Bond fund Mgr Jeff Gundlach:"I have a gift"

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tms
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Bond fund Mgr Jeff Gundlach:"I have a gift"

Post by tms » Tue May 17, 2011 2:16 pm

This was from a Barron's article three months ago. This quote is remarkable.

Look, I have a gift, or some would say a curse, of being able to have stunning insight into the reality of markets and the economy. I don't often know where my ideas come from. Maybe it's the fact that I'm obsessively regimented in my analysis, borderline autistic. But whether it's bond selection or asset allocation, we can do it better than just about anybody around. - Jeff Gundlach


http://online.barrons.com/article/SB500 ... BOL_twm_ls

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Post by HomerJ » Tue May 17, 2011 2:22 pm

Those who the gods would destroy, they first make proud...

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Post by matt » Tue May 17, 2011 2:26 pm

What makes this remarkable? Are there not gifted people? Or are we all equal?

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Post by chaz » Tue May 17, 2011 2:29 pm

Some are less than equal.
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Post by Sam I Am » Tue May 17, 2011 2:39 pm

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Post by Stonebr » Tue May 17, 2011 2:41 pm

matt wrote:What makes this remarkable? Are there not gifted people? Or are we all equal?


I used to read Barron's. Every couple of weeks they interview somebody gifted. So you are right, there are gifted people. Lots of them on Wall Street selling something.
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Post by FafnerMorell » Tue May 17, 2011 2:42 pm

It's really more of a curse - just think, if he had been blessed with stunning insight into the reality of sport teams and competition, he'd be able to make a fortune betting on sports at Vegas. Instead, he's just got the economy.

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Post by Scott S » Tue May 17, 2011 2:42 pm

rrosenkoetter wrote:Those who the gods would destroy, they first make proud...


+1
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Post by tms » Tue May 17, 2011 2:46 pm

matt wrote:What makes this remarkable? Are there not gifted people? Or are we all equal?


"I have a gift..of being able to have stunning insight into the reality of markets and the economy."

Besides Donald Trump, who talks that way?

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Post by tms » Tue May 17, 2011 2:51 pm

This was interesting as well:
"Gundlach's cautious take on high-yield is the result of an aperçu or an intuitive flash he had several weeks ago, that the yield spread between high-yield and government bonds should be calculated using the 20-year government bond, rather than the entire Treasury yield curve. That's because high-yield paper, though maturing sooner than 20-year bonds, shares similar price volatility."


Similar price volatility..yes, but for different reasons! This guy is supposed to be smart?

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Re: Bond fund Mgr Jeff Gundlach:"I have a gift"

Post by CrankyManager » Tue May 17, 2011 3:02 pm

tms wrote:This was from a Barron's article three months ago. This quote is remarkable.

Look, I have a gift, or some would say a curse, of being able to have stunning insight into the reality of markets and the economy. I don't often know where my ideas come from. Maybe it's the fact that I'm obsessively regimented in my analysis, borderline autistic. But whether it's bond selection or asset allocation, we can do it better than just about anybody around. - Jeff Gundlach


http://online.barrons.com/article/SB500 ... BOL_twm_ls


This is the very reason that I'm just Joe Nobody trying to build up some scratch with a handful of low-cost funds and ETFs. I could probably never refer to anything I've ever done as "stunning." Stunningly dumb maybe...

It takes a remarkably different genetic make-up to operate on that sort of level -- or convince other people you're operating on that level at least. I simply don't have it.
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Post by Random Musings » Tue May 17, 2011 3:16 pm

But whether it's bond selection or asset allocation, we can do it better than just about anybody around


At any point of time, there are always a few who can say this. Moving forward is when the crystal ball gets a bit cloudy.

RM

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Post by fishndoc » Tue May 17, 2011 3:23 pm

One thing that should be fun to watch: Gundlach has taken the exact opposite position on treasuries from Bill Gross:
U.S. Treasuries will perform well following a downgrade by Standard & Poor's on Monday of the rating agency's credit outlook for the United States, DoubleLine Chief Executive Officer Jeffrey Gundlach said on Monday.

Gundlach said Treasuries, whose major holders include foreign investors, will be in high demand as the U.S. economy will "soften subtantially" with no monetary stimulus in the pipeline.

One of them has to be wrong here.

http://www.reuters.com/article/2011/04/ ... 0320110418
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Re: Bond fund Mgr Jeff Gundlach:"I have a gift"

Post by floydtime » Tue May 17, 2011 3:28 pm

tms wrote:This was from a Barron's article three months ago. This quote is remarkable.

