Billionaire Investor’s Dire Warning: Sell Everything!

This post Billionaire Investor’s Dire Warning: Sell Everything! appeared first on Daily Reckoning.

With the S&P 500 hitting record highs, one of the world’s most renowned investors has hit the panic button with a sledgehammer…

Jeffrey Gundlach, also known as the “Bond King,” is one of the most accomplished fund managers on the planet.

Just six years after launching his own firm, DoubleLine Capital, he’s at the top of the bond world, with more than $100 billion under management.

When Gundlach speaks, the press genuflects.

And not surprisingly, many of Wall Street’s brightest lemmings are freaked out by his recent market warnings…

Running for Cover

In a recent Reuters interview, Gundlach told investors to head for the hills.

Here’s his apocalyptic advice:

Sell everything! Nothing here looks good… The stock markets should be down massively but investors seem to have been hypnotized that nothing can go wrong.

Why is Gundlach headed to the bomb shelters?

Economic growth is in the toilet… corporate earnings are accounting games… corporate debt is soaring… and the Fed is out of control in an effort to make everyone a winner.

Did I miss anything?

Here’s the deal: By keeping interest rates at zero for more than seven years, the Fed created no-cost loans for CEOs. But instead of using interest-free money for building and expanding, CEOs used it to buy back stock…

This artificially inflated stock prices. And, of course, it made investors and executives happy with ever-increasing dividends and executive bonuses.

That’s what is propping up our all-time high stock market, not real growth.

But Gundlach sees the rigged game implosion coming soon. And he’s not the only legendary investor hitting the big red panic button…

The man who held the title of “Bond King” before Gundlach, Janus Capital’s Bill Gross, is right there too…

In recent comments, Gross was stone-faced: “I don’t like bonds; I don’t like most stocks; I don’t like private equity.”

So with doom and gloom permeating, is there one investment these investing icons actually like?

“I am not selling [my] gold,” Gundlach told Reuters. He holds gold, and gold miner stocks.

Gross agrees. He points to safe havens like gold and land as the sane options in an insane world.

Don’t Be Late to the Party

So are Gundlach and Gross right? Is a massive correction that will send us all back to the Stone Age imminent?

They can’t know. They’re skilled investors, not crystal ball readers.

Sure, a 50% S&P meltdown will happen. A crash is inevitable. But trying to predict when that will happen is a fool’s errand.

With the “prediction” approach, you’ll get lucky and take big gains occasionally. Other times you’ll be nailed in the kisser with crushing losses. This ridiculous seesaw is a surefire way to cat-food dining.

But that’s not my main lesson here…

You see, many investors follow Gundlach and Gross via news headlines… and then invest accordingly. But if you rely on “a day late and a dollar short” media reporting to track heavy hitters, you’re late to the party every time.

And that’s been especially true with gold…

Precious metals have been on a massive tear to the upside this year, long before any of the “Bond King” warnings. The market seems to always know the right way.

And that has created a rising price trend in gold that my proprietary system picked up back in March.

My trend following system got two more precious metals buy signals in April. And my Trend Following subscribers are up 50%, 32% and 70% on these three recommendations to date.

If you weren’t following gold’s price trend, you missed out big time.

Could gold continue higher from here? Of course. It can also head lower.

But waiting for the next media story on which direction Gundlach and Gross think it’s headed is certifiably crazy. That’s no system.

The only reliable indicator for gold’s direction is its price trend. That’s how you can make the big money, by following the trend.

And like all profitable market trends, they form long before any of the media hyperventilation.

So when you find yourself feeling manipulated by the press, remember: “People are sheep. TV is the shepherd.”

Please send me your comments to [email protected]. I want to know what you’re thinking.

Regards,

Michael Covel
for The Daily Reckoning

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