57:31,200 --> 00:57:37,200 Speaker 1: all throughout my life, in my marriages and so on, 829 00:57:37,360 --> 00:57:41,760 Speaker 1: I you know, I would bring home take up dinners 830 00:57:41,840 --> 00:57:45,560 Speaker 1: from the local Taco bell um three times a week. 831 00:57:47,720 --> 00:57:50,880 Speaker 1: You know, we we never lived and still don't live 832 00:57:51,400 --> 00:57:54,200 Speaker 1: high off the hog. We eat very simply. We go 833 00:57:54,320 --> 00:57:58,720 Speaker 1: to sleep but eight o'clock and and watch Netflix and 834 00:57:58,800 --> 00:58:00,720 Speaker 1: so on and so on. We don't out of parties, 835 00:58:00,840 --> 00:58:07,080 Speaker 1: we don't uh dress up a lot and and and so. Um. 836 00:58:07,440 --> 00:58:12,240 Speaker 1: You know my idea of living well is, yes, certainly 837 00:58:12,480 --> 00:58:16,000 Speaker 1: have enough money to live well, but then to to 838 00:58:16,120 --> 00:58:21,360 Speaker 1: live simply and to ultimately give give back. Uh not 839 00:58:21,440 --> 00:58:25,040 Speaker 1: in terms of time. I don't give back time like 840 00:58:25,320 --> 00:58:29,960 Speaker 1: Bill Gates, and we'll INDI Gates do. That's not my strength. 841 00:58:30,120 --> 00:58:34,320 Speaker 1: But you know I give back a lot of money. Um, 842 00:58:34,400 --> 00:58:36,920 Speaker 1: I've done the giving pledge. I've already given a billion 843 00:58:37,040 --> 00:58:40,520 Speaker 1: or so in in terms of money, I have a 844 00:58:40,520 --> 00:58:46,120 Speaker 1: five million dollar foundation, etcetera, etcetera, and so so you know, 845 00:58:46,160 --> 00:58:48,920 Speaker 1: it's a simple life, but not so simple in terms 846 00:58:48,920 --> 00:58:53,120 Speaker 1: of all the money that I have to to give back, 847 00:58:53,200 --> 00:58:58,680 Speaker 1: not just two people and um organizations. But you know, 848 00:58:58,840 --> 00:59:02,520 Speaker 1: certainly to the government want to check the bucket, they'll 849 00:59:02,680 --> 00:59:05,520 Speaker 1: they'll take it unless you give it all the way. 850 00:59:05,600 --> 00:59:08,919 Speaker 1: That's a good enough reason to a having a state 851 00:59:08,960 --> 00:59:12,640 Speaker 1: tax and B give the money away. So I have 852 00:59:12,760 --> 00:59:16,960 Speaker 1: to ask this question, what's the deal with Gilligan's Island. 853 00:59:17,000 --> 00:59:22,400 Speaker 1: You have to explain and ps. I always understood that 854 00:59:22,560 --> 00:59:24,880 Speaker 1: you could put whatever you want in your backyard. Nobody 855 00:59:24,920 --> 00:59:29,760 Speaker 1: has the right to a view across the neighbor's property. Um, 856 00:59:29,800 --> 00:59:33,600 Speaker 1: but tell us about Gilligan's Island. Well, our our house 857 00:59:33,720 --> 00:59:39,720 Speaker 1: is right across from the the bay or the entrance. 858 00:59:39,880 --> 00:59:46,360 Speaker 1: Um that the opening segment of Gilligan's Island takes place 859 00:59:46,400 --> 00:59:51,120 Speaker 1: in him a few years ago. And this is in 860 00:59:51,200 --> 00:59:55,360 Speaker 1: Newport Beach or in Laguna. It's a Newport Beach. It's 861 00:59:55,360 --> 00:59:59,120 Speaker 1: a home in Newport Beach. And um, so we watched 862 00:59:59,160 --> 01:00:01,800 Speaker 1: it and we said, hey, that's where this house is. 863 01:00:02,080 --> 01:00:06,280 Speaker 1: And so we we learned to love Gilligan Islands. That 864 01:00:06,480 --> 01:00:10,320 Speaker 1: the skipper and the movie star, and we would sing 865 01:00:10,360 --> 01:00:13,360 Speaker 1: it to each other. And so when we would go 866 01:00:13,480 --> 01:00:18,280 Speaker 1: down to the hole in South Vaginas, we'd just seen 867 01:00:18,400 --> 01:00:22,520 Speaker 1: Gilligan's Island, and and the whole neighbor things started with 868 01:00:22,600 --> 01:00:27,000 Speaker 1: a sculpture in the backyard that the neighbor didn't disapprove 869 01:00:27,040 --> 01:00:30,880 Speaker 1: of at a fact, he had said he liked it. 870 01:00:30,920 --> 01:00:34,400 Speaker 1: But one day there was a one storm the palm 871 01:00:34,440 --> 01:00:39,200 Speaker 1: tree fronts um broke down and broke some of the 872 01:00:39,200 --> 01:00:42,440 Speaker 1: the glass, and so we put up the net um, 873 01:00:42,440 --> 01:00:45,320 Speaker 1: you know, during inclement, whether to protect it. He didn't 874 01:00:45,360 --> 01:00:49,240 Speaker 1: like that any sued and that was the start of 875 01:00:49,280 --> 01:00:55,960 Speaker 1: the whole thing, uh, which resultimately ridiculous that that Um, 876 01:00:56,280 --> 01:00:58,240 Speaker 1: you know I spent five and a million or five 877 01:00:58,320 --> 01:01:01,480 Speaker 1: five or a million. Um you know, I spent five 878 01:01:01,520 --> 01:01:05,120 Speaker 1: and a thousand. Lawyer's face. I think he did too. Um. 879 01:01:05,160 --> 01:01:08,120 Speaker 1: I suggested we just give it all to local charities. 880 01:01:08,160 --> 01:01:11,440 Speaker 1: He didn't want to do that. I think he. I 881 01:01:11,480 --> 01:01:14,400 Speaker 1: think being a personage. Um, you know, like the bon 882 01:01:14,560 --> 01:01:18,320 Speaker 1: King was part of the problem. He wanted to take 883 01:01:18,360 --> 01:01:22,040 Speaker 1: it to the Bond King, and he did. And you 884 01:01:22,080 --> 01:01:25,520 Speaker 1: mentioned in the book he was always sort of watching 885 01:01:25,560 --> 01:01:29,320 Speaker 1: you guys, had cameras trained on your house. How much 886 01:01:29,360 --> 01:01:33,040 Speaker 1: of this is just? Gee, you know, I don't care 887 01:01:33,040 --> 01:01:36,560 Speaker 1: if I'm a billionaire Bond King. I'm entitled to have 888 01:01:36,760 --> 01:01:39,920 Speaker 1: some degree of privacy in my own backyard. Where's the 889 01:01:39,960 --> 01:01:44,640 Speaker 1: line there? Well, that's true, and that's our argument that 890 01:01:44,600 --> 01:01:47,400 Speaker 1: it didn't fly with the judge. But you know, the 891 01:01:47,440 --> 01:01:50,960 Speaker 1: city ordinance has said that the sixty decibels was as 892 01:01:51,000 --> 01:01:53,800 Speaker 1: loud as you could play the music. We had a 893 01:01:53,840 --> 01:01:56,440 Speaker 1: decibel meter that kept it at sixty year under. But 894 01:01:56,520 --> 01:02:00,760 Speaker 1: it didn't please the neighbor, especially at eight or nine 895 01:02:00,760 --> 01:02:03,520 Speaker 1: o'clock when we were in the pool, and so, um, 896 01:02:03,600 --> 01:02:05,720 Speaker 1: you know, he kept seeing and kept calling the cops. 897 01:02:05,720 --> 01:02:08,560 Speaker 1: Etcetera to tour and ultimately we wound up in court 898 01:02:08,600 --> 01:02:14,000 Speaker 1: for playing loud music. And it is sort of disheartening. Um, 899 01:02:14,920 --> 01:02:19,280 Speaker 1: not that it diminishes my career, but it's certainly what 900 01:02:19,360 --> 01:02:23,080 Speaker 1: people talk about. And you know, I guess my epitaph 901 01:02:23,080 --> 01:02:27,040 Speaker 1: will be half on King and half you know, loud music, 902 01:02:27,360 --> 01:02:30,520 Speaker 1: which is a little disturbing, but that I was part 903 01:02:30,520 --> 01:02:32,960 Speaker 1: of it. Bill, I wish you would have called me 904 01:02:33,040 --> 01:02:35,920 Speaker 1: for advice. I would have given you a very simple solution. 905 01:02:36,440 --> 01:02:38,320 Speaker 1: Asked him when he wants for the house, by it 906 01:02:38,360 --> 01:02:43,040 Speaker 1: and knock it down, and him solved he didn't have 907 01:02:43,080 --> 01:02:45,560 Speaker 1: as much money as I did. I'm going to tell 908 01:02:45,600 --> 01:02:47,600 Speaker 1: you I someone I worked for at a neighbor that 909 01:02:47,680 --> 01:02:50,360 Speaker 1: was problematic and that was their solution, Hey, what do 910 01:02:50,360 --> 01:02:51,760 Speaker 1: you want for your house? And the guy threw out 911 01:02:51,760 --> 01:02:54,720 Speaker 1: a ridiculous numberies like done. Have your lawyer called my 912 01:02:54,800 --> 01:02:58,680 Speaker 1: lawyer and we'll we'll be bulldozing this in a month. Um. So, 913 01:02:58,680 --> 01:03:02,000 Speaker 1: so you know, Harry's book is out. Your book is out. 914 01:03:02,480 --> 01:03:05,120 Speaker 1: There's been reviews of both. Your book actually got some 915 01:03:05,160 --> 01:03:08,400 Speaker 1: pretty good reviews. Also, you really let a lot of 916 01:03:08,440 --> 01:03:13,280 Speaker 1: stuff out there that most people don't any regrets about 917 01:03:13,280 --> 01:03:15,680 Speaker 1: the book. Is there anything you feel like, well, maybe 918 01:03:15,760 --> 01:03:20,880 Speaker 1: I shouldn't have gone that far here or hey, this 919 01:03:20,960 --> 01:03:23,600 Speaker 1: is who I am and you gotta take the good 920 01:03:23,600 --> 01:03:27,400 Speaker 1: with the bad. No, no regrets about the book. I 921 01:03:27,400 --> 01:03:30,919 Speaker 1: mean I read it myself about a hundred times over 922 01:03:30,960 --> 01:03:33,160 Speaker 1: and over and over again and and cut some stuff 923 01:03:33,200 --> 01:03:36,080 Speaker 1: and not um what I wanted to do. What was 924 01:03:36,160 --> 01:03:43,680 Speaker 1: to present subjectively of course from my uh classes, but uh, 925 01:03:44,240 --> 