Look, I have a gift, or some would say a curse, of being able to have stunning insight into the reality of markets and the economy. I don't often know where my ideas come from. Maybe it's the fact that I'm obsessively regimented in my analysis, borderline autistic. But whether it's bond selection or asset allocation, we can do it better than just about anybody around. - Jeff Gundlach


http://online.barrons.com/article/SB500 ... BOL_twm_ls


Just...wow. I have a gift too - I can spot people who are full of it. 8-)


What makes this remarkable? Are there not gifted people? Or are we all equal?

There have been thousands (millions?) of people who THOUGHT they were gifted gamblers (err, I mean investors) over the years. But they all reverted to the mean (or worse) eventually -or- remained extremely lucky for another decade or so.

But that's not gifted. You are "gifted" in math. You are "lucky" in investing.
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Post by woof755 » Tue May 17, 2011 3:42 pm

fishndoc wrote:One thing that should be fun to watch: Gundlach has taken the exact opposite position on treasuries from Bill Gross:
U.S. Treasuries will perform well following a downgrade by Standard & Poor's on Monday of the rating agency's credit outlook for the United States, DoubleLine Chief Executive Officer Jeffrey Gundlach said on Monday.

Gundlach said Treasuries, whose major holders include foreign investors, will be in high demand as the U.S. economy will "soften subtantially" with no monetary stimulus in the pipeline.

One of them has to be wrong here.

http://www.reuters.com/article/2011/04/ ... 0320110418


Treasuries never even took a hit after Standard & Poors came out with their much ado about nothing announcement.
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Post by susze » Tue May 17, 2011 3:53 pm

Is this the same Fund manager here who was accused of stealing at TWC?


http://www.reuters.com/article/2010/01/ ... YI20100108

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Post by HomerJ » Tue May 17, 2011 3:57 pm

fishndoc wrote:One thing that should be fun to watch: Gundlach has taken the exact opposite position on treasuries from Bill Gross:
U.S. Treasuries will perform well following a downgrade by Standard & Poor's on Monday of the rating agency's credit outlook for the United States, DoubleLine Chief Executive Officer Jeffrey Gundlach said on Monday.

Gundlach said Treasuries, whose major holders include foreign investors, will be in high demand as the U.S. economy will "soften subtantially" with no monetary stimulus in the pipeline.

One of them has to be wrong here.

http://www.reuters.com/article/2011/04/ ... 0320110418


Interesting, because both Gross and Gundlach are considered to be "gifted"

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Post by Sidney » Tue May 17, 2011 3:57 pm

susze wrote:Is this the same Fund manager here who was accused of stealing at TWC?


http://www.reuters.com/article/2010/01/ ... YI20100108

No, those were gifts. :lol:
I always wanted to be a procrastinator.

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Post by floydtime » Tue May 17, 2011 8:16 pm

Sidney wrote:
susze wrote:Is this the same Fund manager here who was accused of stealing at TWC?


http://www.reuters.com/article/2010/01/ ... YI20100108

No, those were gifts. :lol:


omg, hilarious post given the subject of this thread. Well played sir!
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Post by HardKnocker » Tue May 17, 2011 8:28 pm

Ivan Boesky and Bernie Madoff both said the same thing.
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Re: Bond fund Mgr Jeff Gundlach:"I have a gift"

Post by Qtman » Tue May 17, 2011 8:46 pm

tms wrote:This was from a Barron's article three months ago. This quote is remarkable.

Look, I have a gift, or some would say a curse, of being able to have stunning insight into the reality of markets and the economy. I don't often know where my ideas come from. Maybe it's the fact that I'm obsessively regimented in my analysis, borderline autistic. But whether it's bond selection or asset allocation, we can do it better than just about anybody around. - Jeff Gundlach


http://online.barrons.com/article/SB500 ... BOL_twm_ls


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Post by ofcmetz » Wed May 18, 2011 11:38 am

I submit that he may be some type of bond Jedi. The interest rates are strong with this one.

Seriously, I think he's just putting his sales pitch into the article and some sheep might believe his comments.
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Post by Rodc » Wed May 18, 2011 11:46 am

fishndoc wrote:One thing that should be fun to watch: Gundlach has taken the exact opposite position on treasuries from Bill Gross:
U.S. Treasuries will perform well following a downgrade by Standard & Poor's on Monday of the rating agency's credit outlook for the United States, DoubleLine Chief Executive Officer Jeffrey Gundlach said on Monday.

Gundlach said Treasuries, whose major holders include foreign investors, will be in high demand as the U.S. economy will "soften subtantially" with no monetary stimulus in the pipeline.

