Benedict Arnold PIMCO: Bill Gross Frantically Dumping Treasuries

[Joanne98]

Nine months ago, Bill Gross's Total Return Fund was 50% in US Treasuries. Now it's only 30%, the lowest percentage in the 23 year history of the fund, says Nelson Schwartz of the NYT.

Why is Gross dumping Treasuries?

Two primary concerns:

Inflation
The massive tidal wave of money the US needs to raise in the coming years, which will increase the supply of Treasuries (driving prices down and rates up).
More broadly, Gross believes that, while interest rates have now generally been declining for more than 25 years, we're now moving to an era in which rates will rise, not fall.

PIMCO has shifted money into corporate bonds and foreign bonds, including Germany.

http://finance.yahoo.com/tech-ticker/pimco's-bill-gross-frantically-dumping-treasuries-thinks-u.s.-interest-rates-will-soar-464814.html?tickers=TIP,TBT,TLT,UUP,UDN,%5EDJI,GLD&sec=topStories&pos=7&asset=&ccode=

[dixiegrrrrl]

1. I don't see the term "Benedict Arnold" as fititng.

Gross is always worth watching to see the which way the wind is really blowing.

[ParkieDem]

3. Me neither.

Because of all the debt that the GOP has laden on the country in the past two decades, US treasuries simply aren't as good an investment. Can't blame the guy.

[anigbrowl]

9. Nor I

I don't see any manipulation or shenanigans ehre; he's just investing in things he thinks will yield a better return over the long haul. Nothing wrong with that.

[Hawkowl]

2. More like the Warren Buffet of bonds.....nt

[roamer65]

4. I'm glad he's making such a smart decision with my 401K money.

[catzies]

7. Andy my IRAs. I hear you. Without listing all the securities, I invest with Bill Gross.

Unapologetically.

[RM33]

5. When Bill Gross talks

the market listen. That's why Bill Gross is a recurring guest on Bloomberg News. If he says, dump T Bills, then I am sure the bond market will consider his words carefully.

Strange, I though TIPS would protect government treasuries from inflation?

[A HERETIC I AM]

6. You should read up on what TIPS are and how they work.

TIPS = "Treasury Inflation Protected Securities"

They have BUGGER ALL to do with regular Treasury Bonds. They are marketed toward, and their primary purchaser is the individual investor. TIPS are a unique type of bond and are not quoted as having anything to do with the benchmark - the Ten Year Treasury.

http://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm

If he says, dump T Bills, then I am sure the bond market will consider his words carefully.

Yeah. Sure.


A Bond guy is dumping Treasuries.

OH MY GOD!!! WHAT DOES IT MEAN?


It means he is protecting the NAV of his bond funds.

That's it.

He doesn't want the NAV of his bond fund(s) to fall as Treasury yields rise over the coming months.

WHAT A SHOCKER!!!

Bill Gross is a smart guy. But he has no crystal ball. Long Treasury yields are likely to rise for the foreseeable future, but they could likely fall in the future as well. He has no idea, really, and the Treasury bond market is a shitload broader than the whims of the bond desk at Pacific Investment Management. If a large amount of Treasury obligations start hitting the market all at once, yields will rise. And they'll rise to the point that buyers will flock back in, (buyers from all over the world, mind you, not just those at a desk in Newport Beach, California) pushing yields back down again. Gross knows this. He is simply hoping the interval isn't too long so that he doesn't sell at a low price point and have to buy again at a high.

The question that isn't answered is where is he going to stash all that cash?

Corporates? Germany?

Really?

Is he that convinced that Germany is a better long term bet than the capabilities of the economic engine of the United States?

Best of luck, Bill.

[Statistical]

8. So he should intentionally lose money?

If he feels Treasuries fill fall then he has a fiduciary responsibility to minimize that loss to his shareholders.


Not sure why the guy should be blasted for selling something he believes will be worth less in the future?

[Common Sense Party]

10. Especially when holding on to it is not in the interest of his shareholders.

That's his job--to get decent returns for his investors, no matter which way the market goes. He doesn't always succeed--no manager does--but he would have no investors if he deliberately stayed in things he felt would tank.

Using the term "Benedict Arnold" is simply stupid and juvenile.