01:03:47,720 Speaker 1: what I thought was a fair arguments on either side 926 01:03:47,760 --> 01:03:50,280 Speaker 1: from pim Pill and myself and tend to explain to 927 01:03:50,720 --> 01:03:54,200 Speaker 1: what I called the you know, the Pimpco magic um 928 01:03:54,640 --> 01:03:58,320 Speaker 1: why we were so successful? And I I think that's 929 01:03:58,360 --> 01:04:01,120 Speaker 1: the heart of the book. Um, you know why it 930 01:04:01,200 --> 01:04:06,360 Speaker 1: was spent Pimco successful? What what were the people like? Um? 931 01:04:07,320 --> 01:04:10,000 Speaker 1: So it um. I think it was a good book. 932 01:04:10,000 --> 01:04:13,160 Speaker 1: It was I think it. I shouldn't say this. I 933 01:04:13,240 --> 01:04:16,720 Speaker 1: think that a great book and I think people should 934 01:04:17,400 --> 01:04:21,760 Speaker 1: read it. Not not thoroughly. You can't spend three or 935 01:04:21,800 --> 01:04:25,320 Speaker 1: four hours reading it. But there's some very interesting parts 936 01:04:25,320 --> 01:04:29,600 Speaker 1: and there's some interesting investment outlooks in the appendix h 937 01:04:30,520 --> 01:04:34,080 Speaker 1: that you know, I think are pretty humorous. Since some 938 01:04:34,240 --> 01:04:37,080 Speaker 1: of the best and so I, uh, it's only four 939 01:04:37,200 --> 01:04:41,640 Speaker 1: ninety nine, So I'd recommend, you know, going to where 940 01:04:41,680 --> 01:04:45,240 Speaker 1: you need to go, Amazon or wherever it is, and 941 01:04:45,240 --> 01:04:48,520 Speaker 1: and all the proceeds are donated to charity. Yeah, to 942 01:04:48,640 --> 01:04:51,880 Speaker 1: the to the extent that that matter as much, But 943 01:04:52,480 --> 01:04:55,760 Speaker 1: that's where where it goes. Let's talk a little bit 944 01:04:55,760 --> 01:04:59,520 Speaker 1: about the state of the market today and what's going on. 945 01:05:00,560 --> 01:05:04,200 Speaker 1: When you wrote the book, inflation was looking like it 946 01:05:04,240 --> 01:05:07,959 Speaker 1: was gonna tick all the way up to five. We're 947 01:05:07,960 --> 01:05:10,600 Speaker 1: recording this towards the end of March. The last print 948 01:05:10,640 --> 01:05:14,040 Speaker 1: we got was just about eight percent. What's your view 949 01:05:14,680 --> 01:05:18,240 Speaker 1: of inflation here? Is this transitory or is this a 950 01:05:18,400 --> 01:05:23,120 Speaker 1: kin to the nineties seventies or is this something completely different? Well, 951 01:05:23,120 --> 01:05:26,840 Speaker 1: I don't think it's transitory. Uh. In other words, going 952 01:05:26,960 --> 01:05:34,320 Speaker 1: back to two or less. Um, I think it's a result, yes, 953 01:05:34,440 --> 01:05:41,880 Speaker 1: of supply shocks, of oil prices, of the war in Ukraine. Um, 954 01:05:42,560 --> 01:05:47,760 Speaker 1: you know a lot of global considerations, but it's also, um, 955 01:05:47,800 --> 01:05:50,720 Speaker 1: you know, a Freedman Milton Freedman type of thing in 956 01:05:50,760 --> 01:05:54,880 Speaker 1: which you know, basically money supply matters. And I'll take 957 01:05:54,920 --> 01:05:58,680 Speaker 1: it back very and uh, I don't think he started then, 958 01:05:58,720 --> 01:06:04,040 Speaker 1: but you're certainly aware of Nikon went off the gold standard, 959 01:06:04,080 --> 01:06:07,560 Speaker 1: and credit was free to be created as opposed to 960 01:06:07,560 --> 01:06:10,480 Speaker 1: be tied to the gold and and back the inn 961 01:06:10,920 --> 01:06:14,400 Speaker 1: Total credit in the United States and I'm talking about mortgages, 962 01:06:14,440 --> 01:06:17,080 Speaker 1: I'm talking about government that, I'm talking about credit cards, 963 01:06:17,360 --> 01:06:22,840 Speaker 1: I'm talking about everything was one trillion dollars um. Today 964 01:06:23,080 --> 01:06:27,040 Speaker 1: that number is eighties seven trillion. And so talk about 965 01:06:27,080 --> 01:06:31,560 Speaker 1: a growth industry um one to eight seven over what 966 01:06:32,200 --> 01:06:36,320 Speaker 1: fifty one years UM. And so it's been this tremendous 967 01:06:36,920 --> 01:06:41,520 Speaker 1: creation of credit in the last few years, certainly based 968 01:06:41,600 --> 01:06:45,240 Speaker 1: upon the COVID bill out and as well as the 969 01:06:45,280 --> 01:06:50,520 Speaker 1: fiscal uh stimulation of four trillion dollars. Uh. You know, 970 01:06:50,680 --> 01:06:53,960 Speaker 1: to study the economy. So when you combine a huge 971 01:06:54,320 --> 01:06:59,040 Speaker 1: discal push with monetary creation and the FED increasing its 972 01:06:59,080 --> 01:07:03,560 Speaker 1: balanchie date brillion and like I say, credit credit credit um, 973 01:07:03,720 --> 01:07:07,440 Speaker 1: inflation is inevitable. And so if they continue to do this, 974 01:07:07,520 --> 01:07:10,120 Speaker 1: and I know the Fed's talked about reducing its balance 975 01:07:10,200 --> 01:07:15,080 Speaker 1: sheet UM, and the government isn't issuing a four trillion 976 01:07:15,120 --> 01:07:20,560 Speaker 1: dollar deficit, perhaps there's one trillion now um. Yeah, this 977 01:07:20,640 --> 01:07:24,240 Speaker 1: is certainly excessive in terms of the possibility of exceeding 978 01:07:24,320 --> 01:07:27,680 Speaker 1: too pers and inflation. So yeah, we're coming back down. Yes, 979 01:07:27,800 --> 01:07:31,920 Speaker 1: oil prices and gasoline prices will uh steady at some 980 01:07:31,960 --> 01:07:34,040 Speaker 1: point and come back down. The same thing with food 981 01:07:34,080 --> 01:07:39,840 Speaker 1: and wheat and um, all of the commodities. Um. But um. 982 01:07:41,080 --> 01:07:43,640 Speaker 1: And this is a guess, um, you know, forty five 983 01:07:44,240 --> 01:07:47,480 Speaker 1: inflation for the next several years I think is baked 984 01:07:47,520 --> 01:07:50,600 Speaker 1: in the cake. And the question becomes, now that the 985 01:07:50,640 --> 01:07:56,040 Speaker 1: FED isn't buying bonds, who wants to buy them? At 986 01:07:56,920 --> 01:07:59,720 Speaker 1: you to thirty five of the tenure and and two 987 01:08:00,240 --> 01:08:04,600 Speaker 1: for the third year, and and perhaps a flight to safety, 988 01:08:05,040 --> 01:08:11,880 Speaker 1: I can see that. But but you're certainly being out inflated. 989 01:08:12,240 --> 01:08:16,080 Speaker 1: I guess by um, you know, the the existing in 990 01:08:16,120 --> 01:08:22,160 Speaker 1: the future trail of inflation going forward, bonds are definitely 991 01:08:22,200 --> 01:08:26,120 Speaker 1: something to avoid. Huh. That's really interesting. The FED. Are 992 01:08:26,160 --> 01:08:29,559 Speaker 1: they behind the curve? And if so, by how much? Yeah, 993 01:08:29,560 --> 01:08:32,960 Speaker 1: they're way behind the curve. And I can see, uh, 994 01:08:33,160 --> 01:08:36,360 Speaker 1: you know, the COVID crisis of a year two years 995 01:08:36,400 --> 01:08:40,040 Speaker 1: back now or getting onto two years. I can see 996 01:08:40,080 --> 01:08:44,400 Speaker 1: how that would be a reason to not raise interest rates, 997 01:08:44,439 --> 01:08:48,160 Speaker 1: to not stop buying bonds. But you know, I think 998 01:08:48,200 --> 01:08:51,559 Speaker 1: Powell should have figured it out that you know, a 999 01:08:51,640 --> 01:08:55,680 Speaker 1: four trillion dollar budget deficit. In the stimulation in the 1000 01:08:55,720 --> 01:08:59,760 Speaker 1: economy that that creates, as well as the credit that 1001 01:09:00,040 --> 01:09:05,080 Speaker 1: is being created by his policies at near zero posent industry, 1002 01:09:05,080 --> 01:09:08,320 Speaker 1: it's was was ultimately going to be very inflationary, and 1003 01:09:08,400 --> 01:09:12,080 Speaker 1: that to think that he could stop it, um, And 1004 01:09:12,479 --> 01:09:15,040 Speaker 1: he doesn't speak to stop in it at a time. 1005 01:09:15,160 --> 01:09:18,200 Speaker 1: He says it will take time. But once you get 1006 01:09:18,200 --> 01:09:22,000 Speaker 1: the momentum going like in the seventies, um, you know, 1007 01:09:22,040 --> 01:09:24,599 Speaker 1: in the in the rays is you know, based upon 1008 01:09:25,720 --> 01:09:28,880 Speaker 1: prices at the stores and grocery stores. Uh, you know, 1009 01:09:28,960 --> 01:09:32,280 Speaker 1: it's pretty hard to stop. And in order to keep 1010 01:09:32,280 --> 01:09:35,080 Speaker 1: the economy above the line, that's the important thing. To 1011 01:09:35,200 --> 01:09:38,439 Speaker 1: keep it above the line in terms of fortified percent 1012 01:09:39,040 --> 01:09:44,080 Speaker 1: nominal GDP, which was the standard before. Uh, you have 1013 01:09:44,240 --> 01:09:51,000 Speaker 1: to keep on printing money. And ultimately that becomes destructive, 1014 01:09:51,479 --> 01:09:54,200 Speaker 1: not just in terms of inflation, but in terms of savings, 1015 01:09:54,240 --> 01:09:58,559 Speaker 1: and it distorts the U. S economy, and it's distorts 1016 01:09:58,560 --> 01:10:02,120 Speaker 1: the global economy. So I'm going to assume you don't 1017 01:10:02,160 --> 01:10:07,679 Speaker 1: think bonds are buy anytime soon. No, I don't, But 1018 01:10:07,680 --> 01:10:09,800 Speaker 1: but I don't see here, you know, I think there's 1019 01:10:09,840 --> 01:10:12,880 Speaker 1: a limit to the tenure. I've talked about in my 1020 01:10:13,080 --> 01:10:16,280 Speaker 1: tweets in the last few weeks about you know, breaking 1021 01:10:16,560 --> 01:10:20,599 Speaker 1: a long term down trendline at two fifteen for the tenure, 1022 01:10:20,600 --> 01:10:23,200 Speaker 1: and now it's at two thirty five, so theoretically it's 1023 01:10:23,280 --> 01:10:29,040 Speaker 1: broken the line. Um, I don't don't think the economy 1024 01:10:29,080 --> 01:10:33,200 Speaker 1: can stand much more in terms of higher yields. I mean, 1025 01:10:33,560 --> 01:10:37,080 Speaker 1: we have a flat Yielker, what does that mean ultimately 1026 01:10:37,120 --> 01:10:40,120 Speaker 1: in terms of forward interest rates? It it basically means 1027 01:10:40,160 --> 01:10:44,120 Speaker 1: that the tenure at two thirty five five years forward 1028 01:10:44,200 --> 01:10:47,280 Speaker 1: is estimated to be two forty or two forty five. 1029 01:10:47,400 --> 01:10:53,480 Speaker 1: So all of all of the curve going forward basically 1030 01:10:53,520 --> 01:10:57,920 Speaker 1: in terms of current pricing, is suggesting that interest rates 1031 01:10:58,120 --> 01:11:01,240 Speaker 1: don't go up much. And so why that be if 1032 01:11:01,360 --> 01:11:07,840 Speaker 1: inflation is four it would be simply because if it 1033 01:11:08,560 --> 01:11:11,839 Speaker 1: ten year goes to three or three and a half 1034 01:11:11,920 --> 01:11:17,080 Speaker 1: or four um, then it'll break the economy, much like 1035 01:11:17,479 --> 01:11:20,320 Speaker 1: when the said went to five and a quarter in 1036 01:11:20,400 --> 01:11:24,680 Speaker 1: two thousand and six, it broke the mortgage market. You 1037 01:11:24,720 --> 01:11:27,240 Speaker 1: know now are at much lower levels, but there's been 1038 01:11:27,280 --> 01:11:31,360 Speaker 1: a lot more debt created. And I simply think that 1039 01:11:32,640 --> 01:11:36,800 Speaker 1: uh fifty basis points higher is about as much as 1040 01:11:37,080 --> 01:11:40,920 Speaker 1: as the economy can take. Otherwise we see recession. And 1041 01:11:41,280 --> 01:11:43,840 Speaker 1: that's basically what the flat you care You'll curve is 1042 01:11:43,880 --> 01:11:46,800 Speaker 1: telling you that that you've got to be careful. And 1043 01:11:46,920 --> 01:11:50,320 Speaker 1: that's why the thirty year bond with um, you know, 1044 01:11:50,360 --> 01:11:54,599 Speaker 1: a duration of of you know, close to twenty is 1045 01:11:54,760 --> 01:11:58,160 Speaker 1: trading at two and a half percent. It's simply because 1046 01:11:58,200 --> 01:12:02,200 Speaker 1: there are those that think, um, that it interest rates 1047 01:12:02,320 --> 01:12:07,200 Speaker 1: go much higher, the economy will enter a recession. UM. 1048 01:12:07,240 --> 01:12:10,680 Speaker 1: So I don't like bonds. Obviously, if you buy a 1049 01:12:10,760 --> 01:12:13,320 Speaker 1: tenure at two thirty five, you're not getting paid your 1050 01:12:13,320 --> 01:12:17,200 Speaker 1: money's worth relative to inflation. You should go elsewhere. But 1051 01:12:18,040 --> 01:12:23,840 Speaker 1: I don't. I don't think there's the nineteen eighty one 1052 01:12:23,960 --> 01:12:29,360 Speaker 1: risk anytime soon of interest rates moving much more than 1053 01:12:29,400 --> 01:12:34,400 Speaker 1: a hundred risk spots higher. Huh, that's really interesting. Let 1054 01:12:34,400 --> 01:12:38,640 Speaker 1: me give you a counterfactual to the issue of a 1055 01:12:38,720 --> 01:12:44,599 Speaker 1: trillion dollars in credit. Fifty years ago. Hypothetically, there wasn't 1056 01:12:44,640 --> 01:12:49,240 Speaker 1: this massive credit creation, uh Fanny Freddie, the government, the 1057 01:12:49,280 --> 01:12:54,760 Speaker 1: private sector, of the household sector. Let's say the outstanding 1058 01:12:54,760 --> 01:12:59,040 Speaker 1: credit was a couple of trillion dollars. What would that 1059 01:12:59,160 --> 01:13:04,360 Speaker 1: lack of credit creation have meant for the economy. Asked differently, 1060 01:13:04,960 --> 01:13:10,240 Speaker 1: how much of our wealth and success and GDP expansion 1061 01:13:10,320 --> 01:13:15,200 Speaker 1: and rising in corporate profits is related to all of 1062 01:13:15,240 --> 01:13:20,360 Speaker 1: this credit that's been issued. Oh, it is um and 1063 01:13:20,360 --> 01:13:25,200 Speaker 1: and certainly you need to create credit, ongoing credit relative 1064 01:13:25,280 --> 01:13:29,600 Speaker 1: till last year and the year before, in order to 1065 01:13:29,600 --> 01:13:35,800 Speaker 1: to keep the economy going. Um. The question becomes how 1066 01:13:35,880 --> 01:13:39,240 Speaker 1: much how much credit? And uh, certainly in the last 1067 01:13:39,400 --> 01:13:44,000 Speaker 1: several years, it's accelerated dramatically because of the physical and 1068 01:13:44,040 --> 01:13:46,840 Speaker 1: the monetary stance at zero pers and interest rates. And 1069 01:13:47,439 --> 01:13:49,839 Speaker 1: no one can really judge, no one. No one can 1070 01:13:49,880 --> 01:13:53,080 Speaker 1: tell you or any no one can tell me that 1071 01:13:53,200 --> 01:13:57,920 Speaker 1: they know what the number is. It's just that the 1072 01:13:58,000 --> 01:14:03,680 Speaker 1: global economy, than most part is hooked on more and 1073 01:14:03,680 --> 01:14:07,519 Speaker 1: more credit, more and more money. And that's what you know, 1074 01:14:07,600 --> 01:14:11,880 Speaker 1: the cryptos, that's what bitcoin and ethereum and so and 1075 01:14:13,120 --> 01:14:18,120 Speaker 1: represent in terms of people that are fearful that the 1076 01:14:18,240 --> 01:14:22,000 Speaker 1: government keeps on printing. So, so let's talk about that. 1077 01:14:22,320 --> 01:14:27,360 Speaker 1: I'm gonna suggest it's not a huge coincidence that all 1078 01:14:27,400 --> 01:14:31,240 Speaker 1: the credit created during the financial crisis in a eight 1079 01:14:31,320 --> 01:14:36,320 Speaker 1: and oh nine and beyond coincided with the creation of 1080 01:14:36,360 --> 01:14:40,040 Speaker 1: a lot of different cryptocurrencies and their rise in price. 1081 01:14:40,760 --> 01:14:45,080 Speaker 1: You mentioned your own bitcoin, You're optimistic about etherorium. This 1082 01:14:45,200 --> 01:14:48,320 Speaker 1: is not the typical safe bond experience. This is a 1083 01:14:48,320 --> 01:14:51,840 Speaker 1: bit of a long shot. So tell us why you've 1084 01:14:51,960 --> 01:14:57,960 Speaker 1: jumped aboard the cryptocurrency train. Well, it it's not a 1085 01:15:00,200 --> 01:15:05,880 Speaker 1: because of its volatility and compared to the dollar. You know, 1086 01:15:06,120 --> 01:15:10,639 Speaker 1: it's certainly ten times as volatile as the dollar, uh 1087 01:15:10,800 --> 01:15:14,640 Speaker 1: during any particular period of time. So to use it 1088 01:15:14,720 --> 01:15:19,920 Speaker 1: as a medium of exchange, which ultimately I think it 1089 01:15:19,960 --> 01:15:23,880 Speaker 1: will be um and is becoming. Uh, you know, it 1090 01:15:23,960 --> 01:15:28,200 Speaker 1: does a very risky proposition that depends on on the 1091 01:15:28,320 --> 01:15:31,920 Speaker 1: level of bitcoing on any particular day, any particular moment. 1092 01:15:32,040 --> 01:15:37,559 Speaker 1: I think it's fascinating on Saturday and Sunday at at midnight, 1093 01:15:37,640 --> 01:15:42,000 Speaker 1: I can I can see trading in in bitcoin. Um. 1094 01:15:42,000 --> 01:15:45,280 Speaker 1: You know, limited though it is, but UM, I think 1095 01:15:45,400 --> 01:15:49,200 Speaker 1: ultimately you know the global financial system which is dollar 1096 01:15:49,280 --> 01:15:53,400 Speaker 1: dependent and dollars supported. Um. You know, much like in 1097 01:15:53,400 --> 01:15:58,520 Speaker 1: the seventies in which Nixon broke the code from gold. Um, 1098 01:15:58,600 --> 01:16:03,880 Speaker 1: you know, things happen, and now that there is a 1099 01:16:03,920 --> 01:16:08,920 Speaker 1: potential alternative in terms of bitcoin and some of the 1100 01:16:08,920 --> 01:16:14,840 Speaker 1: other cryptos UM. You know, I think it offers the 1101 01:16:14,880 --> 01:16:21,800 Speaker 1: opportunity to UM to avoid, to avoid a currency that 1102 01:16:21,840 --> 01:16:24,680 Speaker 1: goes down, down, down, in terms of its value. UM. 1103 01:16:25,479 --> 01:16:29,400 Speaker 1: You know, the bitcoin ultimately is capped, at least they 1104 01:16:29,720 --> 01:16:32,960 Speaker 1: say it's kepped, you know, at a certain level, most 1105 01:16:33,000 --> 01:16:36,120 Speaker 1: of which has already been mined or or supplied, and 1106 01:16:36,200 --> 01:16:40,160 Speaker 1: so UM to the extent that future supply is limited, 1107 01:16:40,240 --> 01:16:42,559 Speaker 1: and to the extent, and this is important, to the 1108 01:16:42,600 --> 01:16:47,639 Speaker 1: extent that it becomes a medium of exchange and it's 1109 01:16:47,680 --> 01:16:50,280 Speaker 1: not really a medium of exchange yet. You can't buy 1110 01:16:50,280 --> 01:16:53,400 Speaker 1: a donut with bitcoin, but you can buy other things. 