One of them has to be wrong here.

http://www.reuters.com/article/2011/04/ ... 0320110418


Perhaps stunningly so!
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Post by sergeant » Wed May 18, 2011 12:35 pm

Sounds like the typical meth-head I deal with at work.
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Post by Beagler » Wed May 18, 2011 4:23 pm

tms wrote:
matt wrote:What makes this remarkable? Are there not gifted people? Or are we all equal?


"I have a gift..of being able to have stunning insight into the reality of markets and the economy."

Besides Donald Trump, who talks that way?


Do you think that's an uncommon sentiment among the many interviewees for active portfolio management positions?
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Post by riskreward » Wed May 18, 2011 5:51 pm

I'd like to buy Gundlach for what he's worth and sell him for what he thinks he's worth.

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Post by pteam » Wed May 18, 2011 8:31 pm

I think alot of you are just talking about the quote, but the guy is really gifted.

"On November 19, 2009 Jeffrey Gundlach was named a finalist for Morningstar's award for bond fund manager of the decade. For Gundlach, the nomination recognized 10 years of stellar results, exceeding even the returns of the legendary king of bonds, Bill Gross."

"Morningstar nominated Mr. Gundlach for Fixed Income Manager of the Year for multiple years, and he won the award in 2006. In 2009, he was nominated by Morningstar for Fixed Income Manager of the Decade. In 2010, Mr. Gundlach was named to the SmartMoney Power 30 and one of the seventeen most influential people by The Mutual Fund Wire. He is a graduate of Dartmouth College summa cum laude holding a BA in Mathematics and Philosophy. He attended Yale University as a PhD candidate in Mathematics. "

He has started his own company and his funds DBLTX/DLTNX have returned 15.29% over the last 12 months with relatively low volatility while vanguard total bond market VBMFX only returned 4.95%. So it would take like 3 years of VBMFX to make what DBLTX made in one year. The expense ratio isnt bad at .49% and the guy has a stellar track record returning 7.97% per year over the last 10 years while even Bill Gross returned less at 7.79%.

Current yield on DBLTX is 8.83%. Morningstar gives his fund one of the lowest interest rate sensitivty rating for bonds that there is at "limited" even lower than total bond market which is "moderate". Average duration is only 2.6 years.

Morningstar: "The results have been stunning. Gundlach and comanager Philip Barach started the fund in April 2010, and it soared 18% between then and the end of January 2011, topping every intermediate-term bond fund with less-than-average volatility"

"Gundlach ran TCW Total Return Bond TGLMX with a similar, eclectic look for years, through bull and bear markets, including 2008, with tremendous success."

Yes I have money in his funds, and yes they have performed amazing, and I have no complaints. :)

So I guess this guy put his money where his mouth is, and he has the stats to back it up.

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Post by floydtime » Wed May 18, 2011 9:30 pm

pteam, with all due respect, I don't think you'll find many here buying it.

When you have thousands of mutual fund managers, a few will do incredibly well over a decade or two. Problem is, if you had thousands of chimpanzees doing the same thing, you would also get a few doing incredibly well over a decade or two.

Picking out which chimpanzees (or fund managers) will do this ahead of time is unlikely. Picking out which ones have done this in the past is easy.

The funny thing about this one is that he actually believes he is gifted and has (apparently) not read his history.
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Post by matt » Wed May 18, 2011 10:06 pm

But seriously now...who has ever heard the word "apercu" before? I had to look it up. If using that word is not evidence of a gift, then I don't know what is.

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Post by baw703916 » Wed May 18, 2011 10:43 pm

matt wrote:But seriously now...who has ever heard the word "apercu" before? I had to look it up. If using that word is not evidence of a gift, then I don't know what is.


Maybe he just took a French class? :wink:
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Post by pteam » Thu May 19, 2011 12:09 am

floydtime wrote:pteam, with all due respect, I don't think you'll find many here buying it.

When you have thousands of mutual fund managers, a few will do incredibly well over a decade or two. Problem is, if you had thousands of chimpanzees doing the same thing, you would also get a few doing incredibly well over a decade or two.

Picking out which chimpanzees (or fund managers) will do this ahead of time is unlikely. Picking out which ones have done this in the past is easy.

The funny thing about this one is that he actually believes he is gifted and has (apparently) not read his history.


I do respect the theory that when lots of people do something, somebody will be successful. However, you have to believe some of these fund managers are really talented. If you asked most people if Bill Gross has talent, they would say yes. Well this guy beat Gross's record over the last decade. You cant think that every fund manager out there has no idea what theyre doing and theyre just blindly picking stocks and bonds and throwing them into a hat.

