Yesterday it was announced that Mohammed El-Erian will leave PIMCO after a year that witnessed their flagship Total Return Fund lose more than $41 billion in assets. El-Erian publicly disagreed with Founder Bill Gross, and it has been clear for months that one of them had to go, with El-Erian being the logical choice. El-Erian left Harvard Endowment, where he systematically invested a huge chunk of their money in illiquid hedge fund investments that crushed their performance. Having worked at PIMCO prior to his stint at Harvard, El-Erian ran back to PIMCO, which welcomed him with open arms.
I would not personally blame El-Erian for the poor performance of the fund. After all the bond market had a bad year, and he spent his entire tenure with PIMCO going around the country making speeches using talking points from the crew at PIMCO. He really had nothing to do with the performance of the fund, good or bad. The bigger issue is that this guy, and many more like him, jump around from firm to firm getting paid millions of dollars each year and add no value. Investors are paying the tab, and are receiving in return for their hard-earned investment dollars, sub-par performance, worthless prognostications, and infighting among the leaders of these firms.
Another winner is Economist Nouriel Roubini, AKA Dr. Doom. This guy consistently says the world is coming to an end, regardless of what the economy or financial markets are doing. As the saying goes, even a broken clock is right twice a day. I guess that is what he is banking upon. His track record is absolutely abysmal, yet the media continue to follow this guy around like little puppies, quote, him, interview him, video tape him, and invite him on live television as an “expert” guest. Today an article was written about this genius stating that he is now using Transcendental Meditation, showing a picture with he and a Tibetan monk. I guess if everything else fails, you might as well try meditation.
It is very sad how the financial press has evolved into a trend chasing, biased, short-term trading oriented group of shills. The takeaway for investors should be not to rely upon or trust the financial media for direction. Today, with so much information, most of it biased or at minimum completely irrelevant and useless, investors must have a higher level of skills to be able to sift through this drivel and find actionable intelligence, or work with a professional that can do this effectively.