Four big lessons from the downfall of Bill Gross

October 20, 2014 admin

Before Brutus could plunge the dagger deep inside Bill Gross’s thoracic cavity, the world’s most famous bond manager jumped ship. Gross took up residence at Janus while using the fatuous cover story that he wanted to focus more on investing and less on managing. (Who has ever known a control freak of Gross’s proportions wanting to give up making the decisions?)

Lots of blood has run through the moat at PIMCO — the organization he helped co-found and that served as his castle — and during that time observers have learned many lessons. Here are four:

  1. Be willing to change. The financial market had left Bill Gross behind, and he was not a man who embraced change. Like the football coach who still believes that progress is three yards a cloud of dust, Gross wouldn’t give up his losing game plan. A new generation of managers wanted PIMCO to branch into some new areas, but Gross would have none of that.
  2. Protect your legacy. Today, like athletes and Hollywood stars, many business leaders are household names. And, like movie and sports celebrities, many business leaders don’t know when it is time to get out. The smart ones realize that no one has a hot hand forever, so they get out while still at the top of their game. Instead of departing while he still looked indomitable, Gross clung to his fiefdom until dethroned by a coup d’état.
  3. Understand the true nature of power. If you have to hold onto power, you don’t really possess it. Gross wouldn’t relinquish his control of PIMCO because he never accepted the fact that his influence had long since evaporated. People who possess power have followers — even devotees — not detractors. To quote Game of Thrones author George R.R. Martin: “Power resides only where men believe it resides.”
  4. Read Shakespeare, don’t re-enact his tragedies. Gross had an opportunity to lead the young, to mentor them, to wow them with his sagacity. Instead he instigated a rebellion against his rule.

Having turned 70 years old and with billions of dollars in net worth salted away, Gross should have also learned to enjoy the finer things in life. It’s not too late, Mr. Gross. Be contemplative. Be meditative. Be philanthropic.

Don’t stick around until all those around you just want you to be gone.

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MikeCfinalwebMike Consol is editor of The Institutional Real Estate Letter – Americas.

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