The Bond King: How One Man Made a Market, Built an Empire, and Lost It All

NPR’s Planet Money host Mary Childs has written a biography of Bill Gross and PIMCO, the investment firm he founded. Fresh out of the UCLA Anderson School with a newly minted M.B.A., Bill Gross was hired to work as an investment analyst in the sleepy bond department of Pacific Mutual Life Insurance Co. It was there where Gross comes up with the then novel idea of trading bonds for total return, rather than holding them till maturity.As the concept takes hold in the inflationary 1970’s, Gross begins to outperform other bond managers and he attracts a swath of institutional investors as PIMCO is spun out of the life company. By 2000 Gross is a star money manager and 70% of the company is acquired by Allianz, a German insurance giant.Gross makes his bones by using futures, options, and all sorts of derivative instruments. He generated super returns in 1983 by arbitraging the difference between the futures price of GNMA securities and the underlying cash market where he cornered the market on the cheapest to deliver security. Yes, I know this is arcane bond market stuff. In 2002 Fortune Magazine names him the Bond King.Later in that decade Gross was way ahead of the curve in predicting the mortgage melt down that was to come. He sent his people out to pose as home buyers to get a better understanding of the deteriorating underwriting standards for mortgages which led to a stellar year in 2007.Gross then brings back Mohamed El-Erian from Harvard Management as his co-chief investment officer. Never mind that El-Erian’s international bond fund suffers from horrid performance. Of a sudden Gross became paranoid as El-Erian appears to be a rival. He became erratic and his performance suffered. So much so, that in 2014 his very own executive committee stages a palace coup and ousts him. He goes down hill from there and in 2016 his wife of 40 years divorces him.Childs is very good at explaining PIMCO’s culture. Unlike the boisterous trading floor at sell-side firms and many buy-side firms, PIMCO’s trading floor is silent. There is no chatter among the traders; they communicate by email. As a product of the sell-side culture, the quiet trading floor seems outright weird.My criticism of Childs’ book is that she leaves out quite a bit and makes a few big mistakes. In order for trading strategy to be successful you need counter parties willing to trade. At the same time Gross was starting out a revolution was taking place on Wall Street. Mortgage securities were being invented by Salomon Brothers’ Lew Ranieri and First Boston’s Larry Fink. Over at Drexel, Mike Milken was bringing into being the high yield bond market that enabled leveraged buyouts which had the effect of converting investment grade corporate bonds into junk overnight. Thus, the days of buy and hold were over and active trading became the norm in the fixed income market. Simply put Childs leaves out the milieu Gross was trading in.Childs cites the reason for Pacific Mutual’s move to Orange County from downtown Los Angeles to Newport Beach in Orange County as lower rents. That is wrong. The real reason is that the WASP power structure in Los Angeles was losing relevance in the post-Watts riot era. The ascendant Black-Jewish-Latino coalition was taking over leaving less room for the power barons especially Asa Call, its CEO, at Pacific Mutual. She also characterizes Orange County as “barren strip mall desert,” which is so far from the truth. Only a snobbish east-coaster would make such a comment.Nevertheless, aside from my comments above and aside from my view that her book takes on the feel of a very long magazine article, Childs offers up an interesting history of a finance titan in his time and place.

The First half was a gem. The second half, not so much, when it start delving into all the drama...

This story had the potential to be amazing because the subject, Bill Gross, is a fascinating character. However, the author somehow failed to tell this story in a coherent manner. She jumped from around on the timeline of his career for no apparent reason to the reader because it only detracted from the story. She also let her liberal feminist bias bleed throughout the book for no apparent reason other than she felt morally superior to people she was writing about. Overall, disappointing book that would gets 1 star for the writing and 5 stars for the topic so I just averaged it to 3. This book desperately needs to be written by someone who can follow a timeline and respects the people they are covering.

Informative and adventurous read, but desperately needed an editor. Basic mistakes like punctuation formatting, and flipping between using numerical dates and spelling out "two thousand twelve" are harring and take the reader out.On a larger level, there's no structure to the book. You'll be taken on a journey that discusses the 80s, then jumps to 2012, then back to '08, the 90s, and back to the 2010s. The author chooses to group chapters by "theme," covering successes in one, failures in another. But the end result is a choppy read.All in all, I don't think you can question the book is well researched. A lot of time has been spent finding direct and indirect sources to paint a comprehensive vision of PIMCO and Bill Gross. Anyone interested in bonds or the broader market will take something positive from it. But darned if it isn't a jumbled mess to read.

This was one of the best books I have read in the recent past that held me enthralled on the shennanigans of rich and powerful people. There is a tendency in our society to place successful people on a pedestal as if they are God (Elon Musk, Bill Gates come to mind). This book does a great job of showing these folks are just ordinary humans who have a number of negative sides to them. No doubt Bill Gross is a genius when it comes to investing but he is also a shallow individual that has an overblown ego...Couple of what I felt were flaws in the book -- (a) to certain extent Mary depicts Pimco and the other characters there to be neutral or great folks. I am sure they were no saints in this story. In all fairness Mary does in the "Author's Note" talk about issues at Pimco including lack of diversity and the debauchery of the men drunken with power at Pimco (b) the story jumps back and forth in the timeline, and I found that to be disconcerting...I truly enjoyed the book -- although not as much as Mary's stories at Planet Money!!!!!

As a casual follower of finance, I had heard the name Bill Gross multiple times and remembered being surprised at hearing he left PIMCO because I thought he was the founder. Mohamed El-Erian is another name that I was familiar with but did not know much about. When I heard Mary Childs on the The Compound & Friends podcast explaining she wrote a book on this subject, I eagerly purchased it to learn more. (Great podcast too).I was left very disappointed. There is little about finance or bond trading. The book is one overly long description of the toxic work environment and constantly explains how Bill is such a weird guy. Childs goes to lengths to record specific details, but has to use multiple asterisks and rely on what lawyers told her because the actual people were not interested in speaking with her. I lost interest somewhere in the middle. I finished reading but the tone did not change.I know more about the characters than I did, but this was not an interesting biography or story like I had hoped.

Fantastic and fun read! Quick tempo and engrossing storytelling. Reminded me a little bit of the book ”Barbarians at the Gate”.

Book is detailed and captures the macroeconomic context pretty well. Sometimes the author drags on the description of the characters which displays somewhat of a bias

The book offers a fairly tedious description of a toxic work environment and focuses too much on a character assassination of Bill Gross. Hard to decipher for someone with only a passing interest in stories of financial hubris and not much knowledge of bond trading.

The book was a read which was fun, covered personal bits and business would recommend to people interested in markets

Fast delivery, good condition