Stocks will crash spectacularly within the next 18 months.
That’s according to billionaire “Bond King” Jeffrey Gundlach. The DoubleLine Capital founder shared his bearish thoughts on the the stock market in an interview with RealVision, as well as predicting that the U.S. dollar will tumble in the long run.
“Within 18 months, it’s going to crack pretty hard,” Gundlach said. “I think that you want to be avoiding it for the time being. When the next big meltdown happens, I think the U.S. is going to be the worst performing market, actually, and that’ll have a lot to do with the dollar weakening.”
“I actually think owning 25% gold isn’t crazy right now. Nor do I think owning 25% cash is crazy,” Gundlach continued, noting that the two risk-averse positions make up half of the “permanent portfolio” concept, alongside 25% in stocks and 25% in bonds.
“That’s a good investment right now,” Gundlach said. “I think we have such a potential tail risk of outcomes, such a dispersed potential outcomes, that you really need to have this barreled asset allocation concept.”
In the interview, Gundlach painted a rather bleak picture for the U.S. economy, even as many on Wall Street are still calling for a V-shaped recovery from the coronavirus recession.
“I don’t think people fully understand how many business closures there’s going to be in the next few months,” the billionaire investor said, adding that he’s amazed by how many empty store fronts he’s already seeing popping up. “There’s going to be a lot more of that. I think it’s going to really accelerate. I think there’s going to be real problems in the wintertime here.”
But it’s not all bad news. Gundlach said that the next “very rare” opportunity to make a killing in stocks will come about in the next couple of years. Though the trick will be being prepared to take advantage of the bargains when the time comes.
“The trade is to wait for that trade,” Gundlach said. “It will be quite a pleasant experience to not be in the car on the first wheel of the roller coaster that’s coming. I just want to be very low risk right now.”