20 November 2018
Jeffrey Gundlach is telling investors to “sell everything” during an interview with CNBC. Photo: Reuters
Jeffrey Gundlach is telling investors to “sell everything” during an interview with CNBC. Photo: Reuters

Top investors have never been so divided over market outlook

While billionaire investor Warren Buffett continued to buy more Apple shares, numerous other heavyweights have been issuing alarms about the US stock market.

George Soros is said to be one of the most bearish. According to regulatory filings, his fund management company has reduced holdings in Paypal and Apple.

He also sold his holdings of Barrick Gold Corp., the largest gold mining company. His fund’s long position in gold has also been substantially trimmed.

At the same time, Soros boosted his bearish bet on S&P 500 by adding to put option positions.

David Tepper of Appaloosa Management shrank his US stocks holdings including Facebook and Bank of America during the second quarter.

The billionaire hedge fund manager said he is “on guard” in his approach to trading and blamed central bank stimulus measures for distorting bond markets around the world, which may sooner or later affect stock markets as well.

DoubleLine Capital CEO Jeffrey Gundlach, in an interview with CNBC, went one step further and told investors they should “sell everything”.

Gundlach said he didn’t like any asset class right now. And he was particularly bearish on equities.

“Nothing here looks good … The stock markets should be down massively but investors seem to have been hypnotized that nothing can go wrong,” he said.

As usual, there are always people buying and selling in the market and it’s hard to tell which side is correct.

But If I have to choose, I tend to agree with the cautious camp.

Buffett is more of a stock picker and he always says he has no idea where the market will be tomorrow, next month, or even next year.

He buys companies he think will reward him nicely in 10 years’ time or longer. So his purchase may not say much about the near-term trend.

On the other hand, the warnings look well justified given the super low or even negative government bond yields.

The simple question is how much lower can they go?

If yields stop falling, there would be less of an excuse for investors to pile into stocks or other assets.

That said, typically, even when the market has apparently become too expensive, as long as things look fine and stocks keep going up, few would care to listen.

Meanwhile, central bankers don’t seem to have any idea on how to energize the economy, apart from easing.

So, even if there is a bubble, it may take a long while before something causes it to burst.

– Contact us at [email protected]


EJ Insight writer

EJI Weekly Newsletter

Please click here to unsubscribe