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)