Grant - Out of the box and onto Wall Street: unorthodox insights on investments and the economy

Contents

Copyright 2011 by Mark J. Grant. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Grant, Mark J., 1950

Out of the box and onto Wall Street: unorthodox insights on investments and the economy / Mark J. Grant.

p. cm.

Includes index.

ISBN 978-1-118-01810-1 (hardback); 978-1-118-05665-3 (ebk); 978-1-118-05664-6 (ebk); 978-1-118-05663-9 (ebk)

1. Global Financial Crisis, 2008-2009. 2. FinanceHistory21st century. 3. Investment analysis. I. Title.

HB37172008.G733 2011

332'.042dc22

2010051232

This book is dedicated to the fine people on Wall Street whom I work with each day. Regardless of comments made in the press or barbs thrown about by politicians, most of the people on Wall Street are honorable people who make every effort to do the right thing. The financial community is made up of people from all over the world, and your family name, your point of origin or the school that you attended make little difference. In the end, you are either bright enough to carry the torch or you are not. On Wall Street your reputation is not just a thingit is everything; while we have a few bad apples, as in every profession, for the most part there is not a finer group of diverse people to be found on this planet. Our community is different in one very real senseit is a profession of results. There is no trying; trying is for other areas of endeavor. Either the task is accomplished or it is not, and that is deeply inscribed in the bedrock in very stark black and white.

I am a guy that started at the bottom and made it somewhere toward the top. There are richer people, to be sure, and someone always has a bigger boat; but I had the opportunity, was given the chance, and was able to move myself to higher ground. The bright-eyed kid over time became a senior statesman and I dedicate this book to all of the people, over the years, who saw some promise and encouraged me on in my adventures. To all of my friends and clients: Please allow me to express my gratitude and dedicate this book to all of you!

Acknowledgments

I have lived my life by two guiding principles:

1. Have a great adventure, and if it is not good, then you are doing something wrong and it should be changed.

2. Surround yourself with people who you love and who love you.

Of all of the people on this Earth who have encouraged me in my endeavors, added joy to my adventure, and loved me through the bright and dark days of life, it would be my mother, Carlyn Pollock, to whom the greatest debt is owed. As she would tell you, if not for her I would never have had an opportunity to have this adventure, and, as any mother would tell you, she is right, of course. Consequently, I acknowledge my shining star, my mom, for her contribution to me and this book, and I also give thanks to my father, Stanley Grant, who has left us here and is off on his new adventure somewhere else in the universe. Better parents a son could not have had!

I have two fabulous assistants that work with me: my junior partners, the Sorcerers apprentices. I wish to thank them both for their hard workAngela Offill for handling more than her share of the workload as I got the book ready to be published, and Tara Schuerman for helping to organize the book. There would have been no book without their invaluable assistance, constant loyalty, and late hours worked. I doff my Wizards cap to both ladies and say thank you with great affection and humility as they both fit into the category of surrounding myself with people that I love.

Finally, there are Bill Gross and Paul McCulley at Pimco, Pimm Fox at Bloomberg News, Andy Heiskell at Mutual of America, Cliff Noreen at Babson/Mass. Mutual, and Howard Potter at the Capstone Funds to thank. Without their encouragement and prodding, this book would never have been written. They pushed, pulled, and gave their support to this book as I often wondered if anyone outside of the professionals with whom I do business would have any interest in my meanderings. Finer people there are not on Wall Street, and each is a stand-up guy who carries his values and high standards to our profession. Thank you, my friends.

Introduction

For almost four decades I have been working on Wall Street. There have been great joy and moments of incredible aggravation. I climbed up the ladder step by step, starting from the first rung, and made every effort to continuously pull my way higher. All of the content that you will find here was written for investment professionals. You may not understand each and every subject or nuance, but I believe the general concepts can be easily understood. My commentary is reflective of 10 years where the only distribution was made to professional money managers of one type or another. This is the first instance where Out of the Box has been made available to the public.

My book is not about the stock market, though certain principles apply, or the bond markets, where I have spent most of my time; but it offers some methods for investing that are often not taken up in the news of the moment. Many of my views, I am not apologetic to tell you, have been formulated through long experience. I have often felt that, regardless of any persons intelligence, there is just no replacement for having lived through the battles of the markets, and I wear each scar proudly; each has shaped my vision of how to win at the Great Game. There is a subtle but very real difference between being right and winning, and I have always played to win.