1111 01:16:53,439 --> 01:16:56,519 Speaker 1: And there are countries that UM are are using it. 1112 01:16:57,680 --> 01:17:01,040 Speaker 1: So UM, you know, it's it's up in the air. 1113 01:17:01,280 --> 01:17:05,439 Speaker 1: And you know, did I get in at a good price? No, 1114 01:17:05,800 --> 01:17:09,160 Speaker 1: I think I got in it through a mutual under fifty. 1115 01:17:09,720 --> 01:17:14,000 Speaker 1: But I just it's just a small, it's up, small piece. 1116 01:17:14,120 --> 01:17:17,439 Speaker 1: I use it mainly for observation and to remind me 1117 01:17:17,680 --> 01:17:24,120 Speaker 1: that that even the dollar has a global standard, UM 1118 01:17:24,640 --> 01:17:30,479 Speaker 1: is subject to future volatility and certainly to appreciation in 1119 01:17:30,560 --> 01:17:34,000 Speaker 1: terms of its value relative to what it can buy. 1120 01:17:35,160 --> 01:17:39,960 Speaker 1: Really interesting, let's let's talk growth stocks and technology UM. 1121 01:17:40,040 --> 01:17:43,479 Speaker 1: They had a great couple of years until I don't know, 1122 01:17:43,520 --> 01:17:46,519 Speaker 1: about four or five months ago, we've seen that the 1123 01:17:46,640 --> 01:17:49,360 Speaker 1: complex really takes some some hits. What what are you 1124 01:17:49,479 --> 01:17:53,240 Speaker 1: thought about the various tech stocks that are out there 1125 01:17:53,320 --> 01:17:57,360 Speaker 1: and and some of the managers who kind of rose 1126 01:17:57,400 --> 01:18:01,760 Speaker 1: to fame on on the rallying technolog ology. Well, I 1127 01:18:02,479 --> 01:18:06,840 Speaker 1: think two months ago at the Pig there was a 1128 01:18:06,880 --> 01:18:10,160 Speaker 1: bubble in most of these talks. Um. You know, many 1129 01:18:10,200 --> 01:18:14,639 Speaker 1: of them had no earnings and really no prospect for 1130 01:18:14,960 --> 01:18:18,559 Speaker 1: earnings two three or four or five years in the future. Um. 1131 01:18:19,080 --> 01:18:21,800 Speaker 1: You know, they were based on hope and and yes, 1132 01:18:21,880 --> 01:18:28,519 Speaker 1: on objective and subjective estimations of a changing world in 1133 01:18:28,600 --> 01:18:33,840 Speaker 1: terms of technology, um, and a consumer use of that technology. 1134 01:18:33,920 --> 01:18:36,839 Speaker 1: Sylum that you've pointed out in the past that quote 1135 01:18:36,880 --> 01:18:40,120 Speaker 1: the new stock Queen Cathy would seems to be a 1136 01:18:40,160 --> 01:18:43,599 Speaker 1: two year wonder and since then the art complex has 1137 01:18:43,600 --> 01:18:47,080 Speaker 1: had some pretty serious draw downs. What are your thoughts 1138 01:18:47,080 --> 01:18:50,639 Speaker 1: on managers like Woods who have you know, put together 1139 01:18:50,680 --> 01:18:55,000 Speaker 1: a great track record when the big cap profitable companies 1140 01:18:55,040 --> 01:18:59,880 Speaker 1: the Google's, Amazon's Apples, Tesla's Netflix and Video, when when 1141 01:19:00,000 --> 01:19:03,760 Speaker 1: those have been screaming higher, Well, you know, I give 1142 01:19:03,760 --> 01:19:08,000 Speaker 1: her credit. I watched she's got fifteen billion under management, 1143 01:19:08,040 --> 01:19:13,400 Speaker 1: and and that's that's just how you break into this market. 1144 01:19:13,439 --> 01:19:16,560 Speaker 1: You don't break in by being a junior clerk like 1145 01:19:16,680 --> 01:19:20,000 Speaker 1: I was it at Pacific Mutual. You break in with 1146 01:19:20,040 --> 01:19:25,200 Speaker 1: an innovative, innovative idea, and hers was that these companies 1147 01:19:25,240 --> 01:19:28,920 Speaker 1: that she was buying, um, you know, we're a significant 1148 01:19:28,960 --> 01:19:33,400 Speaker 1: part of our future economic future. And I think that's true. 1149 01:19:33,439 --> 01:19:35,960 Speaker 1: But you know, I listened to her on CNBC all 1150 01:19:35,960 --> 01:19:39,880 Speaker 1: the time, and it seems like she doesn't have an 1151 01:19:39,960 --> 01:19:44,519 Speaker 1: excellent sense of value and when to buy and what 1152 01:19:44,720 --> 01:19:48,280 Speaker 1: to pay. Um. She she simply thinks that at some 1153 01:19:48,360 --> 01:19:52,320 Speaker 1: point down the road, on the long term road, that 1154 01:19:53,560 --> 01:19:58,320 Speaker 1: her her judgment in terms of owning these securities will 1155 01:19:58,360 --> 01:20:02,559 Speaker 1: be validated. And perhaps I will. But in the meantime, um, 1156 01:20:02,600 --> 01:20:07,240 Speaker 1: you know, subject to the huge veil of volatility. And 1157 01:20:07,360 --> 01:20:10,479 Speaker 1: I I also think, you know, much like Peter Lynch 1158 01:20:10,560 --> 01:20:13,880 Speaker 1: back and not to knock Peter Lynch because uh, you know, 1159 01:20:14,000 --> 01:20:19,280 Speaker 1: he was a significant part of the late eighties and 1160 01:20:19,439 --> 01:20:23,360 Speaker 1: early nineties UM in terms of Magellan, but you know, 1161 01:20:23,400 --> 01:20:26,280 Speaker 1: once more money started to come into was fun because 1162 01:20:26,280 --> 01:20:28,840 Speaker 1: he was doing well, that money went straight into the 1163 01:20:28,840 --> 01:20:31,880 Speaker 1: same stock that he was owning and buying, and uh, 1164 01:20:32,000 --> 01:20:34,000 Speaker 1: you know, I went up, up, up, because the cash 1165 01:20:34,040 --> 01:20:37,240 Speaker 1: flow was going straight into that. And I think the 1166 01:20:37,280 --> 01:20:40,120 Speaker 1: same thing for the last several years with arc Um 1167 01:20:40,280 --> 01:20:43,759 Speaker 1: and uh some of the other funds that she manages, 1168 01:20:43,880 --> 01:20:47,479 Speaker 1: huge inflows would lead to more and more and more buying, 1169 01:20:47,560 --> 01:20:52,280 Speaker 1: and now, uh, some of the outflows lead to lower 1170 01:20:52,280 --> 01:20:55,040 Speaker 1: and lower prices. And so I think you just have 1171 01:20:55,160 --> 01:20:59,519 Speaker 1: to be careful in terms of anointing someone that has 1172 01:20:59,560 --> 01:21:01,880 Speaker 1: a had a good record for two years. Now it's 1173 01:21:02,400 --> 01:21:05,240 Speaker 1: the last year, it's not so good. Um, you know, 1174 01:21:05,280 --> 01:21:07,360 Speaker 1: let's let's see what happens five years from now. I 1175 01:21:07,520 --> 01:21:10,040 Speaker 1: think it's a little early fit fair enough. And to 1176 01:21:10,200 --> 01:21:14,400 Speaker 1: clarify the assets under management, I want to say that 1177 01:21:14,520 --> 01:21:18,519 Speaker 1: it was about coming up on sixty billion at its peak, 1178 01:21:19,120 --> 01:21:22,719 Speaker 1: and it's since fallen at least as of the beginning 1179 01:21:22,720 --> 01:21:25,559 Speaker 1: of this year, to about twenty three or twenty five 1180 01:21:25,640 --> 01:21:30,040 Speaker 1: billion dollars. I'm not looking at her releases, but more 1181 01:21:30,160 --> 01:21:33,599 Speaker 1: or less that seems to be a ballpark number when 1182 01:21:33,600 --> 01:21:37,800 Speaker 1: I'm looking at their website. So let's talk about someone 1183 01:21:37,840 --> 01:21:41,800 Speaker 1: else you actually mentioned in the book. Who's another fund 1184 01:21:41,840 --> 01:21:46,240 Speaker 1: manager you you talk about Jeff Gunlock, who many anointed 1185 01:21:46,280 --> 01:21:48,760 Speaker 1: as the heir apparents or placed you. I don't know 1186 01:21:48,800 --> 01:21:51,880 Speaker 1: if that worked out that way. What are your thoughts 1187 01:21:51,920 --> 01:21:58,160 Speaker 1: about gunlocks approach to managing fixed income? Well, he's sort 1188 01:21:58,160 --> 01:22:01,840 Speaker 1: of anointed himself. I mean, one of the commentators on 1189 01:22:01,960 --> 01:22:06,439 Speaker 1: CNBC throughout the term once and and he ran with him. 1190 01:22:06,479 --> 01:22:09,840 Speaker 1: I guess, I guess I did too. But you know, 1191 01:22:10,080 --> 01:22:12,839 Speaker 1: to be a bond king, you've got to have a kingdom. 1192 01:22:13,080 --> 01:22:18,439 Speaker 1: And you know, Pemco's kingdom, although ultimately grew to one 1193 01:22:18,479 --> 01:22:22,639 Speaker 1: to two trillion dollars a gun Lex kingdom, in terms 1194 01:22:22,680 --> 01:22:26,679 Speaker 1: of his mutual funders around fifty billion dollars and not growing, 1195 01:22:26,880 --> 01:22:32,880 Speaker 1: and and his performance has been like sixtieth percentile for 1196 01:22:33,040 --> 01:22:36,880 Speaker 1: three years, five years or whatever. I think he's a 1197 01:22:36,920 --> 01:22:39,080 Speaker 1: smart guy. You know, when I listened to him on 1198 01:22:39,200 --> 01:22:44,280 Speaker 1: c NBC, I O, yes. And he he follows markets, 1199 01:22:45,040 --> 01:22:50,080 Speaker 1: you know, very assiduously. He's he's really into it. So 1200 01:22:50,120 --> 01:22:53,799 Speaker 1: I respect that. But you got to put up the numbers, 1201 01:22:53,800 --> 01:22:57,000 Speaker 1: and you've got to build your kingdom in order to 1202 01:22:57,000 --> 01:23:00,040 Speaker 1: be the bond king or the new bond king. And 1203 01:23:01,280 --> 01:23:03,599 Speaker 1: you know, I don't think anybody can be the future 1204 01:23:03,640 --> 01:23:08,120 Speaker 1: bond king because central banks basically are the kings and 1205 01:23:08,160 --> 01:23:11,880 Speaker 1: the queens of the market. They rule, They determine where 1206 01:23:11,920 --> 01:23:15,880 Speaker 1: interest rates are going, not um you know von managers 1207 01:23:15,920 --> 01:23:20,919 Speaker 1: like him too or uh you know Double Line, etcetera, etcetera. 