From The Masters (2): Turning Bonds Into Gold - The Amazing Investing Success of Bill Gross, America's Most Prominent Bond Investor.

Straight off, it will be right to acknowledge that the Nigerian bond market has lacked steam and may not be ascribed glamour. In the circumstance, you may wonder if there is any point looking at a 'bond expert' when the local market may prove very attractive. If you think so, you may not be totally correct. One, investment is global and you can always invest anywhere you find an opportinity withput limiting your market. Two, our local bond market is not totally inactive and significant volumes of investment are still made by those who understand the market and want to fit bonds into their investment portfolio. The Government has also taken recent actions to use that market and boost the activity level. Thirdly, a balanced portfolio could do with the inclusion of fixed-income assets (bonds) of low to long durations to meet an investor's preferences. More importantly, the investment psyche, tools and strategies that work in one niche can be adapted for application elsewhere. And serioulsly speaking, the fundamental basis of Mr Gross' success in the bond market can help you win big even in the stock market.

Just for the record, Bill Gross is a founder, the Chief Investment Officer and Managing Director of Pacific Investment Management Company (PIMCO), Newport Beach, Califonia. From a humble beginning in the few millions range in 1971, PIMCO built investment assets of $10 billion by 1985. Assets had grown to over $85 billion by 1996 when Gross was honoured with a Hall of Fame induction by the American Fixed-Income Analysts Society for his achievements and contributions to bond-trading. By end of September 2006, PIMCO, still managed by Gross, had grossed a staggering sum of $641.6 billion in assets under management. The Total Return Fund of PIMCO, managed as well by Gross is rated as the world's largest bond fund, valued at $97 billion by September-end, 2006. Extremely remarkable is the fact that of Mr Gross' staying power - consistent top-level performance, often beating the market, over a period now spanning half a century! Even the massive growth in the size of the portfolio hasn't blurred his effectiveness.

What Lessons to Learn?
When someone's investing strategies have worked so well for so long, it's no more a fleeting success and wise people will want to see what lessons they can learn from them. What does this man know or do that so consistently produces market-beating results? How does he read the market to know where the next big thing is going to happen as to cash in or exit at the right time? Has he revealed any of his investment strategies and guiding rules anywhere? Above all, what can we learn here that could aid us in our quest for success with our investing objective?

His Recorded Investment Strategy
It must be admitted that PIMCO's (and Gross') investment strategies are a bit complicated for the average investor to fully grasp. Besides, they are known to apply some proprietary analysis models, as against the widely used Salomon Yield Book (a fixed income securities analysis tool), meaning that not every fact of what they do may be available to us. But we can still gain a lot, especially on the foundational approach in what they do. We'll summarise what we have learned about this as follows:

• Long-term market trends are a major framework for thier investment decisions. Short-term events - like short-term interest-change expectations that will often send the jitters down fund managers' spines - though important, are not the primary drivers. The firm takes a long-term perspective in its portfolio management process and positions on the basis of long-term market expectations. Do you have a personal perspective and strategy?
• As indicated, PIMCO uses proprietary analysis models it has developed and controls. What this implies is a hard-nosed approach that focuses on internal strengths, provides competitive leverage and seperates it from the crowd. It must have taken a period of testing and trials to arrive at a framework. Are you willing to develop your investing skills and develop some evaluation tools or you just want to depend on market buzz and follow-the-crowd approach?
• There's a constant search for technology-driven research tools to sharpen analysis and keep improving on performance. Though this is a corporate fund manager, even an individual seeking explosive weath and willing to invest a bit in mastering the market can achieve similarly
• Notwithstanding the long-term perspective, there is constant evaluation of its holdings against the backdrop of potential market risks. Strategies to avoid losing money ('cut your losses') must rank high in your toolkit.

Breaking it Down
What do we get from all of this as fund managers and individual investors?

Point one: a lot of wealth is possible through investing and it can be in any niche of the market. What's important is to master that niche and develop viable strategies for success.

Point two: the get-rich-quick approach that dominates our environment may simply lead investors to a lot of panicky decisions that undermine their wealth-building objective. You need clear objectives, rules and strategies for execution and you stick, as much as possible, to them. Hone them, master them and ultimately reap with them.

Point three: some hard work is always an important ingredient. Unless you are investing for fun, you need some homework. How do you apply strategies that dust the market? By following the crowd? You need to research and analyse. And if you can't and still won't use a fund manager, you should at least follow daily information that is available from the media and other sources about the companies in the market. Except by chance, your results are likely to be proportional to your investment in quaility analytical work.

Just remember the clear possibilty: you can really get very rich investing in financial assets.