Odd Lots
Bill Gross on the End of the Great Bond Bull Market
Sep 13, 2023
Bill Gross, known as the 'Bond King', shares his insights on the financial landscape after a historic bond bull market. He reflects on his illustrious career and the evolution of bond investing since the 1970s. Gross analyzes modern inflation challenges, drawing parallels to past crises. He discusses the impact of current interest rates and fiscal policies on investment strategies, particularly in sectors like oil and gas. The conversation touches on emotional trading strategies and highlights potential opportunities in the market, revealing what keeps him optimistic today.
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Quick takeaways
- Self-hedging with short-duration bonds created a golden opportunity in the bond market during the high-interest rate period of the 1970s and 1980s.
- In a bear market, both relative and absolute performance are important, with the latter crucial for retaining clients and navigating market cycles effectively.
Deep dives
Bond Market in the 1970s: High Interest Rates and Self-Hedging Bonds
During the 1970s, the bond market experienced high interest rates, with rates reaching 15% in 1981. However, due to the short duration of 30-year Treasury bonds at the time, it was possible to self-hedge. For example, even if rates went up to 18%, investors wouldn't lose money. This created a golden opportunity in the bond market.
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