1208 01:23:21,040 --> 01:23:23,840 Speaker 1: So you know, I think the term is sort of 1209 01:23:23,880 --> 01:23:28,520 Speaker 1: passe and certainly unlock doesn't tip uh you know, the 1210 01:23:28,520 --> 01:23:31,840 Speaker 1: the past definition of what a bond king should be. Right, 1211 01:23:32,040 --> 01:23:36,080 Speaker 1: And and as of December thirty one, Double Line had 1212 01:23:36,640 --> 01:23:40,640 Speaker 1: add thirty four billion in assets under management. Totally, I 1213 01:23:40,680 --> 01:23:44,280 Speaker 1: don't I'm not seeing the breakdown by fund, but you 1214 01:23:44,320 --> 01:23:48,559 Speaker 1: know it's definitely a substantial amount of money, but you know, 1215 01:23:48,680 --> 01:23:51,439 Speaker 1: not a trillion dollars worth. Let's you know, one of 1216 01:23:51,479 --> 01:23:55,919 Speaker 1: the things we should talk about is risks to financial markets. 1217 01:23:55,960 --> 01:23:59,920 Speaker 1: And you have pointed out that climate change is an 1218 01:24:00,000 --> 01:24:04,400 Speaker 1: actual risk factor. Tell us what you see, um as 1219 01:24:04,400 --> 01:24:08,320 Speaker 1: that risk from rising temperatures and and how do you 1220 01:24:08,400 --> 01:24:13,479 Speaker 1: think about E S G investment? Well, I think the 1221 01:24:13,600 --> 01:24:17,040 Speaker 1: risk is is it's sort of like the broken window syndrome. 1222 01:24:17,080 --> 01:24:23,000 Speaker 1: I mean, so that sends a baseball through a window 1223 01:24:23,040 --> 01:24:26,400 Speaker 1: on their brakes and you've got to replace it. Um, 1224 01:24:26,439 --> 01:24:29,679 Speaker 1: that increases G D p the replacement of a window, 1225 01:24:29,760 --> 01:24:32,160 Speaker 1: but it doesn't make the window any better than it 1226 01:24:32,280 --> 01:24:35,519 Speaker 1: was before. And it's it's really the same thing. I 1227 01:24:35,840 --> 01:24:41,960 Speaker 1: think in terms of global warming, UM does um, you know, 1228 01:24:42,000 --> 01:24:45,559 Speaker 1: because it requires a huge amount of investment in order 1229 01:24:45,560 --> 01:24:49,360 Speaker 1: to to stop it from going forward, and a huge 1230 01:24:49,479 --> 01:24:55,559 Speaker 1: change in terms of societal behavior and and so that 1231 01:24:55,680 --> 01:25:01,880 Speaker 1: investment that goes into capping carbon creation at a certain level. 1232 01:25:02,920 --> 01:25:08,120 Speaker 1: You know, if if global warming wasn't taking place, then um, 1233 01:25:08,439 --> 01:25:11,840 Speaker 1: then you could use that money for something more productive. 1234 01:25:12,240 --> 01:25:16,439 Speaker 1: But it's it's you can't really call it productive. If 1235 01:25:16,920 --> 01:25:21,240 Speaker 1: you simply stop a negative trend from happening, it it 1236 01:25:21,960 --> 01:25:25,960 Speaker 1: makes things better than they would be. But it's sort 1237 01:25:26,000 --> 01:25:29,599 Speaker 1: of like the broken window. And so UM, I think 1238 01:25:29,720 --> 01:25:35,400 Speaker 1: in the future enormously countries and companies will be moving 1239 01:25:35,600 --> 01:25:42,040 Speaker 1: in the direction of of creating a better future environment 1240 01:25:42,280 --> 01:25:48,120 Speaker 1: for us and for our kids and grandkids. But but ultimately, UM, 1241 01:25:48,439 --> 01:25:50,519 Speaker 1: it won't make it any better and then it is now. 1242 01:25:50,680 --> 01:25:54,800 Speaker 1: It will simply not make it worse. And uh, that 1243 01:25:54,920 --> 01:25:57,360 Speaker 1: costal lot of money, and I don't don't make it 1244 01:25:57,400 --> 01:26:01,240 Speaker 1: worse that that's the advice at this point. Huh. Interesting, 1245 01:26:01,600 --> 01:26:04,240 Speaker 1: you know we've gone this far into the conversation, and 1246 01:26:04,640 --> 01:26:08,040 Speaker 1: I just haven't gotten around to ask you about your 1247 01:26:08,160 --> 01:26:12,960 Speaker 1: days as a card counter playing blackjack. Tell us a 1248 01:26:13,040 --> 01:26:15,599 Speaker 1: little bit, which also you mentioned in the book. Tell 1249 01:26:15,680 --> 01:26:19,080 Speaker 1: us a little bit about Ed Thorpe and his books 1250 01:26:19,720 --> 01:26:24,960 Speaker 1: and what led you to to head to Sin City. Well, 1251 01:26:24,960 --> 01:26:27,360 Speaker 1: I'll go through it quickly. Uh. You know that the 1252 01:26:27,479 --> 01:26:32,200 Speaker 1: year before I graduated from Duke in sixty I had 1253 01:26:32,200 --> 01:26:34,599 Speaker 1: gone to Bahamas on the spring break and I lost 1254 01:26:35,520 --> 01:26:40,839 Speaker 1: fifty on the black jack table um. And I remembered 1255 01:26:40,880 --> 01:26:45,600 Speaker 1: that after I uh nearly cut off the top of 1256 01:26:45,640 --> 01:26:47,960 Speaker 1: my head in a car accident and was in a 1257 01:26:48,000 --> 01:26:52,080 Speaker 1: hospital for a long time, and somebody introduced me to 1258 01:26:52,160 --> 01:26:54,160 Speaker 1: this new book called Beat the Dealer. Until I had 1259 01:26:54,200 --> 01:26:56,800 Speaker 1: all the time in the world to sit there and 1260 01:26:56,800 --> 01:27:01,160 Speaker 1: and to discover whether or not his theory about car 1261 01:27:01,280 --> 01:27:03,840 Speaker 1: counting worked. I didn't have a computer, but I would 1262 01:27:03,840 --> 01:27:07,040 Speaker 1: play thousands of hands of black jack back and forth, 1263 01:27:07,080 --> 01:27:10,800 Speaker 1: back and forth, and I discovered it worked. And so 1264 01:27:10,880 --> 01:27:14,920 Speaker 1: when I graduated from Duke in May of sixty six, 1265 01:27:14,920 --> 01:27:18,759 Speaker 1: and before I was going into the Navy and ultimately 1266 01:27:18,800 --> 01:27:23,160 Speaker 1: to Vietnam. Four months later, I went to Las Vegas. 1267 01:27:23,200 --> 01:27:25,439 Speaker 1: I hopped on a freight train. I had two hundred 1268 01:27:25,439 --> 01:27:30,759 Speaker 1: dollars that's all I could afford to put on the tables, 1269 01:27:30,880 --> 01:27:34,120 Speaker 1: and took a freight chain, took seven days to Vegas, 1270 01:27:34,240 --> 01:27:37,960 Speaker 1: got off at the Golden Nugget right in downtown and 1271 01:27:36,920 --> 01:27:40,680 Speaker 1: U and rented a six dollar a day motel that 1272 01:27:41,080 --> 01:27:44,519 Speaker 1: n cents of free nickels and a free breakfast. And 1273 01:27:45,360 --> 01:27:50,880 Speaker 1: so I started playing black jack. That that basically taught me. 1274 01:27:50,920 --> 01:27:53,960 Speaker 1: I ultimately turned it into ten thousand and it paid 1275 01:27:54,000 --> 01:27:57,360 Speaker 1: for my graduate school. But it taught me about money management. 1276 01:27:57,360 --> 01:28:01,720 Speaker 1: It basically it worked off what they all the Kelly system, UM, 1277 01:28:01,920 --> 01:28:04,720 Speaker 1: the system where you can't bet more than two of 1278 01:28:04,840 --> 01:28:09,840 Speaker 1: your um your your stake, even if the odds were 1279 01:28:09,920 --> 01:28:12,760 Speaker 1: tremendously in your favor, because things can go wrong. And 1280 01:28:12,840 --> 01:28:18,440 Speaker 1: so when I ultimately went to Pacific Mutual and Independo, 1281 01:28:18,680 --> 01:28:22,760 Speaker 1: it became an instrumental part of risk management for me 1282 01:28:23,560 --> 01:28:26,200 Speaker 1: because it made a lot of sense and uh and 1283 01:28:27,400 --> 01:28:32,120 Speaker 1: it still does. Um but um yeah, Vegas for me 1284 01:28:32,320 --> 01:28:38,120 Speaker 1: was was was the heart of my career ultimately as 1285 01:28:38,720 --> 01:28:43,200 Speaker 1: as it came to pass it it it taught me 1286 01:28:43,280 --> 01:28:46,839 Speaker 1: what I like to do it just to bet against 1287 01:28:46,840 --> 01:28:50,400 Speaker 1: the house and to make money it um it provided 1288 01:28:50,400 --> 01:28:56,400 Speaker 1: a system of money management, and ultimately I would all 1289 01:28:56,439 --> 01:29:00,400 Speaker 1: to at Thorpe who eventually I met he ups out 1290 01:29:00,439 --> 01:29:04,240 Speaker 1: here and yeah in Newport Beach Irvine, who was a 1291 01:29:04,280 --> 01:29:09,040 Speaker 1: mathematics professor, and we came together to to fund a 1292 01:29:09,400 --> 01:29:13,640 Speaker 1: stem cell research center at ten million dollars. Um you 1293 01:29:13,680 --> 01:29:16,639 Speaker 1: know what you see, Irvine, And so we contact each 1294 01:29:16,640 --> 01:29:21,240 Speaker 1: other once in a while. Um. Uh. He's a very 1295 01:29:21,280 --> 01:29:25,720 Speaker 1: smart guy, smarter than me, but um you know, very 1296 01:29:25,760 --> 01:29:28,880 Speaker 1: fun to talk to and uh and to talk about 1297 01:29:28,920 --> 01:29:32,559 Speaker 1: his times in Las Vegas, which were much much larger 1298 01:29:32,600 --> 01:29:38,160 Speaker 1: than my ultimate ten dollars. Did you ever run into 1299 01:29:38,240 --> 01:29:40,840 Speaker 1: any of the trouble he did? The Vegas is not 1300 01:29:41,600 --> 01:29:45,080 Speaker 1: fond of either people who win money from them, and 1301 01:29:45,320 --> 01:29:50,479 