Friday, May 17, 2013

Jeffrey Gundlach Discussion On The Global Financial Markets

The following is an excellent interview from Reuters with Jeffrey Gundlach of Doubleline, not only due to the quality of the questions but the clear responses from one of the best minds in finance today.

The interview covers asset classes around the world, both where they are today and where he sees them heading moving forward.

His fund, DoubleLine, currently has over $60 billion under management. He became a household name during the middle of last year when he was one of the very few (perhaps the only) voices who recommended shorting Apple stock just a few months before it peaked and collapsed.

2 comments:

  1. The video makes the same point about mortgage rates and home prices.

    Is it possible salary increases from inflation would eventually push prices back up?

    Also in areas of existing wealth do interest rates matter? Or does th fact that welthy americans long equities will sustain buying prices with non leverged purchasing power?

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    Replies
    1. The fundamental strength behind the residential real estate market is the growing population. That trend will be with us for decades if not longer.

      The weaknesses are pretty much everything else. In order to get a sustainable rise in pricing you need an increase in wages + savings, and lending standards to loosen further (bring back 100% financed loans), and mortgage rates to continue falling.

      All those things may very well occur. You have to make your own decision on that.

      The impact of rising stock prices on real estate is limited because the largest majority of stock holders (the 90%) have such a small base of capital in the market to begin with that a sharp percentage rise in stocks provides limited value in relation to the price or down payment on a home. Stock price increases help the rich significantly who own a large capital base.

      This is also why you have see a large divergence between high end retailers (doing very well), and low end retailers (doing poorly).

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