Bill Gross: Rating agencies – no common sense or intelligence

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Bill Gross, co-founder and co-CIO of PIMCO, is to my mind one of the shrewdest money men around. His monthly newsletter, this month entitled “Lovin’ Spoonful”, therefore always makes for thought-provoking reading.

The following are a few excerpts from the report:

“ … if a chef were to concoct a gourmet investment recipe, he would likely blend a teaspoon of intelligence with a tablespoon of common sense …

“No one or no one company has a monopoly on investment or ratings expertise. Second grade intelligence and a high Common Sense Quotient (CQ) are a rare combination for an individual rating agency or an investment management firm as well. Still, the rating agencies in recent years have displayed little of either. In addition, they have brazenly sold their reputations for unbiased judgment to the very companies they were standing in judgment upon. Don’t bury them however; like vampires in the dead of the night they will outlast us all. Those looking to profit at their expense, however, will dismiss them. They no longer serve a valid purpose for investment companies free of regulatory mandates that can think with a teaspoon of IQ and a tablespoon of CQ.”

Click here for the full article.

Source: Bill Gross, PIMCO – Investment Outlook, May 2010.

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