Bond King : Recession Set to Bring Painful Outcomes

27. Februar 2023 Aus Von admin

• Billionaire Jeffrey Gundlach, AKA the „Bond King,“ has cautioned of “painful outcomes” in the next recession.
• The Federal Reserve is attempting to curb inflation, but Gundlach believes this could lead to a “very high severity problem”.
• He advises that investors should prepare for a potential downturn by having protection strategies in place.

Jeffrey Gundlach: Warnings of ‚Painful Outcomes‘ in Next Recession

Billionaire Jeffrey Gundlach, also known as the „Bond King,“ has warned of „painful outcomes“ that are likely to come with the next recession. As chief executive officer and chief investment officer of investment management firm Doubleline, he shared his outlook on the U.S. economy with Yahoo Finance last week.

Federal Reserve Attempts to Curb Inflation

Gundlach noted that one indicator of a recession is if the unemployment rate crosses its 36-month moving average and that historically when there is more than a 50-basis-point rise in unemployment rate, it suggests you’re in more of a hard-landing type of recession. He added that the Federal Reserve’s attempt to never have a significant downturn in the economy could lead to worse problems down the road: „The more you try to reduce the severity of problems, you’re going to end up ultimately having a very high severity problem.“

Gundlach’s Rule of Financial Physics

Gundlach referred to his own rule – dubbed “Gundlach’s rule of financial physics” – which states that “the frequency of problems times the severity of problems equals a constant”. He believes that by attempting to reduce the severity of economic issues now, ultimately worse problems will arise later on down the line.

Advice for Investors

The billionaire advised investors that regardless if it’s soft or hard landing, it’s important to have certain degree protection from potential downturns: „People are always asking me this question: ‚How bad is the recession going to be?‘ It doesn’t matter, as long as we’re going into a recession, you have to have a certain degree of protection.“

Net Worth & Background

Jeffrey Gundlach currently has an estimated net worth $2.2 billion and was even featured on Barron’s cover in 2011 with title “The New Bond King” due his achievements within investments over years.