The Greatest Investors: William H. Gross

Born: 1944 (Middletown, Ohio)

Key Positions: Pacific Mutual Life Insurance Company

Pacific Investment Management Company (PIMCO)

Janus Capital Group

Personal History:
Bill Gross earned a degree in psychology from Duke University in 1968 before eventually entering the business world. He holds an MBA from UCLA’s Anderson School of Management and also spent time early in his career in the Navy and as a professional blackjack player. Following his completion of the Certified Financial Analyst (CFA) program, Gross worked as an investment analyst with Pacific Mutual Life in Los Angeles from 1971 to 1976, then as an Assistant Vice President in the fixed income securities area until 1978. From 1971 until 2014, Gross acted as managing director and chief investment officer for Pacific Investment Management Company (PIMCO), which he founded. PIMCO has consistently been one of the world’s leading mutual fonds and focuses primarily on bonds.

Gross was inducted into the Fixed-Income Analyst Society, Inc. (FIASI) Hall of Fame in 1996, the first portfolio manager to earn that distinction, for his contributions to bond and portfolio analytic practices. PIMCO was purchased by Allianz SE in 2000, although the firm has continued to operate as an independent subsidiary. Gross left PIMCO in September of 2014 to join the Janus Capital Group.

Investment Philosophy:
Gross is known for his willingness to change directions in response to changes in the markets. In July 2005, SmartMoney.com’s Nicole Bullock observed that “Gross doesn’t adjust to market conditions – he changes them! His views on the bond market are widely followed by professional investors and the investing public worldwide.” Gross focuses  on investments that will be successful in the long term based on their structural composition within a portfolio over a longer span of time. He focuses on a three- to five-year forecast, which encourages an investor to think long term and disregard shorter term flights of fancy. A strong proponent of separating out emotions from investing, Gross believes that “emotions can convince any investor or management firm to do exactly the wrong thing during irrational periods in the market.”

Noteworthy Publications:

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

Quotes:

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

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

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

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