Speaker 1: especially not fond of card counters as they're known. Did 1302 01:29:50,520 --> 01:29:54,040 Speaker 1: you have the same sort of problems of getting chase 1303 01:29:54,120 --> 01:29:58,000 Speaker 1: from casino to casino like he did. Yeah, I get 1304 01:29:58,080 --> 01:30:00,120 Speaker 1: chased from a few and I was very proud of it. 1305 01:30:00,200 --> 01:30:05,280 Speaker 1: Was like a badge of honor to be to be 1306 01:30:05,600 --> 01:30:08,519 Speaker 1: kicked out. I would wear different disguises, I would wear 1307 01:30:08,560 --> 01:30:11,599 Speaker 1: a hat, I would wear different clothes to the extent 1308 01:30:11,720 --> 01:30:15,960 Speaker 1: of that had them, but that they could eventually track 1309 01:30:16,040 --> 01:30:21,080 Speaker 1: a card counters simply by watching the size of their bets. 1310 01:30:21,280 --> 01:30:23,559 Speaker 1: You know, I would bet two dollars and then ten, 1311 01:30:23,800 --> 01:30:26,920 Speaker 1: and then three dollars and then fifteen, back and forth, 1312 01:30:26,920 --> 01:30:31,120 Speaker 1: back and forth, and they could ultimately watch my eyes 1313 01:30:31,160 --> 01:30:34,000 Speaker 1: and see me covering the table in three or four 1314 01:30:34,040 --> 01:30:37,680 Speaker 1: seconds in terms of counting the cards. So, um, was 1315 01:30:37,720 --> 01:30:41,920 Speaker 1: I killing the casinos with my UH ten dollar winning 1316 01:30:42,000 --> 01:30:45,519 Speaker 1: to no? But they simply didn't like the trend, and 1317 01:30:47,080 --> 01:30:51,599 Speaker 1: so yeah, I got booted a few times. So last 1318 01:30:51,680 --> 01:30:54,360 Speaker 1: question before I get to my favorite questions that we 1319 01:30:54,400 --> 01:30:58,240 Speaker 1: ask all our guests. In the book, you talk about 1320 01:30:58,240 --> 01:31:03,240 Speaker 1: having a mild case of Asperger syndrome. Tell us about that. 1321 01:31:03,720 --> 01:31:07,600 Speaker 1: How has this affected your life? How is it manifested? 1322 01:31:08,240 --> 01:31:13,920 Speaker 1: A number of other great investors UM have either discussed 1323 01:31:13,960 --> 01:31:17,120 Speaker 1: being on the spectrum or wondered if they're on the spectrum. 1324 01:31:17,520 --> 01:31:23,080 Speaker 1: Tell us about your experience with Asperger syndrome. Well, I 1325 01:31:23,120 --> 01:31:26,320 Speaker 1: was never aware of it until I read Michael Lewis's 1326 01:31:26,320 --> 01:31:29,599 Speaker 1: book The Big Short and in one of the chapters 1327 01:31:29,600 --> 01:31:35,439 Speaker 1: he talks about an individual called Michael Drury who has 1328 01:31:35,760 --> 01:31:39,679 Speaker 1: still as prominent in the press. I guess with shorting 1329 01:31:39,760 --> 01:31:44,720 Speaker 1: and managing money. But he um, he was either he 1330 01:31:44,800 --> 01:31:48,640 Speaker 1: or his son. I forget, it's probably him, um that 1331 01:31:48,800 --> 01:31:53,280 Speaker 1: had Aspergers. And he listed like ten things that alert 1332 01:31:53,360 --> 01:31:56,400 Speaker 1: you to the fact that he had it and and 1333 01:31:56,560 --> 01:31:59,120 Speaker 1: therefore I might have it. And and one of them 1334 01:31:59,200 --> 01:32:04,719 Speaker 1: was not people in the eye or never observing the 1335 01:32:04,760 --> 01:32:09,639 Speaker 1: color of their eyes. And to tell you the truth, 1336 01:32:09,720 --> 01:32:12,800 Speaker 1: I am my ex wife. I didn't know she had 1337 01:32:12,840 --> 01:32:17,800 Speaker 1: brown eyes until seven years into the marriage. Um. And 1338 01:32:17,800 --> 01:32:21,000 Speaker 1: and so there were other things too about the characteristics. 1339 01:32:21,000 --> 01:32:24,639 Speaker 1: And I I took this page out to the kitchen 1340 01:32:24,680 --> 01:32:26,400 Speaker 1: to my ex wife and I said, look at this, 1341 01:32:26,600 --> 01:32:28,920 Speaker 1: Look at this. I said, I think I have asked 1342 01:32:28,960 --> 01:32:33,200 Speaker 1: Berger's And she goes, you do it was certainty? And 1343 01:32:33,600 --> 01:32:37,080 Speaker 1: I said, how do you know? She said, well, we 1344 01:32:37,080 --> 01:32:40,120 Speaker 1: were up at Bill Gates house in Seattle on an 1345 01:32:40,160 --> 01:32:44,439 Speaker 1: open house about four years ago. And I was watching Gates, 1346 01:32:44,520 --> 01:32:46,840 Speaker 1: and I was watching you. You're at the same table, um, 1347 01:32:47,280 --> 01:32:49,479 Speaker 1: and you were doing the same thing he was doing. 1348 01:32:49,560 --> 01:32:51,599 Speaker 1: He was doing the same thing. You were going looking 1349 01:32:51,600 --> 01:32:54,479 Speaker 1: down at the table, not being engaging that type of thing. 1350 01:32:55,240 --> 01:32:58,480 Speaker 1: And I'd heard that Gates had a mild case of Aspergers, 1351 01:32:58,560 --> 01:33:02,960 Speaker 1: and and so I I went to a psychologist on 1352 01:33:03,000 --> 01:33:06,840 Speaker 1: my own and described the symptoms that she said, he does, 1353 01:33:07,120 --> 01:33:11,000 Speaker 1: he's an asperger. And so that's how I discovered it. 1354 01:33:11,160 --> 01:33:15,400 Speaker 1: I ultimately, after my divorce, I went to a psychologist 1355 01:33:15,520 --> 01:33:19,280 Speaker 1: and after the first meeting, I as my closing question, 1356 01:33:19,360 --> 01:33:22,000 Speaker 1: I said, do you think I have asked Burgers? And 1357 01:33:22,080 --> 01:33:27,719 Speaker 1: she said most definitely. And so that's how I became 1358 01:33:28,160 --> 01:33:35,080 Speaker 1: aware of it. And what are the symptoms of characteristics 1359 01:33:35,160 --> 01:33:37,559 Speaker 1: or how has it affected my life? I think what 1360 01:33:37,600 --> 01:33:41,000 Speaker 1: it does is it allows me to to screen out 1361 01:33:41,320 --> 01:33:46,640 Speaker 1: of you know, minuan and everything that's going on. Um 1362 01:33:46,800 --> 01:33:50,719 Speaker 1: For instance, example, when I played golf with Tiger Woods 1363 01:33:50,720 --> 01:33:52,920 Speaker 1: and Phil Nicholson at the A T and C. You know, 1364 01:33:52,960 --> 01:33:54,600 Speaker 1: people would say, how do you do it? You know, 1365 01:33:54,680 --> 01:33:57,720 Speaker 1: I'm afraid of getting my drive into the crowd. I go, 1366 01:33:58,120 --> 01:34:00,800 Speaker 1: I never seen the crowd. I know they're there, but 1367 01:34:00,840 --> 01:34:04,000 Speaker 1: I never see them. And and so, um, you know, 1368 01:34:04,080 --> 01:34:09,160 Speaker 1: in terms of uh PIMCO, in terms of managing money, 1369 01:34:08,760 --> 01:34:12,160 Speaker 1: I rarely see the minusha. I see the big picture 1370 01:34:12,800 --> 01:34:17,479 Speaker 1: because of my Aspergers. That's just what aspergers that the 1371 01:34:17,520 --> 01:34:22,400 Speaker 1: spectrum do. And um, so I think it's been very helpful. 1372 01:34:22,600 --> 01:34:25,920 Speaker 1: I owe a lot to ask Murgers. That's interesting, and 1373 01:34:26,160 --> 01:34:29,559 Speaker 1: I'm glad you brought up Tiger Woods because that could 1374 01:34:29,560 --> 01:34:33,599 Speaker 1: be my favorite story in the entire book. You talk 1375 01:34:33,720 --> 01:34:39,800 Speaker 1: about almost missing a golf pro am game with him. 1376 01:34:39,800 --> 01:34:43,559 Speaker 1: Tell us about that story. Okay, this wasn't a setup. 1377 01:34:43,600 --> 01:34:46,080 Speaker 1: This wasn't a question of paying ten tho dollars to 1378 01:34:46,080 --> 01:34:47,920 Speaker 1: play with Tiger Woods. This was the A T and 1379 01:34:48,000 --> 01:34:51,040 Speaker 1: T pro am. This was big time. You gotta qualify, right, 1380 01:34:51,080 --> 01:34:55,680 Speaker 1: You gotta hit your way into the actual game, right. 1381 01:34:55,720 --> 01:34:57,960 Speaker 1: The first three days you qualify and if you have 1382 01:34:58,000 --> 01:35:01,720 Speaker 1: a certain score, you make it into Sunday. And so. Um. 1383 01:35:02,320 --> 01:35:05,080 Speaker 1: When Bill Thompson and I the CEO, went up there 1384 01:35:06,000 --> 01:35:11,360 Speaker 1: in two thousand and two, um, you know, the rumor 1385 01:35:11,479 --> 01:35:13,760 Speaker 1: was that you needed to be nineteen under as a 1386 01:35:13,840 --> 01:35:17,720 Speaker 1: team in order to qualify for Sunday. And so I 1387 01:35:17,720 --> 01:35:20,240 Speaker 1: I finished my round on Saturday and Thompson came up 1388 01:35:20,280 --> 01:35:23,120 Speaker 1: and he had been fourteen under and he said, what 1389 01:35:23,200 --> 01:35:26,120 Speaker 1: are you? I said, sixteen under. He said, well, let's 1390 01:35:26,120 --> 01:35:28,439 Speaker 1: go home because nineteen under makes the cut. And I said, 1391 01:35:28,560 --> 01:35:30,599 Speaker 1: I don't know, LABI should stay and he goes, now, 1392 01:35:30,680 --> 01:35:34,320 Speaker 1: let's go. So I went to the airport and we're 1393 01:35:34,360 --> 01:35:38,519 Speaker 1: waiting in line, and um, this guy from my local 1394 01:35:38,920 --> 01:35:42,400 Speaker 1: country club had a cell phone, and cellphones weren't said 1395 01:35:42,600 --> 01:35:46,000 Speaker 1: popular back then. I certainly didn't have one. And he said, Bill, 1396 01:35:46,080 --> 01:35:48,559 Speaker 1: how did you do? I said, sixteen under probably miss 1397 01:35:48,600 --> 