저자: NeerajBajpai · 외국인
요약 보기
이 영상은 채권 시장의 거물 빌 그로스와 핌코(PIMCO)의 흥망성쇠를 다룬 서적 'The Bond King'을 소개하는 북리뷰이며, 특정 자산의 향후 가격 방향에 대한 예측은 거의 없다. 책의 배경: 채권 시장은 주식 시장보다 크며 글로벌 규모가 약 150조 달러로 언급됐다. 빌 그로스는 1970~80년대 금리 흐름을 정확히 예측해 채권 트레이딩으로 큰 성공을 거뒀다. 그로스의 성공 과정: 1971년 금-달러 태환 중단 이후 신용·레버리지 확대로 채권 가격 변동성이 커졌고, 1975~76년 금리 하락을 선제적으로 예측해 큰 수익을 냈다. 1981년과 1983년 경기침체도 정확히 예측했다. 2006~07년 서브프라임 위기: 그로스는 모기지 연체 증가를 보고 채권 매수를 중단했고, 이 때문에 당시 비판을 받았다. 이후 위기가 터지며 펀드 수익률이 크게 좋아져 '채권의 왕'으로 불리게 됐다. 정부기관 채권(패니메이·프레디맥)에 투자해 정부 구제 기대로 수익을 거뒀다는 내용도 있다. 쇠퇴: 자만과 강압적 조직문화, 개인적 문제(이혼 등)가 겹치며 그가 떠난 뒤 펀드 성과가 악화되고 자금 이탈이 이어졌다. 진행자는 겸손과 원칙 준수의 중요성을 교훈으로 강조했다. 리뷰 말미에 특정 종목·지수·금리의 향후 1~3개월 방향에 대한 구체적 언급은 없었다.
다듬은 글
What's the biggest market in the world? Is it the stock market, gold, crude oil, or bonds? The bond market is much larger than the stock market, which we call the money market. I often tell you that if you want to grasp, learn, and understand the stock market, you must understand the bond market, or the money market, because its size is $150 trillion globally , and about $30 trillion larger than the equity market.
The size. So, when a market is so big, there are many big players in it. Big games are also played. Today, in this new issue of TNS Library, we'll discuss the scandals that have occurred in the bond market. Who has made it, and who has lost it. So, today, Raja Bhai has brought a wonderful book called Bond King.
So, today we'll discuss, understand, and see what this book is and discuss it in detail. Raja, you're very welcome. Raza's introduction is that he's a very prominent communications expert, and you may have noticed that communications are all the rage in the world these days. Now, this meta, or the channel you're watching this show on, X, which used to be Twitter, are all communications mediums, driving the entire world .
So, Raza is an expert in that. He reads a lot of books. He reads a variety of books, but he mostly reads financial ones. So, he recently read a book. He had read it before, and revised it again. "The Bond King," Raza Bhai, welcome. What is this Bond King? So, Neeraj ji, first of all, hello. A very warm greeting to the audience.
This is a very interesting book. The Bond King, basically, is about a gentleman. He's still alive. His name is Bill Cross, and he is known as the Bond King of the world. He was known as the Bond King of the world. So, the bond market used to be completely dead and tired, with people buying bonds and storing them in lockers .
It's still running, interest is coming in, and there's no problem with it. So, Bill Gross not only started the bond market but also made it grow and took it to such heights, as you yourself mentioned, that the equity market was left behind in comparison to the bond market. He took that bond market to sky-high heights and was called the Bond King of that market .
What happened in his life, what happened in his company, the company of which he was the chairman, named Pinku, what developments took place in that company, how did he reach the top, what was his nature and behavior, what was his nature and behavior like after that, as happens in the stock market, Neeraj ji, in every market, not just the stock market, brother, what goes up comes down, so that also happened with him and how his company went down, he was forced out of the company, this entire detailed story has been told very well by Mary Childs, who herself has worked for major publications like Bloomberg and Financial Times, and Barus Magazine.
She has been a writer there . She has written this book. So this is, basically, if you ask in a nutshell , the book "On the Life of the Bond Market and the Life of Bill Cross, Who Was Known as the Bond Key." So, this is about that. The Rise and Fall of Bill Cross. Or yes. Yes. Yes. Yes. Yes. Because the bond market can't fall .
You might remember, I think, Bill Clinton, or whose Chief of Staff, was asked what he wanted to be in his next life. He said, "I want to be a bond marketer because the bond market decides. It's the most powerful. It decides where the world will go, there's no doubt about it. Nothing is more powerful than the bond market.
Just look at the latest one. When bond yields go too high, Mr. Trump immediately declares ceasefire . Absolutely, absolutely, the bond market regulates everything. This is a fact of life because money is a very big thing, and the bond market decides." So today we will read about Ban King by Mary Child ji, who is a very famous journalist and I like it very much.
Sometimes I get a little bias feeling from inside that all the good books are written by journalists. There are insights, Neeraj ji, the insights are very good. And see, I want to tell you one thing that if you are a journalist then you cannot write 90% of the things that you know, it is a compulsion.
