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Retirement Planning > Retirement Investing > Income Investing

What’s Up With Bill Gross? Morningstar Crowd Baffled

By James J. Green

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Don Phillips of Morningstar introduced Bill Gross on Thursday by praising the PIMCO leader and other money managers who ply their “noble” trade in public investing vehicles.

He said Gross has made money for many ordinary people: “It’s not noble to make the wealthy wealthier, but it is noble to help smaller investors,” Phillips said to the lunchtime crowd at the 26th annual Morningstar Investment Conference. Phillips, still the much respected, even loved, face of Morningstar, also mentioned that beyond its investing expertise, the behemoth PIMCO led by co-founder and CIO Gross is using its bully pulpit to encourage public companies to put more women on their boards, “which we all agree would be a good thing.”

Not everyone agreed that Gross’ subsequent presentation to the 1,900 attendees was a good thing.

The Twittersphere lit up as he delivered a somewhat meandering speech that went overtime — meaning no questions from the audience — and was by turns very personal, somewhat wonky in describing the PIMCO investing “template,” and finally straightforward in his predictions for the markets. 

In this posting I’ll do my own reporting, but I’ll also reference how busy Twitter was with folks commenting on Gross’ speech. So busy, in fact, that the conference’s official hashtag, #MICUS, was trending on Twitter for a time, a rarity for a financial gathering.

Gross walked onto the stage in Chicago wearing sunglasses and a chip on his shoulder. The sunglasses he called a “prop,” which he said 70-year-olds like himself need for public appearances; the chip came from the press coverage he has received over the past year questioning his management of people.

His money management style has also been criticized, and dollars have been flowing out of his flagship Total Return mutual fund in lockstep with the fund’s subpar performance. However, one of the points he covered in his speech was to offset that performance perception by saying about the fund that “we’re beating our benchmark, before fees.”

He spoke about Total Return’s investing strategy, which “adds 75 basis points in structural alpha each year” by including three kinds of fixed income, including investing in intermediate maturity Treasuries: 

Another point was to assuage the worries of attendees (and his wider audience of advisors and investors) about the overall state of PIMCO. Noting PIMCO had just moved into a new building and that its new six-deputy CIO structure was “working fabulously,” he said “we’re having a good time; we’re a happy kingdom.” 

— MichaelKitces (@MichaelKitces) June 19, 2014

In conversations with advisors, with Morningstar executives and other members of the media, his speech was not as much panned as it was seen as a curiosity. 

Several wondered if Gross was losing it, while I wondered why he twice pointedly talked about his age (once calling himself a “70-year-old Justin Bieber”). When recommending that his listeners read the book “Triumph of the Optimists,” he used a phrase that usually comes out of the mouths of the elderly. If you want people to stick with you, if you want people to invest with you, you don’t stress your advanced age (only 70) as Gross did in his signoff, when he thanked the audience for listening to his “late-in-life saga.”

But those who’ve heard Gross speak before know that he often goes ‘off message’ and that he’s not the best public speaker in the world. Other observers of PIMCO at the conference also mentioned that Gross and PIMCO may be suffering from the departure of Mohamed El-Erian, who served as a “buffer” for Gross, massaging Gross’ sometimes erratic brilliance to make it accessible and understandable for the wider world. His early and frequently repeated references to the movie “The Manchurian Candidate” and its connection to his press coverage seemed at first amusing, then forced, then a little embarrassing. At the conference, some mentioned that Gross’ thin skin over his media coverage was regrettable since he had been such a darling of the media for so long (think of his “Bond King” moniker, which sticks to this day — Phillips called Gross that in his introduction.) 

 His half-joking point about bringing together a bunch of reporters from The Wall Street Journal, The New York Times and other outlets so he could employ the brainwashing techniques shown in the film, so that upon seeing a red queen playing card those reporters would repeat “Bill Gross is the kindest, bravest, warmest most wonderful human being you’ve met in your life,” was at first amusing, if a little strained (it also pleased me as a musical theater person, since I recalled Angela Lansbury appearing in the orginal film with Frank Sinatra). But his subsequent references to the film became tiresome, as most repeated criticisms of the press tend to be when they come from powerful people whose main goal in speaking publicly is to promote their own wisdom, their own agenda. That’s fine, of course, but the media’s job is not to parrot what powerful people say — it is to find out if what those people are saying is actually true.

And the Manchurian Candidate meme continued even after his presentation: he handed out business cards backed by a red queen playing card. 

It’s not fair to judge a man on one speech, and actions do after all speak louder than words. But if Bill Gross wants to make his own case in public, he should ditch the sunglasses and get a good editor.

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Check out Sunglasses-Wearing Bill Gross Says He’s a ‘Cool Dude,’ Forecasts 3%-5% Return on ThinkAdvisor.

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