Why should you watch this video?
- To see that Gundlach traded in his 1980s The Cure cover band look for a Brioni suit;
- Because Gundlach is the smartest bond investor on the planet.
WARNING: just like the Dalio video from last week, this one is long (25 minutes) and WONKISH.
Some highlights from the video include:
- Gundlach believes that you have to respect the Fed’s continued highly stimulative policies (a) unless the labor market improves and (b) even if it improves they will continue with these policies.
- Thus, investors are forced to accept the fact that the Treasury market–even though there continues to be, at his surprise, bond skeptics–will remain with low volatility.
- First question Gundlach always used to get in meetings & presentations is, “What are you going to do to protect the portfolio from rising interest rates that will come next Tuesday?” He’s now finally getting questions where investors are concerned that we’re in a deflationary environement (i.e. that interest rates will continue to fall)
- Although Gundlach does believe that we’re in a falling rate environement, he still stays away from long term bonds and Treasuries because the risk/reward is too high.
- Gundlach likes stocks. “Equities may be challenged, but I doubt you are going to have this lost decade in equities ever again.” This a huge statement from a guy who makes his money managing bonds.
Overall, he thinks that the inflationists will finally be proved right, but not for a while. “How do you get inflation,” Gundlach asks, “when median household income is falling?” It has to rise before inflation can take hold.
See the complete interview here: