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Gundlach: This Market Is Just 'Fear And Loathing': Yield On 10-Year Could Hit 3.10%
I used tho think PIMCO was bad when it cam to creating 'poobah' managers who know all and see all in Bill Gross and Mohammed El-Erian. But Gundlach makes these guys look like little tykes. No matter what is happening or might happen, he has THE answer for it. It must be incredible to be smarter than everyone else. Unfortunately, the media love Gundlach and his camer-loving cohorts. They always make profound statements and predictions, great for sound bites. Unfortunately the investing public takes the words of these self-annointed gurus as gospel. And even when they are wrong, by a bit or a whole lot, they have an amazing talent to offer explanations that most people swallow like a great piece of candy.
I have been in this business for almost 30 years, and I have seen a number of these poobahs come and go. Some hang on for a long time. Others' fame is short-lived and end with big blowups. But in almost every case, these are not the best people to manage my clients' money. I much prefer a quieter person who just works at it every day, maybe gets noticed once in a while, maybe not. I always get concerned when one of our great managers suddenly gets a lot of press coverage.
No doubt, Metro West carries around a great reputation. I did jump in with "Dr. Gundlach," via DLFNX. He, like everyone else, is unable, alone, to control what goes on. I find him refreshingly candid, though. Like any other Fund Manager, he has a vested interest in where the Markets go. Among other things, he advises right now that investors add to EM bonds. I don't own DoubleLine's EM bond fund, run by Luz Padilla. Instead, I own PREMX and MAINX. Much more of the former, as opposed to the latter. But I just very lately did add to MAINX---- added approx. 0.88% of my total holdings. MAINX is now 3.66% of my total. PREMX = 37.65% of total. Reinvest, reinvest, reinvest all distributions. That's my chief source of money in order to add to what I've got, these days.
Come on folks. We all like our managers to be lucky and don't care if they are not good. Never a problem as long we recognize whose funds we are trading and whose we are not.
Bob- I'm puzzled what you have against Gundlach. He exercises risk control with his funds. For a guy so willing to give opinions he doesn't make large changes to his portfolios based on those opinions. One of the things I like about him is that he realizes that his opinion is nothing more than that - an opinion.
Let me see if I've got this right- • he has opinions, but no conviction with respect to those opinions? -or- • he has opinions and convictions, but fails to act upon them?
which makes for an even more interesting question:
If he has opinions and convictions, but fails to act upon them, then who exactly is running his funds?
What's the point of believing something but taking no action upon that belief?
It's obvious you misinterpreted my comments. It simply means Gundlach is smart enough to know that no one can predict the future and that he stays disciplined to his strategy despite all the noise on CNBC. His track record in managing risk speaks for itself
If you ask me this fella's just a bit "erratic". Been all over the place on bonds past couple years. 10-year at 3.1% by year's end wouldn't surprise me at all. Entirely possible. Shouldn't surprise anybody. It was over 2.9% just a week ago. Truth is nobody knows. So much depends on economic growth, inflation, federal deficit, exchange rates, etc. I left out Federal Reserve policy - viewing it as just an extension of the larger puzzle. Some, however, view it as the primary driver. Whatever!
That said, bonds still may have a place in some balanced portfolios. Fund industry veteran John Bogle and former fund boat skipper Catch 22 can speak to the role of fixed income in a diversified portfolio better than I can. But - yep - many think there's an important role there. And, why stop at 3.10%? There's really no ceiling to how high rates could eventually go given the right circumstances. Distinctly recall 15-20% APR on cash & short term bonds somewhere in the 70s-80s period. And - a prime lending rate in that vicinity as well. Think it can't happen again!? I got a bridge ....
Reply to @Hrux: I agree completely with Hrux. JG's portfolios, in the two main funds he manages (DBLTX and DBLFX) are run on a balanced-risk basis. Once in a while, he tilts a portfolio very slightly in one direction or the other, but basically he's always balancing interest-rate and credit risk, and achieving fairly low volatility and overall risk with decent return while doing so. He's got an ego, to put it mildly, and loves to talk, but he doesn't run his funds on bluster.
I have to wonder how many of his critics have ever listened to one of his webcasts or actually looked at his funds' portfolios.
Reply to @AndyJ: Personally, I have little knowledge of and no opinion one way or the other re Mr. Gundlach. But the description of someone who makes a habit of broadcasting opinions (adding to the noise?) but not actually acting upon them (when such action would be within the sphere of expected responsible activity for this person) makes me wonder just who this person really is, and why anyone would trust him.
How is that different from a politician who loudly declaims one thing, and then does something else?
Comments
Why are stocks different than bonds when it comes to "Buy low, sell high"?
Just sayin...
Art
I have been in this business for almost 30 years, and I have seen a number of these poobahs come and go. Some hang on for a long time. Others' fame is short-lived and end with big blowups. But in almost every case, these are not the best people to manage my clients' money. I much prefer a quieter person who just works at it every day, maybe gets noticed once in a while, maybe not. I always get concerned when one of our great managers suddenly gets a lot of press coverage.
Bob- I'm puzzled what you have against Gundlach. He exercises risk control with his funds. For a guy so willing to give opinions he doesn't make large changes to his portfolios based on those opinions. One of the things I like about him is that he realizes that his opinion is nothing more than that - an opinion.
Let me see if I've got this right-
• he has opinions, but no conviction with respect to those opinions? -or-
• he has opinions and convictions, but fails to act upon them?
which makes for an even more interesting question:
If he has opinions and convictions, but fails to act upon them, then who exactly is running his funds?
What's the point of believing something but taking no action upon that belief?
It's obvious you misinterpreted my comments. It simply means Gundlach is smart enough to know that no one can predict the future and that he stays disciplined to his strategy despite all the noise on CNBC. His track record in managing risk speaks for itself
That said, bonds still may have a place in some balanced portfolios. Fund industry veteran John Bogle and former fund boat skipper Catch 22 can speak to the role of fixed income in a diversified portfolio better than I can. But - yep - many think there's an important role there. And, why stop at 3.10%? There's really no ceiling to how high rates could eventually go given the right circumstances. Distinctly recall 15-20% APR on cash & short term bonds somewhere in the 70s-80s period. And - a prime lending rate in that vicinity as well. Think it can't happen again!? I got a bridge ....
I have to wonder how many of his critics have ever listened to one of his webcasts or actually looked at his funds' portfolios.
How is that different from a politician who loudly declaims one thing, and then does something else?