Bill Gross and the Great Man theory of investment
Trust in one man's magic gives us the false belief that we can be sheltered if we pick right leader
Judging by the Bill Gross affair, the Great Man theory is alive and well among investors.
This demonstrates nothing more clearly than on what slender offerings the investment industry, with all its billions spent on people, processes and strategy, actually earns its money.
Gross, a 70-year-old with a fabulous long-term record of performance as a bond manager but some rocky recent data, resigned suddenly on Friday from Pimco to jump to Janus Capital, a move reports said came just before he was to be dumped.
Analysts began to predict mass redemptions by Pimco investors, with estimates ranging from between 10 and 30 per cent of its funds under management over the next several years, or potentially a number approaching US$500 billion.
Shares in Pimco parent Allianz, a German financial services company, fell more than 6 per cent in reaction as investors discounted outflows from a unit that accounts for about a quarter of the group's operating profits.
Janus moved in the opposite direction, rising about a third, or as much as US$800 million in market capitalisation, a number implying that something like US$30 billion to US$50 billion will flow to it on the news and stay with it for several years.
Bond markets themselves sold off as traders moved to anticipate redemption-driven selling in certain sectors Gross favoured.