01:35:51,960 Speaker 1: a cut by two, and he goes, no, I said, 1398 01:35:52,040 --> 01:35:54,800 Speaker 1: he said, I just checked. He said, sixteen under is 1399 01:35:54,960 --> 01:35:59,720 Speaker 1: in a card off. I go, oh, okay, And so 1400 01:35:59,840 --> 01:36:02,040 Speaker 1: I told Thompson, you better go home, and I'd better 1401 01:36:02,040 --> 01:36:03,680 Speaker 1: go back to the hotel. So I went back to 1402 01:36:03,720 --> 01:36:07,559 Speaker 1: the hotel and at nine o'clock my Caddy calls up 1403 01:36:07,720 --> 01:36:11,840 Speaker 1: and he says, Mr Gross, we made the cut, the 1404 01:36:11,880 --> 01:36:14,320 Speaker 1: card off. We made the cut. I guess who we're 1405 01:36:14,320 --> 01:36:16,519 Speaker 1: playing with? At eight thirty in the morning, I go, 1406 01:36:16,600 --> 01:36:23,280 Speaker 1: who because and I almost saying it. And of course 1407 01:36:23,320 --> 01:36:28,639 Speaker 1: I never slept, But um, if that gentleman hadn't seen 1408 01:36:28,720 --> 01:36:31,800 Speaker 1: me at the airport check in line and told me 1409 01:36:32,160 --> 01:36:35,080 Speaker 1: I had a chance, I would have been sleeping Sunday 1410 01:36:35,120 --> 01:36:39,720 Speaker 1: morning in Newport Beach while Tiger was waiting for me 1411 01:36:40,720 --> 01:36:43,800 Speaker 1: to meet him on the first day it was. It 1412 01:36:43,920 --> 01:36:51,040 Speaker 1: was incredible luck, incredible luck. That's just an amazing story. 1413 01:36:51,120 --> 01:36:55,200 Speaker 1: And sometimes right place, right time is all that matters. 1414 01:36:55,439 --> 01:36:58,439 Speaker 1: All right, so I've kept you for two hours, far 1415 01:36:58,479 --> 01:37:02,400 Speaker 1: longer than I usual. Let me jump to my favorite 1416 01:37:02,479 --> 01:37:05,960 Speaker 1: questions we ask all our guests, starting with something that 1417 01:37:06,000 --> 01:37:10,200 Speaker 1: you actually mentioned earlier. Tell us what you're streaming these days? 1418 01:37:10,200 --> 01:37:13,760 Speaker 1: What kept you busy during uh the lockdown on either 1419 01:37:13,840 --> 01:37:19,840 Speaker 1: Amazon Prime or Netflix or or whatever you were entertained with. Well, 1420 01:37:19,880 --> 01:37:22,960 Speaker 1: I get up at five thirty. I've got a bloomberg here, 1421 01:37:23,000 --> 01:37:25,080 Speaker 1: and I've got a bloomberg at my other homes, and 1422 01:37:26,680 --> 01:37:29,679 Speaker 1: so I get up in uh, you know, the markets here. 1423 01:37:29,680 --> 01:37:32,799 Speaker 1: I've been up at six thirty, and so I've start 1424 01:37:33,479 --> 01:37:38,960 Speaker 1: managing my portfolio, doing trading, mostly in stocks these days, 1425 01:37:39,040 --> 01:37:44,400 Speaker 1: and stock options. But it occupies my time till market 1426 01:37:44,400 --> 01:37:47,360 Speaker 1: closed at twelve thirty. Sometimes I take a nap because 1427 01:37:47,360 --> 01:37:52,080 Speaker 1: I had gotten up so early. In my lovely wife 1428 01:37:52,720 --> 01:37:57,719 Speaker 1: keeps me up till eleven o'clock to watch uh serial 1429 01:37:57,880 --> 01:38:00,679 Speaker 1: programs and so on, so I don't get that much sleep. 1430 01:38:01,880 --> 01:38:05,360 Speaker 1: But in any case, I manage money, and then here 1431 01:38:05,400 --> 01:38:07,920 Speaker 1: I am out for eight months of the year. Out 1432 01:38:07,920 --> 01:38:10,599 Speaker 1: at the vintage in Indian who else it's eighty five degrees. 1433 01:38:10,680 --> 01:38:15,439 Speaker 1: It's almost always seventy five degrees. It's like Hawaii, and 1434 01:38:15,479 --> 01:38:19,519 Speaker 1: I'm looking out at the golf course and I have 1435 01:38:19,600 --> 01:38:22,759 Speaker 1: a little lunch, I top in my cart with Amy 1436 01:38:22,840 --> 01:38:26,400 Speaker 1: and we go play golf in the afternoon. That's like, 1437 01:38:26,720 --> 01:38:30,320 Speaker 1: what you know, this this is uh, this is paradise. 1438 01:38:30,640 --> 01:38:34,439 Speaker 1: You know. Our family comes out into visit and it's 1439 01:38:34,479 --> 01:38:37,560 Speaker 1: just the all around best time I could ever imagine, 1440 01:38:37,600 --> 01:38:40,599 Speaker 1: doing something I love in terms of investing, and doing 1441 01:38:40,680 --> 01:38:43,599 Speaker 1: something I love in terms of golf, which I do 1442 01:38:43,720 --> 01:38:48,439 Speaker 1: every day. And so um, that's that's basically my day. 1443 01:38:48,680 --> 01:38:51,799 Speaker 1: Tell us about some of your early mentors who helped 1444 01:38:51,960 --> 01:38:56,280 Speaker 1: to shape your career. Well, to be honest and say, 1445 01:38:56,400 --> 01:39:00,759 Speaker 1: I only had one UM, and that was well for Girkin, 1446 01:39:00,880 --> 01:39:04,880 Speaker 1: who was the CEO and chairman of the board of 1447 01:39:04,920 --> 01:39:08,960 Speaker 1: Pacific Mutual. And it was Kirkin that basically who was 1448 01:39:09,000 --> 01:39:13,640 Speaker 1: a risk taker for an insurance executive. UM. It was 1449 01:39:13,680 --> 01:39:17,479 Speaker 1: Girkin who basically gave the go ahead and they all 1450 01:39:17,520 --> 01:39:26,719 Speaker 1: clear to to start the five million dollar bond fund. 1451 01:39:26,800 --> 01:39:30,040 Speaker 1: And and and the man would take me to New 1452 01:39:30,120 --> 01:39:33,320 Speaker 1: York for conferences and so on and so on, and 1453 01:39:33,760 --> 01:39:38,080 Speaker 1: clearly he was supporting me for some future role. I 1454 01:39:38,080 --> 01:39:43,960 Speaker 1: don't think he unnecessarily knew that Tempco was going to 1455 01:39:44,040 --> 01:39:46,519 Speaker 1: be a raging success. But he was willing to take 1456 01:39:46,600 --> 01:39:51,600 Speaker 1: the chance and to give me his moral and I 1457 01:39:51,640 --> 01:39:55,040 Speaker 1: guess financial support, because there was a time in the 1458 01:39:55,080 --> 01:39:57,800 Speaker 1: first few years of TEMPKO where we weren't making any 1459 01:39:57,880 --> 01:40:01,600 Speaker 1: money and not getting very many clients. And you know, 1460 01:40:01,960 --> 01:40:07,920 Speaker 1: they could have canceled us, um straight away, but he didn't. 1461 01:40:07,920 --> 01:40:12,360 Speaker 1: They supported me, you know, throughout the but in fifteen 1462 01:40:12,560 --> 01:40:16,880 Speaker 1: twenty years that that he was active within the industry. 1463 01:40:16,960 --> 01:40:21,599 Speaker 1: And so as I say, it was Mr Gherkin who's 1464 01:40:21,680 --> 01:40:25,320 Speaker 1: no longer with us. Let's talk about books. What are 1465 01:40:25,400 --> 01:40:27,800 Speaker 1: some of your all time favorites and what are you 1466 01:40:27,840 --> 01:40:33,719 Speaker 1: reading right now? Well, um, you know, all time favorites 1467 01:40:33,760 --> 01:40:41,519 Speaker 1: is one thing, um, I guess. Um. One of my 1468 01:40:41,560 --> 01:40:45,920 Speaker 1: favorite books was by a brilliant author who won the 1469 01:40:46,000 --> 01:40:51,800 Speaker 1: Pulitzer Prize, Annie Dillard, who wrote a an incredible book 1470 01:40:51,840 --> 01:40:57,280 Speaker 1: called Bilgrament Thinker Creek, which was about observations of life, 1471 01:40:57,479 --> 01:41:03,160 Speaker 1: nature and and personal reflections on on both. And I 1472 01:41:03,160 --> 01:41:07,080 Speaker 1: would encourage any of your listeners to pick up any 1473 01:41:07,120 --> 01:41:10,360 Speaker 1: Dilert's Pilgrim at Tinker Creek. She also wrote a book 1474 01:41:10,360 --> 01:41:15,000 Speaker 1: called American Childhood, which was much like mine. Um, she's 1475 01:41:15,000 --> 01:41:18,600 Speaker 1: the same age, grew up in Pittsburgh, and her childhood 1476 01:41:18,600 --> 01:41:23,720 Speaker 1: memories are quite similar to how I was, um, how 1477 01:41:23,800 --> 01:41:30,240 Speaker 1: I was growing up. I also, I'm recently uh, I 1478 01:41:30,320 --> 01:41:35,000 Speaker 1: recently bought recently reading a book called The Age of AI, 1479 01:41:35,080 --> 01:41:39,600 Speaker 1: which is a book co authored by Henry Kissinger and 1480 01:41:40,760 --> 01:41:44,799 Speaker 1: Eric Smith from Google and a third party who probably 1481 01:41:44,800 --> 01:41:48,800 Speaker 1: wrote most of it. But it's very interesting about artificial 1482 01:41:48,840 --> 01:41:53,320 Speaker 1: intelligence in the future that has for for all of 1483 01:41:53,400 --> 01:41:56,920 Speaker 1: us going forward. And then there's another book. There's an 1484 01:41:56,920 --> 01:42:02,080 Speaker 1: author called Julian Barnes who has written fifteen books. He's 1485 01:42:02,120 --> 01:42:07,880 Speaker 1: a wonderful writer, very introspective, and it's called Done Nothing 1486 01:42:07,880 --> 01:42:10,599 Speaker 1: to be Afraid Of It, and it's it's about death 1487 01:42:10,640 --> 01:42:14,920 Speaker 1: and dying and his thoughts going forward, which is sort 1488 01:42:14,920 --> 01:42:22,200 Speaker 1: of apropost I sort of say, I'm in uh, in 1489 01:42:22,280 --> 01:42:28,679 Speaker 1: the death zone at because that's when people uh find 1490 01:42:28,680 --> 01:42:31,240 Speaker 1: out they have prostate cancer or breast cancer or whatever. 