Bill GrossChief Investment Officer, Pimco
Executive summary: Cut through the noise.
I get up about 4:30 A.M. and check out the markets. I have a Bloomberg and a Telerate and some other machines downstairs. Bloomberg is the most important: You can get a review of the most recent New York play or you can get a 50-year currency history of the Brazilian real. It's amazing what you can access.
Anyway, I check out Japan and Europe. I make myself some breakfast and then head off to work about 5:45 A.M. and get into the office about 6. The first hour or two is used for acclimating to the markets and various economic data releases. Lots of big, macro numbers -- GDP, the unemployment number, other employment statistics -- typically come out around 5:30 A.M. Pacific time. These are things that influence economic growth and inflation going forward, which in turn affects bond prices.
For a portfolio manager, eliminating the noise is critical. You have to cut the information flow to a minimum level. You could spend your whole day reading different opinions. For me, that means I don't answer or look at any e-mails I don't want to. Other than for my wife, I'll only pick up the phone three or four times a day. I don't have a cellphone, I don't have a Black-Berry. My motto is, I don't want to be connected -- I want to be disconnected.
I sit in the middle of a 70-person trading room on the third floor of an office building that overlooks the Pacific Ocean. I'm surrounded by six Bloomberg screens. After I've as assimilated the economic releases and market moves, then I've got portfolios to manage. Pimco manages about $550 billion, and I have direct responsibility for about $200 billion. I check out the status of the various portfolios I manage and determine whether they have enough of this or too much of that, and go to work.
Of course, there some days when there's not much actual trading. When you're managing $200 billion, we need the rest of the market to be accommodating in terms of volume. On a day when there's not much partying going on, it sort of inhibits the ability to get something done. So if you were a fly on the wall, you'd see me just sitting here, examining screens, examining relationships between different bonds or currencies. There's a lot of dull downtime. An outside observer might wonder, "What the hell is he doing to earn that much money?" But that's the nature of the business.
The most important part of my day isn't on the trading floor. Every day at 8:30 A.M., I get up from my desk and walk to a health club across the street. I do yoga and work out for probably an hour and a half, between 8:30 and 10. There's only been two or three times in the past 30 years when someone has come across the street and told me I should get back to the office. One of them was the 1987 market crash.
There's an understanding here that that's my haven. Some of my best ideas literally come from standing on my head doing yoga. I'm away from the office, away from the noise, away from the Bloomberg screens -- not to mention that standing on your head increases the blood flow to your brain.
After about 45 minutes of riding the exercise bike and maybe ten or 15 minutes of yoga, all of a sudden some significant light bulbs seem to turn on. I look at that hour and a half as the most valuable time of the day.
-- Interviewed by Jon Birger