You’re only as good as your last generation-defining crisis. Smart people need to step up and start talking.
This is the year Wall Street can’t get enough of Jeff Gundlach. It really doesn’t matter what he says at this point. The only thing that matters is that people want to hear it.
And instead of hiding his insights behind a paywall, he broadcasts to clients and potential clients alike. Over and over, his name gets out there.
Repetition bred familiarity. People are conditioned to look to him for answers. He has our attention.
In a world where definitive answers are scarce, he practically has a monopoly on attention.
After all, who else is even remotely credible right now?
Filling the leadership vacuum
A few months ago, the joke was that the only opinions investors really respected were Bill Gates and Warren Buffett. It’s a joke because Gates is a technocrat, not an investor.
He has no real experience with the way markets cycle under various conditions. In fact, he outsourced his personal portfolio to Buffett and the Berkshire Hathaway team.
As for Buffett, when random day traders and Ken Fisher make headlines questioning your abilities, you’re no longer the oracular Sage to be envied and emulated.
Buffett’s feel-good pronouncements don’t resonate right now. The space in the industry conversation he used to fill is now a void ambitious and smart people need to fill.
Until they do, the market is just a mass of hot tips, hot money and hot takes right now. Like Buffett used to say, you’ll see who’s swimming naked when the tide rolls out.
And those who have their suits on will build solid reputations for themselves in the next cycle. Gundlach was a relatively minor figure going into the 2008 crash.
His track record was great but he felt the firm was holding him back. When it became clear he wanted more, they pushed him out.
The mouth helped him gather assets. He’s up $100 billion from where he started, and in the bond world that’s almost all organic flow and not market gains.
Now he proclaims on everything. People aren’t tired of him. He’s usually incisive and often funny.
Again, he gets a lot of day-to-day calls wrong, but the nature of the bond world ensures that his strategic ideas won’t be tested for years if not into the next decade.
That gives him a lot of time to talk people through the day-to-day turbulence. He calms the waters.
It’s what bond gurus do. He learned it from watching people like Bill Gross and Tony Crescenzi rise and fade away.
Bonds rarely have stories. There’s no tale to tell. But because investors crave narrative, making them happy means creating that engrossing storyline or, failing that, embodying it yourself.
There’s no shame in it. While we can all read the numbers for ourselves, we prefer to check our interpretations against what other people are saying.
The market is how we reach consensus. Strong interpretations come true. Lazy ones evaporate, taking money with them.
Right now everybody has an opinion and the bad takes can overwhelm the good ones unless everyone speaks up with high conviction and an open mind.
That’s how leaders emerge.
Speak softly if you want to, but back up the talk
A lot of market gurus take the opposite approach, arguing that people pay them for insight and so the best ideas should be reserved for clients only.
After all, Goldman Sachs and other elite firms keep the research behind the password protection screen. You don’t want freeloaders crowding a trade ahead of customers who pay the bills.
But there’s the marketplace of ideas and then there’s the market itself. People don’t pay Gundlach and Buffett for abstract insight. We pay managers who can translate insight into the right assets.
The insight demonstrates that they know what they’re talking about, revealing something about their process and their view of the world . . . their narrative.
When that narrative resonates with ours, the demonstration convinces us to sign up. That’s how prospects become clients.
Without that demonstration, you’re asking them to buy in blind. Maybe they’ll be happy when and if they take that leap, but it’s going to be a tough sell.
Gundlach is in for the long haul. He has a team who can crunch all the numbers, come up with fresh angles on the market and test them for flaws.
His job is to communicate with people who don’t know how any of that works. When they like the story, they’ll trust his team with their money.
When the team gets it wrong, it reflects on him. Something went publicly wrong with Buffett’s process when he bought the airlines and then sold weeks later.
That’s not leadership, especially when your whole image is built around buying quality at a discount and holding on forever. That’s just a short-term trader catching the wrong end of momentum and retreating when he gets burned.
Gundlach has the power of $130 billion in client assets to back up his messaging. If it ever became apparent that he was just chattering, his authority vanishes.
At that point, at best he’s just another reality TV guest paid to fill air time. At worst he’s a kind of parody of how the markets really generate wealth.
One by one, the gurus who survived the 2008 crash are fading into the background. The heroes of the dot-com era are already gone. They might still be great investors but they aren’t as interested in communicating.
Asset flows slow down. Their funds stop growing. It can happen to you.
But if you have something to say, go ahead and say it. Open up your client education efforts to the community.
They aren’t paying you for a newsletter. You aren’t a journalist. They’re paying you for expertise and the newsletter is how you remind them of that.
Let the whole world know what you tell your clients. Make them want to be your client. That’s what it’s all about.
Fill that void and drown out the noise.
