Bloomberg Writes: Gross Says Investors Shouldn’t Trust Moody’s on U.S. AAA Rating
Investors shouldn’t trust the opinion of Moody’s Investors Service on the U.S.’s Aaa rating and should rely instead on the company’s competitors, according to Pacific Investment Management Co. founder Bill Gross.
Moody’s and the U.S. Treasury are one “happy family,” Gross, manager of the world’s biggest bond fund, said today in a post on Twitter. “Trust S&P, Fitch & Egan Jones” for credit ratings, he wrote. Mark Porterfield, a spokesman for Newport Beach, California-based Pimco, said Gross was referring to Moody’s stance on the U.S. debt limit and potential for a government shutdown.
Standard & Poor’s cut the U.S. rating to AA+ from AAA in August 2011, a move that reflected the impasse over raising the debt limit as well as the government’s lack of a plan to rein in its debt load.
I don’t know about you, but I wouldn’t Trust Moody’s with watching my dead grandmother. I am not trying to be boastful, but you could have seen 2007-2009 meltdown coming from 10 miles away. I am not sure why an organization such as Moody’s with hundreds of financial analysts on stuff across multiple industries couldn’t see it coming. As you remember they have downgraded companies after the fact. Well, late enough for most investors to lose a lot of their money.
Actually, I do know. It’s called the “conflict of interest”. Bill Gross is absolutely correct. Basically Moody’s and the US Government are now a one entity scratching each other’s back. Should you care? Not really, but I do want you to be aware of the fact. Next time they either upgrade or downgrade something, view it with some skepticism at best. Know that they do not work for you, but large financial interests who’s objective might be counter to yours. Either way, you should always do your own research and not depend on somebody else’s opinion.
On a related note, there is a parade of Senators and Congressman running around on TV. They are yelling and screaming that if the debt ceiling is not raised, the US Government will shut down and that will lead to a Great Depression. Something along those lines. Do me a favor and tune them out. The stock market could care less and so should you. They will pass it and everything will be fine.
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