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

by Mary Childs

States and nowhere else can borrow money at a fixed rate for thirty years with a free option to refinance, anytime.

That this game he loved—the making money into more money, the orderly little numbers on his blinking screens, the bond market expanding and forming the more he explored—had ended up gaming the American public, the world.

doubled down on one of his favorite strategies, selling volatility, betting that market swings would be less wild than everyone else’s anxiety told them.

The dealers who bought the contracts from Pimco had to hedge themselves, which meant functionally selling the same trade as Pimco’s. Every day, dealers had to fiddle with their positions a little, to hedge themselves back to a neutral risk. Through this basic maintenance, the dealers themselves were acting as guardrails, pressure in the market, keeping things within the range Pimco had delineated. It became a self-fulfilling trade.

That question he used to ask in hiring—power, money, or fame? He’d gotten all three. Money, of course—that had come first. Fame, his own favorite answer—he’d had all the headlines and TV interviews he could ever have dreamed of. And power—the present moment notwithstanding, hadn’t he been influential? He had been king, had had a kingdom.

Gross was always one of the few willing to say out loud that investing was just gambling, but in the end, he made it more and less of a gamble.

He knew better than to be unhappy, or at least to admit it. He was alive and a billionaire, and those things had to count.

this situation has escalated far out of proportion to the actual issues at stake, which are petty in comparison to a world in which thousands are dying and suffering every day, while many more are out of work and desperate to pay the rent and feed their families.

structural ability to forget, to start again, fresh. It has allowed him to approach the table unclouded by unhelpful emotion like regret. It’s the posture a gambler must take: the system works, it just didn’t work that time. If he keeps playing, he’ll get the true odds.

But that’s the natural evolution, not just of

life, but of business life. You rise to the top, and then you gradually erode, and out. But it’s hard to see that when you’re the Bond King and you’re doing well, and [when] assets, in part because of me, are at two trillion … who could possibly object to that?

Gross and Pimco figured out that the government needs the markets to function, wants the stock market to go up, wants companies not to go bankrupt. So, people can battle over basis points in the full security that things will never be allowed to go too far down. And even if they do go down, for a professional money manager, it’s almost never their problem.

“A lack of spontaneous seeking to share enjoyment, interests, or achievements with other people…”

he saw that much of

his drive was that thirst for affirmation. For external validation.

that in his constant forward tilt he neglected everything else, to his own detriment. And that it was gone now.