Jeffrey Gundlach: Avoid Europe and buy Japanese stocks
Jan 18, 2013
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Jeffrey Gundlach has always been good at providing “water cooler fodder for the typically staid money management business”, says Mary Pilon in The Wall Street Journal. Two years ago he was fired from TCW Capital in a murky spat that featured allegations of marijuana and pornography being found in his office.
Gundlach’s habit of peppering investor presentations with references to rock songs and Shakespeare sonnets, and his interest in art – “I seriously doubt there’s anyone who knows more than me about Mondrian” – also raise eyebrows.
Nobody would pay much attention, of course, if the former rock-band drummer didn’t have the record to go with his personality. But his bond fund at TCW earned an annual average of 7.9% in the decade to November 2009, and his DoubleLine Total Return Bond Fund gained an annual average of 13.2% from its inception in 2010 to last December, outshining the record of bond guru Bill Gross, notes Seth Lubove on Bloomberg.com.
He predicted the subprime disaster and also struck gold last year by recommending last April that investors short Apple and buy gas stocks.
“Don’t expect the stability of 2012 to endure in 2013,” says Gundlach. It’s the Chinese Year of the Snake, and various potential hazards are “coiled” and ready to bite. One worry is Europe, where complacent investors have driven peripheral bond yields too far down. With Greece in a full-blown depression and Portugal getting close, the crisis may flare up again this year. The American fiscal crisis, which “never seems… to be seriously addressed”, could also cause turbulence.
However, he reckons bond prices will keep rising as the Federal Reserve continues to buy them. He has stuck with his prescient December call to load up on Japanese stocks: the Nikkei could rise by “a couple or even three thousand points” in 2013.
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