Correct. You took 80% of mine in these books. I had once said online that I say and write only 10% of what I know. We people drink 90% of it. We digest it. He's there, and he'll leave with me because we don't have proof. How can I tell him? If I do, people will sue me. But I know. I've seen it with my own eyes.
Even if you have proof, you can't do it because there's a relationship. He's in the market right now. It 's a friendship. How can you tell? So, Neeraj, let's go into the first chapter about Man King. Neeraj, there 's a small starting part in it. After that, I'll move on to the atmosphere created in the starting part.
It tells us that there was a guy named Dun Isin who was hired by Bill Gross for his company. The story starts from the 20th century, not from the beginning [nasal voice]. It tells us that he was sent with an investment manager, so he was sent to study the market. The real estate market doesn't look good.
Guess there's a problem. So, Dun Sir went to study the real estate market. The real estate market was absolutely bleak. " Where have they sent me? I'm meeting with brokers. I'm roaming every street and neighborhood." Neeraj ji's story is exactly like the one depicted in the movie "Big Shot." So, he went to the market to visit.
He found out that Bill Cross wanted original market data to see what was happening. This Dan went to the market and said, "The market doesn't look good ." Asset-backed securities, or mortgage-backed securities, were flooding the market, and Bill Cross was a little suspicious. So he sent him for testing.
The report came back, "It doesn't look good." One more thing we learned was that shadow banking, insurance companies, and investment banking firms like Goldmax, Morgan Stanley, and PinkCo are all funding the entire operation. No one has information about the other, as we also read in the book "Genius Field." No one knows what goes on in the derivatives market, or what's happening in other companies.
They found out everything. Now, let's end this chapter here. We 'll pick it up later. Okay. Now, I'm going to come to Bilgro Sahib. Bilgro Sahib used to leave at 4:30 . He started getting ready at 4:30. By 6:00, we were extremely painful employees, basically extremely tough taskmasters. And at that level, Neeraj ji, I've seen a common thing, I've seen it in every book.
When a person reaches that level, they're very insecure, worried about losing their position. They're worried about compromising their position. They're always on edge. That was exactly his habit. So, everyone there was on high alert. And another thing the author has written in the book is that, like on the trading floors here, the companies' organs, stand legends, take any one, even the Bhim organ.
There's chaos, fighting, abuse, everything, because people are busy trading and dealing. He said, "There used to be noise on Pinko's office floor, there was no noise there. Sitting in complete silence in front of the computer. Do you remember when you had difficult bosses? What did we do when we first started?
Whether there was work or not, we were in front of the computer, writing and deleting lines, writing and deleting lines, that we were doing something. He wanted to see that we were working." He said, " Billgrass Sahib was a terror, but he was a very hard-working and very tough taskmaster." This is about him: he predicted the 1990 bond market, and his predictions, his knowledge, his understanding were absolutely accurate.
Now, Neeraj ji, you'll be very happy to hear that Billgrass Sahib's degree was in psychology. What a thing. Yes, it's absolutely psychology. This is the whole point of this book ." Yes, like Mr. Jamie Damon was a psychologist. This Billgrass guy was also a psychologist. So when he started his career, I told him that bond trading is such that people are not trading.
You took it and kept it in your locker and became one . Now what happened in between? A guy came to him after taking a rack off. So let me give you a little background about PIMCO, that brother, Pacific Investment Mutual, which is an investment company, PIMCO, was a company called Pacific Life Insurance.
Later, it converted and became an investment company. That life insurance company. It had become an investment company. He joined it as an assistant analyst, meeting people, chatting, and buying bonds in the boring market. He's been earning interest for a lifetime. A man named Reckoff came along and said, "Bonus trading is a possibility." He met Bill Gross and other people.
Bill Gross liked the idea of bond trading because of fluctuations. He had done a lot of research. He told his management that trading should be possible. He was given $5 million. In that context, $5 million is like peanuts, as we call it. He was given the advice, "Okay, brother, you don't have to take too much risk.
Try trading this and see what happens." Bill Gross was very lucky, so he started buying and trading, and he got an account with ATAT. He got an account with RJ Reynolds, a large tobacco company. He bought their bonds and started trading. Hum Na Yuraj ji, when did the biggest change come? You'll remember Richard Max Nichen's removal of the gold-dollar price in 1971.
There was no relation between gold and the dollar. That's when the credit and leverage boom began. And what happened in this, when the work of credit and leverage started, then the prices of bonds started fluctuating due to leverage because it is directly inversely proportional with the interest rate, isn't it?
Fluctuations started in the bond market with the interest rate, and they started trading, and they used to trade purely on volume, they started making money there and they realized that good money can be made in this, and see the first mover advantage, in 1975-76, when the dollar was devalued by Nick in 1971, in 1975-76, they clearly predicted the bond market that the bond market will move like this, interest rates will go down, when the relation of dollar with gold ended, interest rates started coming down, liquidity increased, bond prices started rising, they predicted it right , huge amount of money was made and when money was made, the company also gained confidence, after that Neeraj ji, what happened, there were two recessions in the US in 1981 and 1983.
He predicted that correctly and then made money from it because he was trading bonds, what happens in recession, your interest goes up and down, he made money from it again, now he has made a name for himself in the market, he has written on a very interesting topic in this book, the author has written that Chris Dillons, whom he had hired, whom he had sent to do research, the real market team, these people used to sit and study the whole day, I used to work very hard, I used to study a lot, so when they earned a lot of money, they shifted to a new office, the author has given an example in it that the file which belonged to the witch was kept on the witch's table, when they picked up the file from there to shift, the color of the bottom of the file was stuck with varnish, these people used to read and study so many files, just like you, as you say, you keep sitting and studying from 4-4 to 3-3 in the morning, see, knowledge comes from there.
He used to sit and work hard, Neeraj ji, he had made a complete rise from the bottom, so this was his story. Now after that we go to The Turn. Now we will bring back the story which I told in the beginning that Dan sahab had gone to research the market. Neeraj ji, in The Turn it has been told that the delinquency of mortgages started, defaults started happening, defaults started happening in mortgages.
Now we are coming to the story of 2006-07, correct, defaults started happening there. As defaults started happening, there was the Chairman of the Fed, Banar sahab, he told the Congress that brother, this means it will be a little bad, after that the situation will improve, so the market started running, the Dow started rising, but as the mortgage indebtedness started, there was no run on the banks, but there was a run on the shadow banking.
Neeraj ji, the leverage started closing. The bond market had become static. At that time, people used to issue bonds to raise money to run their work, that market closed. It was a real class on equity. As we discussed in another book, Fool's Gold, about Northern Rock, a London-based company that went bankrupt.
BNP Paribas, a large bank, has three funds. They're frozen. Now, look at this whole crisis going on in the market, and Bill Gross's bond—well, what he did was, when he sent Dunn to do the research, he stopped buying bonds because he had a feeling. Well, this was in 2006 when he stopped buying bonds.
He said, "I don't feel right, I won't buy them." He waited for 2006 and 2007. People cursed him, saying, "This is a wrong prediction." Because these people, all these managers, like Neeraj ji, generally send an investment letter to their investors. In 2006, he said, "Brother, I feel there's a problem, I don't feel the market is going to be good, there will be a recession and a crash." People [nasal voice] said, "It's six, it's seven, it's eight ." There was no starting point.
The entire scandal took place in the month of August, July, August, September when the collapse started. Neeraj ji, the bonds that he had bought, when the market falls, the bonds rise. People go to safe havens to take shelter in bonds after buying bonds. We then went there to buy bonds. Neeraj ji, when the market fell, his bonds gave 50-50% 9% return, his bond fund, which was the biggest fund by the name Total Return Fund, gave 9% return which was 200% more than the bond market return.
Oh God, this was the time when New York Times, Washington Post and CNBC told him that brother, he is the bond king, look at his career, yes, look at his career, his career started from 1990, but he was called Bond King in 2007-2008 when he was told that brother, now he has become the bond king. This was the reason that he was called the Bun King, he was called that and that was the turning point, that was the turning point, he was giving performances but there is a thing that no one saw the peacock dance in the jungle, people know that he performed a lot but the whole world did not know about it, the whole world came to know about it when his bonds gave tremendous returns, now let's move on to the next chapter of this, Neeraj ji, this is his story about college, his childhood story, in that the author has said that from all his friends, people with whom he used to talk, we came to know what he was interested in, brother, he was like Bill Gross, from the beginning his motto was I want to become famous, okay, okay, his story is an interesting story, I have not heard this, yes, it is a very interesting story, when [nasal voice] he went to college, that is, he was his junior, his seniors sent him to buy donuts, his bike met with an accident.
A severe accident. He suffered a head injury. The author has written about the scalp of his head . A portion of his scalp was lying on the ground. A portion of his scalp, meaning a layer had been blown off, fell to the ground. He was brought to the hospital and underwent surgery. The surgery was successful.
That portion of his scalp was reattached. You'll notice that his scalp is a little odd in shape. His scalp is perfectly fine. If you look at his face, yes, absolutely. And while he was in the hospital, he started reading a book. There was a very famous book on Black Jack, a game played in Vegas hotels and casinos.
Now, having nothing else to do, he kept reading and reading and he got into a habit of playing Black Jack. What did he do after that? He came home and said, "Friend, I like it. I had $200 left over, I had saved from here and there." He took that $200 and said, "I'm going to Vegas ." His family strongly objected, saying, "Have you gone mad?
What are you going to do?" Work, do your job, study. Are you going to Vegas? He said, "No, I'll take a test and come back." Meera took $200 and went to a very cheap hotel in Vegas, which offered $100 per day. He started staying there. What do casino workers do when they go to casinos for 15 to 16 hours a week ?
