DoubleLine's Gundlach says U.S. equities 'only game in town'

Wed Nov 13, 2013 7:26pm EST

Jeffrey Gundlach, star bond investor and head of DoubleLine Capital, speaks at the Sohn Investment Conference in New York, May 8, 2013. REUTERS/Brendan McDermid

Jeffrey Gundlach, star bond investor and head of DoubleLine Capital, speaks at the Sohn Investment Conference in New York, May 8, 2013.

Credit: Reuters/Brendan McDermid

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(Reuters) - Jeffrey Gundlach, co-founder of DoubleLine Capital, said the U.S. stock market is the "only game in town" as the Dow and the S&P 500 closed at record highs on Wednesday, though he would be hesitant to add new money because "I don't like buying high."

Gundlach is best known as the new King of Bonds, but he has made a series of prescient calls on the global equity markets.

He oversees roughly $53 billion of assets.

Gundlach told Reuters in an interview that he believes the Japanese stock market looks like it might head higher again after its consolidation in recent months. Gundlach's DoubleLine is still invested in the Nikkei, which has posted returns of more than 40 percent this year.

"That's the one market I am watching closely," Gundlach said.

In April, the Bank of Japan pledged to inject about $1.4 trillion into its flagging economy in an effort to end two decades of stagnation. The monetary easing, coupled with pro-growth policies championed by Japan's Prime Minister Shinzo Abe, sent stocks rallying and the yen tumbling. Japan emerged from recession in 2012.

Gundlach agrees with Ray Dalio, chairman and chief investment officer of Bridgewater Associates, one of the world's largest hedge funds with $150 billion in assets under management, who recently said that the Japanese economy will need another big round of stimulus to boost sluggish growth.

As for U.S. equities, Gundlach said they are in a "momentum phase" and it is running high in the Dow Jones industrial average and the Standard & Poor's 500 though he'd be reluctant to put new money to work here: "It's just really high. I own some equities. I wish I owned more."

The Dow Jones industrial average rose 70.96 points, or 0.45 percent, to end on Wednesday at 15,821.63, a record close. The Dow also hit an all-time intraday high of 15,822.98. The Standard & Poor's 500 Index gained 14.31 points, or 0.81 percent, to finish at 1,782.00, which was both a record closing high and an all-time intraday high.

The Nasdaq Composite Index climbed 45.66 points, or 1.16 percent, to close at 3,965.58.

Gundlach, who bought Apple shares at around $405, said he still has exposure to Apple as it is a "good diversifier."

Many scoffed when Gundlach said at an April 2012 finance luncheon in New York that investors should "short" Apple, then trading around $560, because it was going to $425. Soon after, that's what it did, with Apple breaking below $400 earlier this year after peaking at $700 a share in September of 2012.

Apple is now trading at $520 a share.

(Reporting By Jennifer Ablan; Editing by Andrew Hay and Jan Paschal)

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Comments (3)
The phrase “the only game in town” is of course an old expression used by gamblers. It’s ironically applicable to today’s QE fueled rally.

Nov 14, 2013 5:47am EST  --  Report as abuse
The phrase “the only game in town” is of course an old expression used by gamblers. It’s ironically applicable to today’s QE fueled rally.

Nov 14, 2013 5:47am EST  --  Report as abuse
conorcoen wrote:
If it’s the only game in town it’s time to pack up and move. Markets are there to find the fair value of an asset, the US government has made a joke of the markets through quantitative easing. There’s this mentality that money has to come into a market if it’s not as bad as others, not good, just not as bad. Look at precious metals recently, investors are accumulating physical currency because all the overvalued ‘paper’ (traditional currency, bonds, equities etc.) offers much more risk than reward. You can print money out of thin air but physical commodities will always run out.

Nov 14, 2013 6:18am EST  --  Report as abuse
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