Don’t Pay Too Much for That Bordeaux - Or That Bond

April 10, 2013


Reliance on rating agencies, regulations and benchmarks can lead to some investors paying more for certain securities and – for others – the opportunity to pay less.
-Jeff Helsing, senior vice president, PIMCO

  • The financial market’s reliance on ratings agencies and benchmarks, along with regulations, can cause distortions in the value of some securities.
  • These price distortions can create potential opportunities for some investors.
  • Investors should consider aligning capital allocation with outcome-oriented objectives that aren’t influenced by credit ratings or benchmarks.


Back in the 1970s, the wine business was a sleepy enterprise. It was growing, but mainly in low-grade jug wines. Then in 1978, Robert Parker, Jr., a lawyer turned self-proclaimed critic, decided to rate wines on a scale of 50 to 100. Today, many wine consumers rely heavily on these ratings when choosing wine – and ratings have, in turn, become a strong driver of sales.  


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