PIMCO Co-Founder Bill GrossBill Gross. (Photo: Bloomberg)

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(Bloomberg) –Even after one of the most storied careers infinancial markets, Bill Gross has a few surprises left.

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For one, he's been diagnosed with Asperger's syndrome, theautism-spectrum disorder.

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Gross says he lived most of his life unaware of the conditionand now believes it helps explain not only why he was such asuccessful investor for so long but also why he could, by his ownadmission, rub people the wrong way.

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Gross, long one of the most vocal critics of post-crisisstimulus, now sounds like a near-convert to modern monetarytheory.

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He says deflation poses a huge challenge for central banks,admires what Japan has done to revive its moribund economy andthinks the U.S. government should consider doubling the size of itsdeficit.

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And the billionaire and registered Republican agrees withDemocratic Rep. Alexandria Ocasio-Cortez that the rich should paymore in taxes — if not quite the 70 percent she's proposing at themargin.

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It's a “necessary evil” to correct the failings of Americancapitalism, Gross says, adding that if inequality persists there'llbe a “revolution at the ballot box.”

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He even muses on who might inherit his onetime title of king ofthe bond market.

Last day

Gross, 74, shared the revelations in a 90-minute interview withBloomberg Television at his office in Newport Beach, California. Hetouched on everything from recession risks to a recent round ofgolf with discount-brokerage pioneer Chuck Schwab as he counteddown the hours to his official retirement. Today will be his lastas a portfolio manager with Janus Henderson Group Plc, the firm hejoined in 2014.

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It's been 48 years since William Hunt Gross, an Ohio native,Duke University graduate, Navy veteran and blackjack whiz, startedas an investment analyst at Pacific Mutual Life. He went on toco-found Pacific Investment Management Co. in 1974 and played thestarring role as Pimco grew to become one of the world's largestasset managers, overseeing more than $2 trillion at its peak.

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His Pimco Total Return Fund so reliably beat its bond-marketrivals that he was dubbed “the bond king.”

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More recently, Gross has had less to celebrate. After feudingwith his Pimco partners over strategy, succession and managerialcontrol, Gross was ousted in 2014.

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His second act at Janus was a headline-making dud as poorreturns spurred withdrawals. His three-decade marriage fell apartin a split so acrimonious it became fodder for tabloids thousandsof miles away.

'Different universes'

That's a lot for anyone to take, let alone a portfolio managerresponsible for hundreds of millions of dollars in client money.Yet Gross says he was able to maintain focus and doesn't blame hispersonal ordeals for poor investment decisions.

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“I'm an Asperger, and Aspergers can compartmentalize,” he said,revealing his diagnosis publicly for the first time. “They canoperate in different universes without the other universesaffecting them as much. Yeah, I had a nasty divorce, and I stillhad, you know, feelings about Pimco. But I think I did pretty wellin compartmentalizing them. Not that I didn't wake up in the middleof the night and start damning one side or the other. But when Icame to work it was all business.”

Shared characteristics

The reason he failed to deliver better returns at Janus is muchsimpler: “I made some bad trades.”

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Gross learned he has Asperger's only after reading MichaelLewis's “The Big Short.” In one passage, Lewis recounts the unusualcharacteristics of one of the book's heroes, Michael Burry, adoctor-turned-investor who also was diagnosed with the condition asan adult.

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Gross recognized that he shared many of the same qualities andhad similarly obsessive habits. He went to a psychiatrist, whoconfirmed the condition.

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“It's allowed me to stay at 30,000 feet as opposed to being onthe ground,” Gross said, discussing why he thinks Asperger'sprobably made him a better investor, if also infamouslyshort-tempered. “That's not necessarily good in terms ofone-to-one. People think you're angry or an a-hole or whatever. Butit helps you to focus on the longer-term things without gettingmixed up in the details.”

Secret diagnosis

That's the Bill Gross his former colleagues at Pimco willrecognize. For years, they found him aloof, volatile andseemingly lacking in empathy.

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Symptoms of the disorder range widely, according to the AutisticSelf Advocacy Network, and can include degrees of difficulty withsocial interactions and communication, as well as deeply focusedthinking and a preference for consistency and order.