Just like when you stay in a hotel, you get something called a coin one. You get coins and tokens to play. He went and played. He started playing for 15-15 hours. He would stand there and analyze it. He would see small players sitting there, betting $1, $2, $5. If he got more, then betting $10. In this way, he started working for 16 hours, working hard, completing one task.
Yes, he has written in his book that he came back from there having made around $00 . I feel like he trained to be a Sidoria since childhood. It was. Absolutely, Neeraj ji, absolutely completely. Well, this was their background. Now, what happened when the crisis happened there? There 's a very interesting story in the crisis, Neeraj ji.
When the global financial crisis happened, we told you that when they made a lot of money in it, you might have seen the government's names, Fannie Mac and Faddy Mac Fannie, which are government-controlled bodies. Now, look at their bonds, Mr. Gross loaded up, with the anticipation that the government would bail out its institutions and not let them go down.
So, when the crisis started, their bonds skyrocketed. They had invested in other bonds that the government itself was going to bail out. So, when the crisis happened, they bought them. When the government bailed them out, they ran high and then made money on them. Neeraj ji, there's data given in this, when this happened, there was another very interesting thing.
First, I'll share the data, then I'll tell you another story . Neeraj ji, his fund once made 1.3% in a single day. Now, making 1.3% in the bond market would be a big deal. Guess how much the one-day profit was? 1.7 billion in one day. Of course it would be, because 1.3% means a stir, meaning killing him, that money .
Exactly. Okay, what was the game? I bought it . After that, I went to CNBC and commented that there is a liquidity crisis, the government will have to do it, if they don't do it, there will be problems for the government, for the people, for the customers, there will be problems in mortgages, these will be problems.
So in this book, it has also been told how he was the darling of the media and he used to leverage the media as well. He put pressure on the government that if you want to fix the economy, if you want to run the economy properly, then you will have to bill out, you will have to inject liquidity. The government blinked, the government started buying, you remember that torque program, that Troubled Asset Relief Program, all that was completely started.
Lynn Brother had caused the crash, Morgan Stanley's condition had worsened and all the bearish crashes were happening, imagine at that time, we were making money because we were playing in the bond market. I did not have a mobile phone. Begum Sahiba got a call on her phone, she handed over the phone and said, someone like Geithner, please make this call.
Who was Geithner? He was the Treasury Secretary. As far as I remember, he was the Chair, perhaps the Secretary [laughs]. A call came. It was Geithner's call. Even his wife doesn't know. He had no interest in any of this. He took the call. He was called in, and asked what to do? How to do it? He gave them recommendations.
PIMCO was one of the partners in the TARP program, guiding and suggesting to the US Treasury what to buy and what not to buy. Well, before that, we were buying goods ourselves. And after that, we were also suggesting to the government that buying this would be good for the system. So people, the media, raised questions about governance, transparency, and accountability.
But at that time, the main task was to improve the economy, and this guy was doing it. We just carried on with this work. So, look at how the Pinkos, who were being bailed out by the government, bought the companies and made money in them. So this is how they used to operate ahead of the time. Ahead of the time.
Yes, yes, yes. So, the next chapter in this is about constructive paranoia. There's not much detail in it, but what happens in it? You get some good insights. So, I'm going to tell you about the philosophy of one of his colleagues. Look, how did his philosophy operate? He said, if you're issuing bonds and people bid on your bonds, that means you're overpaying.
If they agree, that means it's not a very good deal for you. Our operational philosophy was that we were so big that people were forced to deal with them. They would squeeze, they would squeeze energy, and you know the Wall Street philosophy; liquidity and money are God there . Correct, this is how people work.
Pinko's philosophy there was to squeeze . It didn't matter if the relationship was bad. They needed to get good returns. Our God is the customer, and our fund is ours. We needed to get good returns from there. They used to win awards every year for their Morningstar fixed income ventures, and for mortgage managers .
They were using the media, but the culture was a bit difficult. There was a negative culture. It was a poisonous culture. So, people would leave their place. So, I was telling you the philosophy of how that happened. Now, the next chapter, Neeraj ji, is a stinker chapter. There's another interesting story there.
They had exposure to major bonds in Mexico. The Mexican presidential candidate was assassinated during the election campaign. Now, there was more exposure in Mexico. The dilemma was whether to increase or decrease the exposure to Mexico because the bonds there started falling, there was some risk there, and the economy wasn't doing well.
So, they said, let's take the risk. They bought more Mexican bonds because they were aware of it. These people knew and bought bonds. Neeraj ji, the US bailed out the Mexican government. Bill Clinton signed it. He cleared the $20 billion Exchange Stabilization Fund. If he had signed that fund, the Mexican economy would have collapsed.
Now imagine that they doubled down on bonds there, and the US bailed them out. Bonds then ran back. We were in the market there, and Pinko made a lot of money there. So, you see, when they kept playing, they kept taking risks and made a lot of money. Well, it's not that they made money every time. The author also told a story from 2011, where their total return fund sold treasury and derivatives stocks, which are against it, that when the market goes down, the bonds go down, we will make money.
