Making A Giant- Part 1

Fixed income markets were never exciting, sexy or in vogue. In fact, many people in the past would not have even called it trading or a profession. Basically, clip some coupons and watch for any potential or realised inflation. Not rocket science and not very taxing. Bonds being of the world full of safe, conservative, old fashioned and boring people. Fixed income never had its rockstars or the media attention that other asset classes had. There was no glamour in bonds full-stop.

One person, more than anyone else, changed this perception though for ever. His name. Bill Gross. He was the man re invent and refine the art and science of active fixed income management. A very unlikely hero of the fixed income world and champion of a relatively new investment field. He was to become very quickly the king over his new domain and some say still is.

Fixed income is a historic, complex and fascinating market. It has always been essential to the worlds/governments economic system of survival and growth. It has always been a great way to enhance wealth and build empires for hundreds of years globally.At this stage, I won’t bore you with the maths and equations. suffice to say the information is out there for all to find. while prostitution may be the oldest profession, bond trading wouldn’t fall too much longer after that. So how did one man make the bond sun rise and set on the west coast of California?

Among the pioneers in this brave new bond world was Pacific Mutual. In 1971 it established a subsidiary called PIMCO in order to actively manage bonds for its clients. Bill Gross was there right from the beginning. His first job out of college was with PIMCO.

One Sunday morning while slumped, agitated and fumbling with his breakfast. His mother who happened to be visiting at the time came across an advert in a paper that would change her son’s life and that of fixed income world forever. She came across an advert for a junior credit analyst at Pacific Mutual and informed her son accordingly in a way only mothers can. He dutifully applied without really reading the job description. He didn’t want to cause any trouble over breakfast and desired no confrontation. He did, however, harbour notions even at a young age of trading stocks but never bonds.  After posting the application he thought he would hear nothing and that would be that.

Another thing to point out at this stage was that in college he had written his master’s thesis on convertible bonds. Something at that moment the Pacific Mutual was extremely interested in. As one of his interviewers said at the time “that was of great interest to us” and also recollected that bill was very “smart” and his credentials were excellent.

He was of course hired. And really that’s where the story begins….




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