It's a bad day for me to be answering this question: I am just furious. This action is the single most egregious fraud that I have personally witnessed over course of three decades.
Last fall al Arian and Gross were on CNBC very oftern, seemed like twice a week. At the time, I was telling anybody who would listen that bonds are unlikely to go higher because: (i) the rates had already fallen to the level of October 2008; and, more importantly, (ii) it'd become common sense to buy Treasuries. Too many people were urging that --- a sure sign of a bubble-think to me.
My opinion could and should be questioned, of course. The point is that buying bonds at the time was far from trivial. But what did Pimco do? Gross and al Arian were telling the world, day in and day out, how dangerous it was out there, everyone should be accumulating Treasuries, and rates will fall all the way to 2% from then current 2.5%.
And now, just a couple of months later they have zero investment in those bonds?! If this is not fraudulent --- urging people to buy as you are selling to them --- I don't know what is.
As you know, it's not easy for me to use such words; I've been taking flack for years now, trying to stop unfounded accusations against Wall Street, the Fed, etc. But do think that this behavior is fraudulent. I think it would qualified to be called such if, while advising others to buy, they themselves sold 20% of their holding. But zero holdings? It's like yelling, "You suckers!" to all those mutual fund managers that followed al Arian's and Gross' advice.
I am just furious. I've got to distance myself from these emotions before I can think about economics again.
Respectfully..... everyone is out to make a buck. This includes investment advisors, hedge funds, banks, the Fed, politicians, and even many of the media types.
I don’t know or fully understand what is happening. However, I do know that we are on a very dangerous path and one bad event in our economy, bond market, or our currency could mortally wound our nation. That is the thing that frightens me.
Everyone seems so consumed with the short-term news cycle of the economy but that is where many of the big boys make their money. I am concerned with the long term future of my kids.
Just a thought and I would not let today’s news ruin tomorrow.