They played with that. Unfortunately, interest rates went up, so they lost their money. So, it's not that they made money every time, but most of the time they made money. They lost money many times , but their losses were mostly correct. He has explained this in detail. And there was one more thing, in the stinker chapter, he also mentioned that whenever there was a loss [nasal sound], Neeraj ji used to send his newsletter to the investors, saying, "Brother, I made a mistake .
Sorry, but it's okay." But their fund, the Total Return Fund, delivered tremendous returns. That's why their business was doing so well. Well, there's a game called Age Karke. Neeraj ji has a chapter on it. The next chapter is Age Karke. A very interesting chapter is that you should see that they were bookworms.
They too were engrossed in books, data, and information. Neeraj ji explained in the Age chapter that there was a government mortgage association, the Government National Mortgage Association, which had a CDR in Jinni. What was there in those depository receipts, which are called convertible depository receipts, that no one had seen.
The government had issued them a long time ago. You got a perpetual interest rate of 8% on them, 8% on the US government's. Okay, well, they weren't traded in the market at all. Those who bought and kept the articles, they kept them in their bank lockers , in banks, in home lockers. No one cared about it.
I used to read them. I had information, and then I found out that there was a CDR on which the interest rate didn't matter because it offered a guaranteed 8% return. Neeraj ji, on that CDR. What did he do? First, he found out who had it. He started buying entire CDRs from the market . So, what's an interesting thing?
Or in the US market, in any market, if a big man starts buying, people's antennae perk up . That's right, people's antennae perk up. These Pinko guys from Bill Cross's place are buying something. So, when Neeraj ji started buying, people started buying after a few days, the news comes later. People stopped selling.
By then, he had already bought. He had bought those CDRs worth $ billion dollars. Till then, there is an interesting story that the CDR was purchased but the delivery of the CDR has to be taken. We say that brother, if you have it then it means it is yours, you have purchased it but if there is no delivery then there is no point.
We sent our colleague Neeraj ji in a private plane or a chopper, from there he reached different places by bus, by train, went to the bank accounts, showed our bills there brother, we made the payment, you bought our goods from them. This was a complete secret operation. Wow. By the time they got the entire CDR, the market got to know about it.
These people are playing some game. The CDR has arrived. These people are getting something in the market. Until then, people didn't even know there was a perpetual CDR. You took delivery. It's an 8% perpetual CDR. You took the entire amount. Mr. Neeraj. What happened in the meantime? Interest rates started falling .
If interest rates go down, what will happen to the CDRs that have a guaranteed 8% return? Correct. They started shooting up. Just imagine, we're getting a guaranteed 8% return, and bond prices are shooting up, and you have an exposure of $2 billion. Mr. Neeraj, we had raised $70 million. They gave them 200 bips of alpha in the market at that time.
And what did they do with bonds? They were buying them cheaply and selling them expensively. Their total return fund, their major fund, meant there was no limit to their outperformance . It outperformed so much, it continued to outperform, and they always received the full award for best fixed return .
So, this was their story about their age, and then there's the chapter called "Grow and Die," which is a small chapter, Neeraj ji, that has just two or three pieces of data. In "Grow and Die," he explained how much Pinko's assets under management were in 2012. Do you know, Neeraj ji, you're talking about 2012?
In 2012, it was $2 trillion. Oh, my God, $2 trillion . Yes, it was $1. My God, now imagine playing at that volume. As I mentioned, it was very difficult, there were a lot of jealousies. What happened to Dan, their colleague? To diversify, they started investing in a distress fund, saying, "Brother, we'll invest the money in a distress fund and buy a distress fund from the bank." Performance there was good.
Now, how long will they continue to perform well? So, Billgr Sahib started getting a little jealous. So there were fights, insecurities, and some brushes. He used to abuse and create ruckus in the office, the boy started doing that, when he started doing that, it was as if he was a witch, his interview started in the media that brother, his performance is very good, he is doing it in State Asset, then he used to say earlier that yes, do that, he was the chairman of the company, do it earlier, when the performance is good, he used to say why are you doing this, there is a lot of risk in it, so you see that at that level the security of that man had increased so much that whenever someone used to press the other man or his performance was good, he started having problems, because of that people had started getting irritated with him.
Now, let's move on to the next chapter. It's a bit of a controversial name, but [laughs] what happened? The story told in this chapter is that people started leaving him. He had a deputy on his team, and he left. When his deputy left, there was a guy named William, who was his deputy's junior. He was made head.
When he was made head, there was some pressure and torture from Mr. Wilgrass, so he was fired and laid off. When he was laid off, he went and filed a full case against Mr. Neeraj at ACC, alleging wrongful termination and insider trading and market manipulation involving malpractices. Mr. Wilgrass was a clean company, but he was clean.
He used to do some minor manipulation at the top, that too through the media or through insider information. Now, a case has started there. Now, you know that the ACC investigations are very dangerous. What happened there was a very interesting manipulation. These people used to do illegal manipulation there.
What was illegal was that to show good performance, different funds would buy from one fund at a lower price from another fund and sell it at a higher rate. This made your fund's performance look good . What was allowed on SS was a chapter called 17A of the ACCCA, where it allowed you to trade and sell among different funds of your own company .
They started using that to show performance. But when a complaint came, Mr. Sir, this continues until a complaint is filed. When a complaint came, William went and filed a complaint. Before the investigation started, he gave an interview to the media saying that our performance is good. We are growing this, doing this, doing that.
But when the complaint came, the investigation began . See, the problems began there. Finally, they paid William and settled the case. But the truth is, their reputation was tarnished. Well, that's what happened. Later, Neeraj ji, another incident happened. Let's move on to the next chapter on Taper Trump.
You'll remember the Taper Trump incident, which was very famous. Very famous. So, let me explain the Taper Trump incident for the audience. Basically, what happened was that the government was purchasing bonds and injecting money into the economy. When they announced that they would stop it, the government said, "Now we're going to stop it." When they didn't, the market crashed so hard, correcting a 30-40% crash in 2016, that they were forced to continue their funding program.
Yes, this is different. Neeraj ji, what happened was that when their Pinko fund started, the market panicked. Now, speculation started that interest rates would increase. As I said, interest rates have an inverse relationship with bonds. It happened that interest rates will increase now. A lot of free money was distributed in the economy.
Inflation is rising. Interest rates will rise. Bond funds will start flowing out . Now, look at the ACC case. They made money during the financial crisis. But when the rate hikes started, the crisis happened in 2008. But when you consider 2009, 2011, or 2012, their fund performance began to decline.
Funds started flowing out. I told you about Dan's work with JP Morgan regarding the asset. He had called JP Morgan to his office for the asset purchase program that was created. Bill Gross had the JP Morgan people harassed. Why are you doing this? It shouldn't have been done, even though the work had started with his approval.
But they became erratic. When their fund didn't perform well , they say they go out of control. That kind of thing started. The ACC case happened. People started withdrawing funds, so they started facing performance problems. In that case, Neeraj ji, the author, has given data from 2013 that in May 2013, clients withdrew $41 billion from Pinko.
Imagine $41 billion, and you can understand the pressure that a fund manager must have been under. So, let's move on to the next chapter, which is a chapter called Secretariat. A very famous fund manager who He was called El Elrian and was appointed CEO, and his performance stabilized somewhat. El Elrian is a very famous fund manager.
I think he used to run a fund at the Harvard Business School or somewhere. At that time, he was called from there, so he started working, but his erratic behavior continued, and people started leaving. El Elrian was brought in as CEO. He too was worried about how much he could handle, how much he could do, because something or the other was always going on.
Meanwhile, the Financial Times published a story. Now, Neeraj ji, before a pressure cooker explodes, a lot of pressure builds up somewhere. The pressure there was such that the Financial Times published a story that the relationship between El Elrian and Bill Gross was not going well. It was very bad.
There was a lot of stress inside. So people were talking inside. Bill Gross thought that it was Elerian who said this because the story was slightly in Elerian's favor. He wasn't criticized in it. Bill Gross was criticized in it. They suspected that he was leaking the story. Now you see, when suspicion arises, two CEOs are sitting together.
A CEO type is sitting together. You can call him Chief Investment Officer or CEO . Mistakes started between them. Fights started. Well, Mr. Allen started saying, "Friend, all the mess you create, the mess you create, the problems you create for clients and employees, I'm handling that. You create new problems one after the other, like the JP Morgan issue.
I told you that JP Morgan came to meet me, we'll invest, we chased him away. We don't want your money, this is a useless program, don't invest in it." So, this story appeared in the Financial Times. After that, as it happens in your profession, Neeraj ji, the Wall Street Journal got wind of it, and said, "Friend, there's some problem going on." After that, we move on to the next chapter.
Inside the Showdown, the Wall Street Journal ran Neeraj ji's story . He was a very famous author there. He ran the story, "Inside the Showdown at Pinko," and in it he said, "Brother, Bill Cross is a very abusive man. He keeps abusing everyone. He scolds employees." Yes. Yes and in that, the example given was that there was a mistake in the numbering in the slide of the presentation.
Three came instead of one, five came instead of three. In that, people start abusing. We had reached that level. No one else would say anything to them because whoever speaks will be taught a lesson. So, Neeraj ji was completely made a villain in that story. So, he went to give an interview and tried to talk to them because he too had the spirit of a fighter.
He had come up from the bottom. He had become one. It is wrong to be a fighter or not. This should not happen. This should not be wanted. This isn't right, that isn't right. They wrote this wrong, they wrote that wrong, they gave an interview to ABC. Meanwhile, Neeraj ji, another story came out that brother Ariane got a salary of 100 million dollars and Bill Gross got a salary of 200 million dollars.