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Post by afan » Thu May 19, 2011 10:05 am

Bill Miller

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Post by mike_slc » Thu May 19, 2011 10:11 am

I thought we as bogleheads bought into the idea that it's possible as a manager to generate alpha in the bond market, just not in the stock market. It's even in one of the Boglehead books somewhere that a good manager can play in important role in a bond fund.

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Post by HomerJ » Thu May 19, 2011 10:25 am

pteam wrote:Current yield on DBLTX is 8.83%.


Average duration is only 2.6 years.


How is this possible? What risks is he taking to get such a high yield with short duration bonds?

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Post by pteam » Thu May 19, 2011 11:37 am

From what I understand he buys securities for alot less than 100% on the dollar. This is mainly a Mortgage backed securities bond fund so there is alot of distressed properties that people ran out of money that he can buy.

"Based on recent distributions, the DoubleLine fund yields 9.4% (its so-called SEC yield, a concept that takes into account the likelihood that many of a fund’s holdings selling below or above face value will pay off at face value, is 11.8%). And all of this comes with low volatility, largely a reflection of the portfolio’s low duration (a measure of interest-rate sensitivity)."

"Consider how Gundlach is currently arranging his fund to protect against the opposing risks of both deflation and inflation. As of the end of August, Total Return had nearly half of its assets in high-quality Ginnie Maes and other mortgage securities backed by government agencies (these are pools of mortgages that come with an implicit government guarantee and are traded much like bonds). Those interest-rate-sensitive securities will gain in price if deflationary pressures continue and long-term interest rates decline. (See Good Mortgage Bonds for more on Ginnies.)

The other half of the portfolio is in non-agency mortgage-backed securities, which come without the implied backing of the government. These riskier, higher-yielding securities should perform well if inflation and interest rates surge, which would imply a strengthening economy. The securities are much less sensitive to interest-rate swings than agency-backed securities and in many cases actually gain in value when rates rise.

The fund’s high yield is mainly generated from large holdings of non-agency securities, many of them rated below investment grade and purchased at steep discounts to face value, or par. “These were trashed during the financial crisis because it’s hard to analyze credit risk, but we’re experts at it,” says Gundlach. For instance, a security with a 6% coupon acquired at 60 cents on the dollar yields 10% (20% of Total Return’s holdings are priced at less than 80% of par value). "


Read more: http://www.kiplinger.com/columns/fundwa ... z1MoigHTiG

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Post by RaleighStClaire » Thu May 19, 2011 12:01 pm

pteam wrote:I do respect the theory that when lots of people do something, somebody will be successful.


It's not a theory.

The big problem that I think you aren't taking into account is that he will be very successful until...he isn't. It sounds stupid but look at Bill Miller. Miller was the investment genius behind Legg Mason Value until reality hit and everyone in the fund lost their hat. His 15 years of out-performance were irrelevant after just a few months of terrible returns.

If you don't think they are the same situation then that's your prerogative.

I don't think anyone can refute the fact that he is very book smart but c'mon, what kind of person makes the comments that he does? He must be outta his mind.

Good luck.
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Post by pteam » Thu May 19, 2011 12:09 pm

RaleighStClaire wrote:
pteam wrote:I do respect the theory that when lots of people do something, somebody will be successful.


It's not a theory.

The big problem that I think you aren't taking into account is that he will be very successful until...he isn't. It sounds stupid but look at Bill Miller. Miller was the investment genius behind Legg Mason Value until reality hit and everyone in the fund lost their hat. His 15 years of out-performance were irrelevant after just a few months of terrible returns.

If you don't think they are the same situation then that's your prerogative.

I don't think anyone can refute the fact that he is very book smart but c'mon, what kind of person makes the comments that he does? He must be outta his mind.

Good luck.


That was stocks this is bonds. In fact, looking at my current portfolio I only have vanguard index funds for my stocks. For my bonds I really don't see a value in total bond market index with such a low yield of only 3.28%, and high US interest rate risk. I currently have bond money with gundlach's funds, trowe price foreign bonds PREMX (much higher yield, great history, and no US interest rate risk) and paying down my house which is at 4.6% as part of my bond allocation.

See:

mike_slc wrote:I thought we as bogleheads bought into the idea that it's possible as a manager to generate alpha in the bond market, just not in the stock market. It's even in one of the Boglehead books somewhere that a good manager can play in important role in a bond fund.

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Post by jimbone » Thu May 19, 2011 12:37 pm

Sure, he has a gift.

Until he doesn't.

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Post by muishkin » Thu May 19, 2011 5:19 pm

I think he's also predicting that the S&P 500 will fall to 500s in the next year, obviously biased but at least he's not afraid to make predictions in public.

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