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This guy is in a zone



January 09, 2009 – Comments (0)


Scientists call it alpha consciousness, but most ballers just call it being in a zone or being on fire.  Anyone who has played hoops has been there.  It's the feeling that the basket is the size of an ocean and everything that you throw up there will go in.  Bill Gross is in a zone in an investment sense right now.  His fund has already outperformed 99% of its competitors over the past five years, but he seems to have saved his best performance for now.  Gross has been playing the government like a violin.  He seems to know every single move that the government is going to make before it does it and he has been using it to his advantage.

I have already talked about his purchases of preferred stock and bonds in the companies that the government is providing bailouts to.  Bloomberg came out with a story about his latest impressive move this morning: Gross Wins ‘Game of Chicken’ Shunning GMAC Swap as Bonds Soar.  Sensing that the government would cave in and provide TARP money to GMAC rather than seeing it go bankrupt Gross backed out of a tenative agreement that he had to swap his GMAC bonds for equity.

Sure enough, the government showered GMAC with money and boom all of a sudden the bonds that big funds like Dodge & Cox accepted as little as $0.60 on the dollar for skyrocketed by as much as 83% to $0.80.5.

Anyone who is interested in investong along side Gross can do so by purchasing shares of the Total Return Fund that he manages for Pimco.


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