Warning: No repeat for stocks this year

Betting against Treasuries risky, caution needed with funds buying junk bonds, shorting government debt
JAN 14, 2014
The U.S. stock market won't repeat last year's 32% return in 2014, according to DoubleLine Capital's Jeffrey Gundlach. Should bond buying by the Federal Reserve be reduced, it makes sense that its support of the stock market would be taken away, Mr. Gundlach said Tuesday on a conference call with investors. The S&P 500 rose 1.1% to 1,838.88 Tuesday, posting its biggest gain of the year. The Fed will probably end its monthly asset purchases by the end of this year while keeping short-term interest rates low into 2016, said Mr. Gundlach, whose firm had about $52 billion in assets as of Sept. 30. Long-term bonds won't do “that badly” on a yield basis even as they fall out of favor, he said. Investors should keep in mind that betting against U.S. Treasuries could backfire if there's any economic weakness. They also should be cautious with funds that have been buying junk bonds and shorting government debt, according to Mr. Gundlach. He said Treasuries look cheap relative to municipal bonds and high-yield securities, or those rated below Baa3 by Moody's Investors Service and less than BBB- by S&P. For those who can stomach the volatility, Puerto Rico and J.C. Penney Co. bonds may be worthwhile, Mr. Gundlach said. Mr. Gundlach's $31 billion DoubleLine Total Return Bond Fund (DBLTX) lost $6 billion to redemptions last year, according to estimates by Morningstar Inc. It returning 0.02%, ahead of 80% of peers, according to data compiled by Bloomberg. All of the money put into U.S. bond mutual funds in 2012 is likely to be pulled by the end of this year after withdrawals started in 2013, said Mr. Gundlach. (Bloomberg News)

Latest News

Trust is built before volatility arrives
Trust is built before volatility arrives

Markets will always create reasons for investors to worry. The advisor’s role is not to predict uncertainty, but to help clients understand why volatility should not derail a well-built financial plan.

Fintech bytes: Orion and Flourish bring client cash into advisor workflows
Fintech bytes: Orion and Flourish bring client cash into advisor workflows

Plus, Asset-Map partners with Contio to elevate the advisor meeting experience, and MyVest claims an innovation in portfolio management with separately managed models.

Advisor moves: LPL lands $1B group from Ameriprise
Advisor moves: LPL lands $1B group from Ameriprise

Meanwhile, Cetera has drawn advisors managing around $390 million from LPL and Commonwealth, while Raymond James' financial institutions division announces its own LPL hire in Indiana.

Bluespring Wealth snaps up $1.1B New Jersey RIA in fifth deal of 2026
Bluespring Wealth snaps up $1.1B New Jersey RIA in fifth deal of 2026

Synthesis Wealth Planning brings a fivefold asset growth story and a recently merged practice to the Bluespring fold.

Clients expect to know if you use AI, but don’t realize that their portfolios are likely exposed
Clients expect to know if you use AI, but don’t realize that their portfolios are likely exposed

Janus Henderson Investors research reveals demand for transparency, but lack of awareness of AI’s prevalence in the corporate world.

SPONSORED Beyond wealth management: Why the future of advice is becoming more human

As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management

SPONSORED Durability over scale: What actually defines a great advisory firm

Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline