Thursday, October 8, 2009
It's "dog years!"
Oh. Does that mean gold has to move that much higher?
But isn't that how Wall Street works? No one believes, and then, after the fact, they pretend they were believers. Instead of seeing the gates of hell, they saw the streets lined with gold.
We went from Armageddon to heaven!
Now back on April 23, I wrote this piece on "rabbit" hunting. It encompasses David Rosenberg's Wily Coyote, the bears, and Pimco's McCulley, and his pet rabbit Bun Bun. You would have to appreciate that, to understand the mindset of the brains behind PIMCO, and their evolutionary thinking (see March letter) because I found a draft of their new holiday card, that will soon be sent out to their clients. Now maybe that wasn't enough to convince you that I have their real card; so maybe you should look at Paul McCulley's year end letter last year, with his pet bunny Bun Bun, or "5% a year in equties" Bill Gross and his October Investment Outlook, titled Doo-Doo Economics.
Here's part of it, for those that still need a shovel for Wall Street's doo-doo:
Dog owners would be the first to acknowledge it. Having converted reluctantly to felines nearly ten years ago, I myself am only forced to humble myself by emptying the litter box once or twice a year when Sue is visiting the relatives. But dogs? Well, Bowser has to be walked, and Bowser owners these days are being forced to subserviently follow in step, holding those little blue “doo-doo” bags at the ready that keep the neighbors’ grass green instead of brown and minimize the number of summer flies to a billion per square mile. No longer will the current generation be allowed to use pooper-scoopers; they must in fact be pooper “stoopers,” bending down, turning the bag inside out to form a glove, and then – EEECH – making the grass environmentally friendly again by picking it up, reversing the bag and hurriedly looking for the nearest neighbor’s garbage can who might conveniently be at church or shopping at the grocery store. One can only hope that Fido is mildly constipated, if you get my drift.
Cute animal stories? PIMCO? Must be genuine!
Dear Clients, Friends and Investors
We have much to be thankful for this year. We were able to massively front run the US Government in their purchase of mortgage securities, and then we were able to offload our purchases to Uncle Sam, allowing us at PIMCO, and our investors to have our own taxpayer funded stimulus.
For that we are very grateful.
We shook hands with Uncle Sam, but we wore a rubber glove when we bought our mortgage securities. We have now turned that glove inside out, and now we are massively overweight Government bonds of a longer duration.
We hope to shake hands with Uncle Sam again.
We are, of course, the world's largest bond house, but we also have a staff of PHD's devoted to understanding the equity market, which helped us immensely this year.
Their thought leadership, talent, and use of technology helped Bill Gross devise his thesis of 5% annual returns in the equity market for the foreseeable future.
We have had one of the biggest rallies in the history of the stock market, and Bill's call has been amazingly prescient. Bill, of course, measured this return in "dog" years, and therefore it needed to be multiplied by seven.
We felt it would be appropriate to memorialize that bold call for our 8 million clients this Holiday Season, and give our heartfelt thanks to Bill, as that call was made without any special insight from the Government.
We are proud of our firm's record and are always working to repeat and extend our successes.
Posted by Palmoni at 7:35 AM