Bill Gross: ‘bond king’ who learned risk at Vegas blackjack tables

Las Vegas

Bill Gross learnt his nous for numbers counting cards at the blackjack tables of Las Vegas.

The “bond king”, as he is dubbed for his skills managing the world’s largest bond fund, headed for Vegas in 1966 with $2,000 in his pocket after graduating with a degree in psychology from Duke University.

After four months counting cards for up to 16 hours a day he left with $10,000 – but not before getting kicked out of some of the biggest casinos on the Strip.

“My early blackjack career taught me several things,” he said. “The first is that if you apply yourself with a lot of hard work and mathematical prowess you can beat the system.”

Gross, who was born in Middletown, Ohio, in 1943, said Vegas gave him a “sense of risk” that was unusual at the time, and taught him to avoid placing too many high-stakes bets. “Although the odds were many times in my favour, if you took too much leverage and had too much debt then the house of cards will come tumbling down.”

Gross then joined the military as a “24-year-old baby-faced naval officer” and was sent to Vietnam. His memories from service sometimes cropped up in his eagerly-anticipated Pimco newsletters. “I sweated bullets, even if I didn’t fire many, and there was blood on my hands in a figurative if not a literal sense,” he wrote in one column.

After the military, Gross went to business school at the University of California in Los Angeles, but he reckons university is over-rated. “A mind is a precious thing to waste, so why are millions of America’s students wasting theirs by going to college?” he said in an investment column. “An undergraduate education is primarily a four-year vacation interrupted by periodic bouts of cramming or Google plagiarising.” He is, however, still one of the biggest donors to Duke, giving $23.5m in 2005.

After business school he went to work as an investment analyst for Pacific Mutual Life in LA. He founded his own firm Pacific Investment Management Company (Pimco) with friends Jim Muzzy and Bill Podlich in 1971 with $12m of assets under management. Pimco now manages $1.97tn.

But the firm has been struggling recently with investor withdrawals, a US regulatory investigation and a bust-up with Mohamed El-Erian, his heir apparent who quit the firm suddenly in May after his 10-year-old daughter wrote a list of the 22 milestones in her life he had missed.

Raymond Watson, a colleague from Gross’ early days at Pacific Mutual, says Gross is “not the typical Wall Street guy who’s so full of himself that you get turned off”.

“He doesn’t say, ‘I know what the bond market will do’. It’s more like, ‘Here’s what I believe might happen- but I’ve been wrong before.’”

Gross is personally worth $2.3bn, according to Forbes Magazine’s latest Billionaire’s list. A lot of it he spends on stamps.

He has one of the most impressive philatelist collections in the world, and the Smithsonian National Postal Museum opened a William H. Gross Stamp Gallery in September 2013.

Last year he made $9m auctioning off a collection of British stamps, and donated all of the proceeds to Doctors Without Borders.

Powered by Guardian.co.ukThis article was written by Rupert Neate, for The Guardian on Friday 26th September 2014 19.09 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

JefferiesAnd the Best Place to Work in the global financial markets 2017 is...

Register for Financial Markets News Alerts