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Hey, you want to screw up your life? Get rich. More on that in a minute.
In the meantime, does Bill Gross's departure from PIMCO mark the end of an era? Is it the end of the bull market in bonds?
We don't know. No one does. Yesterday, there was little movement in the bond market or the stock market. But gold let loose another $10. It looks like it will test the $1,200 level. Which could mean the world economy is weakening. Commodities are soft. The dollar is strong. If this is because economic growth is slowing, it will also mean possibly even lower bond yields. The 30-year Treasury bond yields all of 3.21%. Could it fall below 3%? How about 2%? Anything is possible, isn't it? And if that is so, the top of the bond market could still be scheduled for when we are deep in retirement, drooling quietly in some forgotten nursing home, after having given up all care about bond yields or body functions.
Gross has been with PIMCO, a company he helped start, since 1971. That was the fatal year. "Love Story" was the big film of the year. Charles Manson got the death penalty. And the last link between the dollar and gold was broken. Credit was freed from its earthly fetters... and it soared. Over the course of Bill Gross's career, total credit in the US increased 50 times.
At first, the bond market shuddered at the thought of a pure-paper dollar. Interest rates and inflation ran for cover. But then, 10 years later, Paul Volcker had the situation under control. Interest rates have been coming down ever since...for the last 33 years.
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And now Bill Gross has reached retirement age. And he's parted company with the firm he helped create.
And even if the top is not exactly in, it's probably a good time for the rest of the bond players to look around them and plan for a graceful exit too. No market goes in the same direction forever. Bonds were at their peak approximately the year Bill Gross and your editor were born. They bottomed out 33 years later. But it was not a sharp, simple bottom. It took place over years...with plenty of backing and filling until we could finally see a pattern. And now, 33 years further on, the bull market that began in the early '80s looks ready to top out. Again, it may not be a sharp, clear top. Instead, it may take place over years...with investors doubting it every step of the way.
Jeremy Grantham says his studies show a cycle of about 31 years for major tops and bottoms. If he's right, our hat is off to Bill Gross; good career move.
Back to the trials and tribulations of the 1%.
Yes, maybe we are exaggerating. But surely the rich do not deserve the calumnies and kvetching directed towards them. They suffer enough. Wealth is power (of a sort). Even in the hands of sensible, well-meaning people it can do damage as well as good.
That was the message we took from a recent article in Forbes about the Rollins family. The Rollins are the owners of the Orkin pest control empire. It's worth some $8 billion. And though the Rollins seem like decent people with decent financial and business skills, their private lives sound like a train wreck. We thought we heard cockroaches laughing as Forbes told the story:
Glen has sued his father, Gary, CEO of Rollins Inc., as well as his uncle Randall, company chairman. Glen's three siblings also joined in, claiming they were being denied their rightful cash allocations-though Randall's five kids stuck by their dad and Gary. Ruthie apparently took her kids' side in the money fight, filing for divorce from Gary, after 45 years, at almost precisely the same time. And then Glen and Danielle began their own ugly divorce. The cumulative effect-father vs. sons, wives vs. husbands, cousins vs. cousins-makes this one of the nastiest intergenerational battles ever to take place among members of The Forbes 400 (Gary and Randall rank 225th on the list, at $2.7 billion each). "It's like a Greek tragedy," says Danielle.
"Money is just a way of keeping score in life," says T. Boone Pickens. People keep score in dollars because it's easy to tote them up. Too bad it is all nonsense. What really matters in life is not quantitative; it's qualitative. You can't add it. You can't subtract it. You can't keep score with it. The numbers are meaningless.
It's like dominos," says Glen's ex-wife, Danielle. "My children have lost grandparents, cousins. Their heritage."
Glen has had no further dealings with the company that bears his family name. He doesn't speak to his father nor his uncle, now 82, who continues to work at the family business six days a week. Before evicting his ex-wife and three kids from Boxwood in July 2014, Glen was renting an Atlanta town house owned by his mom. Now he's back at the estate, sports cars in the garage, his sister's former nanny in his bedroom.
Meanwhile, Gary threw one last party this past spring, when he remarried. None of the children that he raised in all that luxury and splendor was in attendance.
Looking from the outside, you might as well be the family dog overhearing a family squabble. You don't know what to make of it. For all we know Glen Rollins is as happy as any biped...or he may be the most miserable man on the planet.
Money makes things possible - good things as well as bad. Which brings us to the last part of our 'Homage to Poverty' series.
Remember, what really matters is 1) what you do, 2) where you do it and 3) with whom you do it. We've already seen how money can keep you from doing what you want...where you want. But how about with whom you want? How does money come into play with that?
Readers may object that it was not wealth that wrecked the Rollins family. It was lack of family solidarity. And a lack of moral direction. Two of the boys were described as 'drug addicts.' Glen, heir apparent, was said to have a 'sex addiction.' Poor people have those problems too. But they don't end up in court over them. Money - or arguments over money - breaks up rich families, not poor families.
That leaves the 1% often feeling lonely and isolated - cut off from the 99%...and from their own 1% kin. What can they do, but hang out with other 1percenters? They move to the rich side of town. They take up hobbies and past-times shared by other rich people. Pretty soon, their lives are slipping away from them...measured out in sauvignon blanc and charity fundraisers.
The best of them piddle away their days in idleness, drunkenness and debauchery. The worst are full of earnest good intentions. The women they married may feel abandoned in Atlanta, but women they never met in Africa have their full support!
More to come...
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.
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