Now you see, as soon as the head is shaved, they say something or the other, yes, when God gives, he gives with great pomp and when he takes class, he takes it with great pomp and show. So here, there was the ACC case, there was the Financial Times story, there was the Wall Street story. After that, what happened to the salary?
We are paying such a high salary, shareholders there were saying, "I hadn't even noticed such a high salary. It's not justified." The regulatory authorities started looking into it, and they saw that there are so many stories coming out. All these absurd stories. There are even investigations going on against them .
Well, to control all this, they had a journalist at Rutgers who was a friend of theirs. He said, "Let's give him a story and get him interviewed." Neeraj ji, look, when the journalist asked him a few difficult questions, which is a journalist's job, the intelligence works in reverse. He said, "Have the people in front bought you?
Are you on their payroll? Are you taking money from them?" He started saying all this because there were a few bosses. He started saying all this. So, you see, even with friends, enmity has started. You had already made everyone your friend or enemy. Now you have started making enemies of friends and even friends, and now the entire management there is against them.
Neeraj ji, let's move on to the next chapter. Yes, sir. For example, nowadays, there is a story or the other against one of our top banks every day, and there are 81 bonds, so something or the other keeps happening against MSRDC every day. And that means, the way they are struggling after a moment of success, it is exactly like that, once bad days start, they continue continuously.
Hey, we have a friend, Neeraj [sounds of clearing his throat]. We have a friend who's sitting around with stocks. He 's crying a lot. He says, "I was up 20% , but I'm down 20%. I should have been fired at that time." So, Neeraj runs a firm called Stealing the Firm. So, basically, the continuation is that he was banned from media appearances.
The company's management said he wouldn't appear in the media because he would talk nonsense and make negative comments. It would reflect negatively on the company, so he wouldn't make media appearances. Now, they said they wouldn't make media appearances. There was a press conference for Morning Star, a very big company, and they also had an event.
Yes, there he walked into the conference hall wearing a pink jacket and sunglasses, acting like a guitarist, Justin Bieber. So, now you see, fund managers, you see, fund managers, they always wear suits and ties. You deal with fund managers more , you will speak very little formality with people , you will speak limitedly, you think about it there, he is going around wearing a pink dress, flashy floats, wearing goggles, talking to Justin Bieber, positioning himself, there was a commotion, people said, what has happened to this guy, people did not say it to his face, but they were saying it, they were thinking, has this guy gone mad, what kind of things is this guy doing, so there was a lady manager who looked after the equity product, during the meeting she said, you are stealing money and stealing the company's money, she told the lady, first the lady and then the fund manager, tell him that you are stealing, then these activities started, then what happened, the management told him, brother, you cannot stay alone anymore, we will discuss the structure of the CIO, we will discuss, we cannot work with you, so they imposed a couple of conditions, on which they suspected that people were leaking their news.
He said, "Secure him, then I will agree to the CIO structure, otherwise I will not agree when he was the Chairman. Imagine making him CIO and telling him to sit in it." Yes, they are talking about Lawyer Wire and Dan, whom they had hired in the beginning and sent to survey real estate. He had reached a senior level.
They met with the lawyers and made a plan that brother, now we will have to remove him. It cannot happen without him. So the management, the entire management came against him. Well, I forgot to mention one thing, Neeraj ji. Pinko, which is the primary majority owned by Alliance, a German insurance company, is the majority owner of PI.
The CEO of Pinko also came and discussed what to do. It was a management failure. Another ACC investigation was underway. Meanwhile, Neeraj ji was under so much pressure that no one was willing to listen to him against the entire management, and no one was willing to believe him because he would go back on his words.
Ultimately, that night, before leaving the office, Neeraj ji typed his resignation letter and sent it. Meanwhile, he resigned. Meanwhile, he went to another competing fund to talk to them, saying, "Brother, I want to join you." The chairman of that fund, the owner, was an old acquaintance of his. I wouldn't say friend, but acquaintance.
He said, "I'll think about it and let you know." Then, when the ACC investigation stories, Wall Street Journal stories, Financial Times stories, and people's complaints all started, he too refused, saying, " Brother, I can't take it." He said, "Brother, why should we waste our funds? By inviting such a corrosive person, who tarnished his reputation in the market, that's where his downfall began.
After that, when he resigned, and after resigning, Neeraj ji had done such a time." We move to the next chapter which is the final chapter. Bye bye two days, the chapter which is yes, bye bye two days is the last chapter. So, in that he joined a company called Janus Capital, which was on the opposite side of the road from his firm.
Now you see that when he joined there, the stock of the fund increased by 23%, 43%, sorry, 43%. Due to his joining, funds started dropping from PIMCO because he had left. The clients withdrew 100 billion dollars of funds. Well, when he went to the new fund, he withdrew his fund's money because the fund there was smart, they refused saying that we will not give you more money, so he invested his fund's own money there.
George Soros also invested money there and we invested our money and the fund started running and the performance of the team started going down because he had left. Whatever you may say, he was brilliant, but gradually over a Over a period of time, Neeraj ji, his own fund started underperforming. Yes, he was hit by the almighty and nothing else, so his fund started underperforming and his total return fund, which was named Pinko's fund, started outperforming in 12 months.
