Bill Gross

Bear Funds or mutual funds that are intended to prosper during down markets have actually performed poorly over the past decade. One would think that the past decade would have provided the perfect environment for these types of investment vehicles. As reported in Bloomberg, though, a Pimco bear market mutual fund run by Bill Gross is the only fund of its type to beat U.S. stocks over the past five years. According the the Bloomberg article: "Bear funds trailed equities over five and 10 years,...

Pacific Investment Management Company (Pimco)--the large asset manager headed by Bill Gross--has taken a position that reflects skepticism of the possibility of long-term deflation in the United States. During the first half of 2010, Pimco entered into derivative contracts with a notional value of $8.1 billion.

The consumer price index has fallen for two consecutive months: 0.2 percent in May and 0.1 percent in June. The unemployment rate in the United States remains at a persistent 9.5 percent, and in July the U.S. shed 131,000 jobs. Not exactly the type of news that supports a strong recovery or growth story. As discussed in a recent Wall Street Journal article , some large and very prominent investors are conditioning their investors and structuring their portfolios for deflation. PIMCO's Bill...

Bill Gross is the manager of the world's largest bond fund at PIMCO. Gross believes that "bonds have seen their best days" and that both inflation and real interest rates are headed higher.