1491 01:42:31,880 --> 01:42:34,439 Speaker 1: It's it's not a good time going forward. And so 1492 01:42:34,560 --> 01:42:38,240 Speaker 1: it you know, it's very introspective, and the man has 1493 01:42:38,240 --> 01:42:40,920 Speaker 1: written other books that I think other people would enjoy, 1494 01:42:41,080 --> 01:42:46,200 Speaker 1: Julian Barnes and Nothing to be Afraid Of So uh, 1495 01:42:46,320 --> 01:42:50,280 Speaker 1: those are some of them really interesting stuff. Our final 1496 01:42:50,360 --> 01:42:53,880 Speaker 1: two questions, what sort of advice would you give to 1497 01:42:53,960 --> 01:42:57,320 Speaker 1: a recent college grad who was interested in a career 1498 01:42:57,960 --> 01:43:04,880 Speaker 1: in either investing or fixed income? O. Um, well, I 1499 01:43:04,920 --> 01:43:07,639 Speaker 1: would say this. I mean, the market is much different 1500 01:43:07,640 --> 01:43:10,040 Speaker 1: now than it was then, and I had an opening 1501 01:43:10,120 --> 01:43:14,599 Speaker 1: in terms of the little line that you know, even 1502 01:43:14,600 --> 01:43:18,240 Speaker 1: a ten year old could have run through. I guess, um, 1503 01:43:18,400 --> 01:43:21,160 Speaker 1: now it's a different story. But that I think finance 1504 01:43:22,439 --> 01:43:26,559 Speaker 1: um will always be with us, whether stocks, bonds, real estate. 1505 01:43:26,800 --> 01:43:31,720 Speaker 1: Um uh, you know, money is something that's always been 1506 01:43:31,760 --> 01:43:34,320 Speaker 1: with us, and the making of money with money has 1507 01:43:34,439 --> 01:43:38,400 Speaker 1: always been with us. I don't see that. Um, I 1508 01:43:38,439 --> 01:43:40,280 Speaker 1: see it changing, but I don't. I don't see it 1509 01:43:41,080 --> 01:43:45,200 Speaker 1: declining in any form or fashion. And so I would 1510 01:43:45,240 --> 01:43:49,280 Speaker 1: advise those that are thinking about the industry they do 1511 01:43:49,280 --> 01:43:51,920 Speaker 1: do something like yeah, like Cathy Wood did. I mean 1512 01:43:52,000 --> 01:43:56,280 Speaker 1: she she innovated in terms of her ideas and there 1513 01:43:56,280 --> 01:43:59,400 Speaker 1: in terms of her portfolio construction. She did take a 1514 01:43:59,520 --> 01:44:02,720 Speaker 1: risk in terms of her ideas. I mentioned before that 1515 01:44:02,840 --> 01:44:07,000 Speaker 1: she didn't be too much attention to price, but obviously 1516 01:44:07,080 --> 01:44:12,639 Speaker 1: she created this huge wedge and opening for herself. What's 1517 01:44:12,720 --> 01:44:16,640 Speaker 1: a product that no one else was thinking of, and 1518 01:44:16,800 --> 01:44:20,840 Speaker 1: so one of those products I don't know. Um, I'm 1519 01:44:20,920 --> 01:44:25,160 Speaker 1: past the stage of innovation, but yeah, I would say 1520 01:44:26,400 --> 01:44:29,720 Speaker 1: in addition to spending your one or two years of 1521 01:44:29,800 --> 01:44:34,960 Speaker 1: Goldman or whatever in terms of the background, that you know, 1522 01:44:35,320 --> 01:44:38,679 Speaker 1: you kind of go out on your own and innovate 1523 01:44:39,240 --> 01:44:42,160 Speaker 1: with some type of product that will it will get 1524 01:44:42,200 --> 01:44:46,240 Speaker 1: you going and make you a a star and make 1525 01:44:46,320 --> 01:44:50,760 Speaker 1: you some money and and lead you to hopefully to 1526 01:44:52,240 --> 01:44:55,919 Speaker 1: obsessive enjoyment of of what you're doing. You you can't succeed, 1527 01:44:56,000 --> 01:44:59,240 Speaker 1: I would tell them, you can't succeed unless you love 1528 01:44:59,479 --> 01:45:04,120 Speaker 1: what you're doing. Really really interesting. And our final question, 1529 01:45:04,680 --> 01:45:07,839 Speaker 1: what do you know about the world of finance today 1530 01:45:07,880 --> 01:45:11,599 Speaker 1: that you wish you knew fifty years or so ago 1531 01:45:11,840 --> 01:45:19,080 Speaker 1: when you were first getting started out. Oh? Um, you 1532 01:45:19,120 --> 01:45:22,800 Speaker 1: know when I think it is Barry, I think. Um. 1533 01:45:22,840 --> 01:45:24,919 Speaker 1: You know. There was an old soft from Will Rogers, 1534 01:45:24,920 --> 01:45:28,080 Speaker 1: the old journalists in the thirties, and he said a 1535 01:45:28,120 --> 01:45:30,920 Speaker 1: lot of funny things, sort of like Yogi berra. Um. 1536 01:45:31,280 --> 01:45:34,640 Speaker 1: He was known for, um, you know, funny equips and 1537 01:45:34,640 --> 01:45:38,760 Speaker 1: funny comments. And uh I remember him saying about the 1538 01:45:38,760 --> 01:45:42,840 Speaker 1: stock market. He said, if you if you have a 1539 01:45:42,880 --> 01:45:46,760 Speaker 1: stock that goes up, buy it and it goes If 1540 01:45:46,760 --> 01:45:50,400 Speaker 1: it doesn't go up, don't buy it. Um. And I 1541 01:45:50,439 --> 01:45:53,479 Speaker 1: thought that was really funny, and I didn't and I 1542 01:45:53,520 --> 01:45:55,200 Speaker 1: think he thought it was funny too. I don't think 1543 01:45:55,240 --> 01:45:57,679 Speaker 1: he knew what he was talking about. But it really 1544 01:45:57,760 --> 01:46:02,439 Speaker 1: refers to a momentum. If you find this stoctor goes 1545 01:46:02,520 --> 01:46:06,599 Speaker 1: up by it, and if it goes down, and don't 1546 01:46:06,640 --> 01:46:10,559 Speaker 1: buy it. Because momentum is a very powerful force that 1547 01:46:10,600 --> 01:46:13,960 Speaker 1: I learned, you know, sort of in the last ten 1548 01:46:14,080 --> 01:46:18,480 Speaker 1: or fifteen years of managing money. Um. It's an alpha generator. 1549 01:46:18,520 --> 01:46:21,960 Speaker 1: It's statistically proven to be an alpha generator. You can 1550 01:46:22,000 --> 01:46:24,120 Speaker 1: turn against you, like in the last few months when 1551 01:46:24,200 --> 01:46:28,759 Speaker 1: momentum upward momentum turns negative and it uh, it turns 1552 01:46:28,760 --> 01:46:34,520 Speaker 1: into downward momentum. But momentum is something that really predocated 1553 01:46:34,600 --> 01:46:39,519 Speaker 1: upon human nature. They do what has been successful before 1554 01:46:39,680 --> 01:46:44,360 Speaker 1: and it continues until a dozen't And so I think 1555 01:46:44,439 --> 01:46:48,960 Speaker 1: that's what I That's what I was always skeptical, skeptic, skeptical. 1556 01:46:49,040 --> 01:46:53,280 Speaker 1: I was all skeptical of people that UH followed momentum 1557 01:46:53,640 --> 01:46:56,240 Speaker 1: because I thought that was just joining the crowd. Well, 1558 01:46:56,720 --> 01:47:02,080 Speaker 1: joining the crowd works for while until a dozens and 1559 01:47:02,080 --> 01:47:04,719 Speaker 1: and how do you measure it? Well, you can measure 1560 01:47:04,720 --> 01:47:07,599 Speaker 1: it with two hundred moving day averages with owns or bands, 1561 01:47:07,680 --> 01:47:12,880 Speaker 1: with lots of different things. But it's it's statistically an 1562 01:47:12,880 --> 01:47:16,519 Speaker 1: alpha generator in addition to several of the things that 1563 01:47:17,240 --> 01:47:21,120 Speaker 1: I discovered before that. So I say I should have 1564 01:47:21,160 --> 01:47:25,240 Speaker 1: been more appreciative of momentum, not that the Tempco with 1565 01:47:25,320 --> 01:47:29,840 Speaker 1: its secular forecast wasn't really doing the same thing, and 1566 01:47:29,840 --> 01:47:33,680 Speaker 1: and following momentum downward in terms of interest rates and 1567 01:47:33,760 --> 01:47:37,759 Speaker 1: upward in terms of bond prices. But I I follow 1568 01:47:37,840 --> 01:47:43,760 Speaker 1: momentum today. It's important, really really great stuff. Bill, Thank 1569 01:47:43,800 --> 01:47:47,679 Speaker 1: you for being so so generous with your time. We've 1570 01:47:47,720 --> 01:47:51,479 Speaker 1: been speaking with the bond king, Bill Gross, co founder 1571 01:47:51,479 --> 01:47:55,040 Speaker 1: of PIMCO, the man who managed more bond money than 1572 01:47:55,280 --> 01:47:59,920 Speaker 1: literally anybody else UH in the private sector has ever done. 1573 01:48:00,600 --> 01:48:03,439 Speaker 1: If you enjoy this conversation, check out any of our 1574 01:48:03,479 --> 01:48:07,000 Speaker 1: previous four hundred plus discussions we've held over the past 1575 01:48:07,040 --> 01:48:12,200 Speaker 1: eight years. iTunes, Spotify, wherever you get your podcast from, 1576 01:48:12,240 --> 01:48:15,559 Speaker 1: you'll find Masters in Business. We love your comments, feedback 1577 01:48:15,600 --> 01:48:19,880 Speaker 1: and suggestions right to us at m IB podcast at 1578 01:48:19,880 --> 01:48:24,080 Speaker 1: Bloomberg dot net. You can sign up from my daily 1579 01:48:24,160 --> 01:48:28,120 Speaker 1: reading list at dhults dot com. Follow me on Twitter 1580 01:48:28,160 --> 01:48:31,120 Speaker 1: at rit Halts. I would be remiss if I did 1581 01:48:31,120 --> 01:48:33,920 Speaker 1: not thank the crack team that helps me put these 1582 01:48:33,960 --> 01:48:39,200 Speaker 1: conversations together each week. Katherine Silva is my audio engineer. 1583 01:48:39,560 --> 01:48:43,360 Speaker 1: Sean Russo is my head of research. Paris Wald is 1584 01:48:43,439 --> 01:48:48,480 Speaker 1: my producer. I'm Barry Hults. You've been listening to Masters 1585 01:48:48,479 --> 01:48:50,880 Speaker 1: in Business on Bloomberg Radio.