You see how the cycle changed. So when his fund started underperforming, George Suras withdrew his money from there. The fund of me and Pinko outperformed and became good in the market. So it became stable . In the meantime, his wife also divorced him due to his rude behavior . He also had personal problems, absolutely, absolutely, he got divorced, and his fund underperformed, the fund had to be closed, so roughly speaking, Neeraj ji, you see, it is a peak, it started from the bottom, reached the peak, after that it came down completely, where neither friends were there, nor company, nor wife, nor family, what will you do with the money, so this is the entire story and the sequence of how the guy who became the bond king, who made the bond market famous, took it to its peak, the market itself reached its peak and how it came down, this story moral of the story Neeraj ji is that brother, one should keep one's feet on the ground, one should not forget humility and one should never forget where one comes from, otherwise, the time comes and the blows of time, so we can say that discipline is not certainty, there is no certainty at all, Neeraj ji, certainty is not guaranteed at all, exactly discipline is most, look in the market, the same person, the same bond market, the same success and when Unsuccessful start If it happened then actually I think my experience tells me this in the market or in many things in life that when you start getting success then you build your structure brick by brick and it is strung together in a single thread from the bottom to the top, then a single mistake will make the entire fort collapse like a house of cards .
I have seen this in most of the cases. For example look at this case of Pi, Billgrass, that you made a mistake, you missed one place or your estimation was wrong at one place. If you did not understand then it will bring down your entire success because you have built on that only. But Neeraj ji, look at one example in this, for example, you said absolutely right about this PIMCO fund.
Due to discipline, there came a time when it underperformed but after Bill Gross left , it started outperforming the market in 12 months because there was discipline there, their downfall did not come from just one reason, they had made enemies, they were not friends with anyone, your character is negative, you are abusing people, you have become an agent and along with that you are also doing officially illegal things, the Sector 17A thing which I told you about, you are also doing that.
So what happens after a while is what's left, brother? Neeraj ji, ultimately, brother, it's a legacy, right? What legacy have you left behind? You have money in abundance, not a single person to spend time with you. What will you do? As our guru, Sharma ji, said, brother, there are no pockets in a shroud.
Yes, what will you do? Go and earn a name, go and earn a name. And secondly, it's not necessary that you yourself know the foundation on which you've achieved success. Yes, they definitely know. They absolutely know. So, they are aware of their downfall , that this decline that has begun will not stop because all those things collapse together .
But Neeraj ji, then the question to him is, why don't they correct their course? If they are so intelligent, then why don't they [clear throat] the biggest problem in the world, I think, is that people are not willing to admit they are wrong. Yes, absolutely, I can't be wrong. Neeraj, he is right. A person starts thinking about ego without realizing that ego is above.
So when ego starts using the stick, then the one below has to be taught a lesson, that the day you get the feeling that I am right. And that you have got success in the last 810 times, then you think, look my formula is perfect. Yes, it is absolutely perfect. Yes, that very day the problem starts. Beginning of the Downfall Beginning of the Yes So after analyzing such books it becomes clear that you have to be disciplined and always humble Humility Like they say, even Hakim Lukman did not have a cure for misunderstanding [laughs] Keep a dog but do not keep a misunderstanding brother, do not keep a misunderstanding yes yes yes yes yes no one has a cure for it and no one can make you understand If once you are right, do not accept it publicly to keep your ego in front of him, go home and immediately accept that yes friend, he is saying the right thing, this is a mistake, course correction [laughs ] Neeraj ji, I was in Bhopal for some time, there was a very famous saying there, in the local language they used to say keep anything Khan sahab but do not keep any illusion yes the same illusion , I said keep a dog but do not keep any illusion, do not keep any illusion, it can break any time I have done a lot It's an interesting book, and we're remembering Pimco because around 2008, his name was often mentioned.
He was often seen on television. His appearance was quite distinctive, not because of his skull. He was a very famous personality and the Bond King. Reading this book also taught me a lesson. I also understood how big the bond market is, how big it is, and how people can make a lot of money there. It's not just the equity market that makes money.
So, let's discuss this very interesting book. You should read it. I really like that our journalist brothers write about it. You know, CLSA was founded by two journalists. What are you talking about ? Two journalists created CLSA together. They were journalists, not finance professionals. So, as you said, psychology is a very good subject.
I recommend everyone to take it because there are different aspects to courses. In general, you Read this book on psychology. The entire market runs on psychology. If you understand behavior completely, what could be more interesting than that? You'll enjoy it. Human prediction was a game of psychology, and journalists are uneducated psychologists because they travel the world constantly, meeting people and seeing who will do what, and it's very beneficial.
So, thank you very much. This is a very interesting book. My recommendation is to buy it and read it, not just for the sake of it. If you like it very much, then buy it and read it, you'll enjoy it even more. We'll bring you another book like this in the next issue. Until then, thank you very much.
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