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Gross kept his diagnosis a secret, sharing it with closefriends, and dropping only one hint publicly.

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In a February 2016 blog post on investing, Gross speculated asto why he wasn't included as a character in Lewis's best-seller:“Perhaps I wasn't addled enough like co-star hedge fund managerMichael Burry, who I share affection for and an affliction (andit's not a glass eye).”

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While Gross says he's “sort of proud” of his condition because“it explains a lot about me,” he no longer believes it's as much ofan advantage professionally.

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“The markets are substantially different today than they werewhen I started, more day-to-day, more robotic, moremachine-dominated,” he said. “So it's not a negative, but it'sprobably not as much of a positive.”

Deficit critic

As a bond-market investor, Gross had to have views on monetaryand fiscal policy, and he shared them publicly in the investmentoutlooks he posted regularly on Pimco's website and, later, onJanus's.

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One consistent thread was a critique of budget deficits, zeropercent interest rates and quantitative easing. He wronglypredicted they'd spark runaway inflation and hurt returns on stocksand bonds.

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Now, Gross appears to be revisiting those views.

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Although he still believes low-rate policies destroy therisk-reward relationship in a market economy, he recognizes thatthe government and the Federal Reserve can work together to combatdeflationary forces like America's aging population andAmazon.com.

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“Why can't the government have a $2 trillion deficit if the Fedis simply going to buy it, like they do in Japan?” Gross said.“Well, Jim Grant would say, 'Mmm, it would be inflationary.' But ithasn't been. So, yeah, I would say Trump or the next president,whoever he or she is, could go to $2 trillion, as long as the Fedwas willing to accommodate.”

Restoring balance

This clearly isn't the Bill Gross of 2012, who declared the“cult of equity” dead and predicted an “age of inflation.” Hedescribes his politics as increasingly liberal, and he jokes thathe re-registered as a Republican just to pass muster at his countryclub.

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Gross believes tax rates on high earners need to be raised torestore balance in American capitalism and fund benefits for themiddle class, such as access to affordable health care.

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That's why he's sympathetic to Ocasio-Cortez, the congressionalfreshman who has energized the left wing of the Democratic Party,even if he doesn't agree with all her ideas.

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“Maybe the next time, the next election, there will be a'socialist' in the White House,” he said. “The wealthy have beenadvantaged for a long time and certainly the past few years withthe tax cuts. The middle class hasn't necessarily suffered, but thegap has increased.”

Differing billionaires

The question is how heavy the tax burden should be.

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Other billionaires, such as Oaktree Capital Group LLC's HowardMarks, have warned against the consequences of “confiscatorytaxes.” Gross says a top marginal rate of 70 percent — the numberfloated by Ocasio-Cortez — would be too high.

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“I just think Trump took it too far,” he said.

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Gross himself has a fortune the Bloomberg Billionaires Indexestimates at $1.4 billion.

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He plans to manage that money and the $500 million in hisfoundation as a one-man family office. Gross said he'll do so“conservatively,” investing in closed-end funds and municipal bondsand continuing with one of his favorite trades, selling options onmarket volatility.

New routine

His routine, if all goes according to plan, will have himstarting at 6:30 or 7 a.m., keeping at it for two or three hours,and then playing a round of golf.

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Gross said he wants to be remembered for investing clients'savings profitably and helping to build a “wealth-creating machine”at Pimco.

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That leaves only one question: Will there be another bond marketking?

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Probably not, according to Gross.

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One reason is the proliferation of passive investment vehicles.Anyone who claims to be a king of index funds is “just a puppetbecause the market is making the decisions.”

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Gross volunteered that he wouldn't pick Jeffrey Gundlach, thechief executive officer and co-founder of DoubleLine Capital who'sfrequently cited as the new king.

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If anyone, he said it might be Scott Minerd, the chiefinvestment officer at Guggenheim Partners, in part because of his“great long-term perspective.”

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“In the right environment, 20 years ago, he could have been abond king,” Gross said. “But I don't think he's got the market ormaybe the willingness to be a king. Who would? Well, I guess I did.In retrospect it carries a certain burden. The crown is heavy.”

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