Thursday, December 10, 2009

MONEY CNN: Long Interview with Pimco's El-Erian: Tough Times Ahead. Investors Should be Less U.S.-Centric

As I said recently, when too many money advisors are recommending Asia and Emerging Markets, their real motive might be to push their holdings higher while cutting back their overseas investments. Recently Buffett took his investments out of China and bought a railroad here. He does not follow the crowd. Read such books by John C. Bogle, former CEO of Vanguard, "Enough: True Measures of Money, Business, and Life" and Yale's David Swensen "Unconventional Success" as a start because they tell you the truth about markets. Both recommend index funds for individual investors. Don't compete with the professional investors because they have the facts before you do and can act fast. They only tell you what they did long after the rake in the profits.

In order to stick it out when things get rough, you need to develop a strategy based on knowledge. Both Bogle and Swensen know what works for the long-term. Also you have to be honest with yourself and from your history of investing, you should get a good idea about your tolerance for risk. Yes, you should invest all over the world in index funds for your stock portion of your investments. How much can you afford to lose if we get another collapse of the stock and bond market? Invest accordingly and don't get greedy.

Jim Kawakami, Dec 10, 2009, Posted in brief at

Mohamed El-Erian: Tough times ahead

Pimco's CEO says individual investors must change their investing style, such as being less U.S.-centric.


By Geoff Colvin, senior editor at large

Last Updated: December 10, 2009: 11:43 AM ET


(Fortune Magazine) -- Mohamed El-Erian has earned his status as one of the investment world's rock stars with surprising speed. After a 15-year career with the International Monetary Fund, he joined Pimco just 10 years ago and began managing the firm's emerging-markets bond fund.

That fund's knockout performance, combined with his deeply intellectual approach to investing and understanding the larger financial world, caught the attention of Harvard University, among others.

When the legendary Jack Meyer stepped down as manager of the university's mammoth $30 billion endowment in 2005, Harvard hired El-Erian to take over. He didn't stay long, but in his one full fiscal year at the helm, the fund returned a market-whomping 23%.

El-Erian returned to Pimco's Newport Beach, Calif., headquarters in late 2007, just before the global recession took hold. He's now the firm's CEO as well as co-chief investment officer, with Pimco's famous founder, Bill Gross. …

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