Weekend Economists Putin on the Ritz March 28-30, 2014

[Demeter]

5. The real millionaires of Wall Street: vain, bickering and powerful

http://www.theguardian.com/money/us-money-blog/2014/mar/27/real-millionaires-wall-street-finance-stars?CMP=ema_565



A good investing record can be an excuse for bad behaviour, but financial stars have huge influence despite their reality TV antics...

"I'm tired of cleaning up your shit."

Words straight from the mouth of a rebellious teenage boy? Sadly not.

They were levied by 55-year-old Mohammed El-Erian, CEO of noted Pimco, the noted California bond investment firm. El-Erian's target: “Bond king” Bill Gross, the company’s 69-year-old co-founder, who had transformed Pimco into a $1.9tn mutual fund and investment behemoth. Their spat was described in a horrifying and hilarious chronicle published in the Wall Street Journal.

But, because there were billions of dollars at stake, this more than just office sniping. Both the bond market and Gross’s own investment bets weren’t doing all that well; El-Erian's attempts to move Pimco into stocks added to create friction. Most significantly, the Total Return Fund – Pimco’s flagship – lost 2% in 2013, lagging 94% behind of all its rivals, in what was otherwise a great year for financial markets. In the 12 months before February 28, Pimco had lost a net $58bn, while the Total Return Fund alone had seen investors flee as if from the bubonic plague.

That would have been bad enough.

But then there’s the now-public trash-talking, which culminated in the very public departure of El-Erian from the firm he was supposed to lead when Gross retired. "I have a 41-year track record of investing excellence,” the Wall Street Journal records Gross as chiding El-Erian in front of two witnesses. “What do you have?"

Alas for Pimco, what both men have is an outsized public profile – so when they argue, it indicates deeper trouble...


WALL ST. TYCOON REALITY TV ANTICS? SEE WHAT I MISS BE AVOIDING CABLE?