Jeffrey Gundlach has said that he wants to buy things when other people are afraid of them, according to Bloomberg:
“I want fear. …I want to buy things when people are afraid of it, not when they think that it’s a gift being handed to them.”
He made the comment in reference to speculative bonds, i.e. bonds with a rating lower than BBB by S&P or Baa by Moody’s.
Gundlach is said to prefer cash to all other investments. 10-year treasuries would offer a buying opportunity if yields rose above 3.5%, he said.
Gundlach’s DoubleLine Capital LP is opting for cash. Some of DoubleLine’s funds which don’t typically hold cash are opting for 15% now, and its Multi-Asset Growth fund holds 30%.
Mutual funds have been increasing the percentage of their assets that they hold in cash to the highest level since 2008. Managers are said to be holding about $243 billion of cash and short-term securities. In a previous interview with Bloomberg, Gundlach had said:
“We are looking for a more severe down move in prices, for a better level to buy. …To hold cash you have to have a conviction that prices of something that you’d otherwise own will go down, which is exactly what happened in June.”