GUNDLACH: 'I'm Waiting For Something To Go Kaboom'

TBI ^ | 11-30-2012 | Sam Ro

[blam]

GUNDLACH: 'I'm Waiting For Something To Go Kaboom'

Sam Ro
Nov. 30, 2012, 5:05 AM

The cover story of the new BloombergBusinessweek is an excellent and comprehensive profile of bond god Jeff Gundlach.

The reporters Seth Lubove and Alexis Leondis also laid out his longer term outlook for the world as the economy enters what he calls "phase three."

Deeply indebted countries and companies, which Gundlach doesn’t name, will default sometime after 2013. Central banks may forestall these defaults by pumping even more money into the economy -- at the risk of higher inflation in coming years. ... “I’m waiting for something to go kaboom,” Gundlach says in his office a week before the L.A. speech. “If phase three takes two years, it’s worth waiting for. The markets don’t have lots of opportunity now.”

According to the report, Gundlach recommends investors start positioning their portfolios now as there will be little warning when the "kaboom" happens.

For now, Gundlach recommends buying gemstones, art, commercial real estate, and other hard assets.

Gundlach's DoubleLine Funds plans to off a long-short equity fund to provide inflation-adjusted returns. He's also sitting on cash because he expects there to eventually be extraordinary opportunities when asset prices tumble.

Adding color to his call, Gundlach discusses U.S. policy:

In the U.S., Gundlach sees a postelection, pre-fiscal cliff economy that’s growing anemically and only because of consumer loans, government stimulus and the Fed.

(snip)

The profile goes into his prescient calls, his love for art, his famous webcasts, and his war with Morningstar.

Read the whole story at Businessweek.com

[djf]

I’ve been wondering how this could all play out.

Imagine a bunch of folks had pieces of paper. Imagine the nominal “value” of those pieces doubled every six months.

Eventually, some of the owners catch on that they’re only getting more or better paper every six months, and decide to turn that into real assets.

Stuff like art, hard commodities, real estate could explode!

Could that happen without the price of a can of Beefaroni going through the roof?

Musical chairs...

If the unloading of the paper goes into the energy sector, we’re screwed!

[RegulatorCountry]

We’ve had several massive “ kabooms” since the summer of 2007.

They’ve been plastered over with dollars, delusion and propaganda.

This will continue so long as everybody plays nice.

It will end when somebody doesn’t.

[blam]

Silver Price Forecast 2013: Silver Will Perform Like Gold on Steroids

[Hardraade]

Send War in Our Time, Oh Lord.

[Sooth2222]

I've been predicting $200 Happy Meals for a while.

The fascinating part of this experiment is that the world has never seen hyperinflation in a welfare state before! What happens in a hyperinflationary environment when half the population is dependent on the gov't for "Bread and Circuses"?

Will the gov't adjust EBT card payments on a daily basis? Can they? I have my doubts, since the gov't can't even manage everyone's annual DMV treck without screwing it up, somehow.

I'd add "a shotgun and a dog" to Gundlach's list of assets advisable for every investor.

[trebb]

Gundlach recommends buying gemstones, art, commercial real estate, and other hard assets.

Where we are heading, those items will have no life-sustaining value. Even the real estate can be confiscated and you can't eat or produce food with the others. Kind of like a billionaire being stranded on a small island with no provisions or shelter - all the money in the world won't provide sustenance.

[tiki]

I see around here that wealthy people are investing in agricultural land again.

[darth]

Take a look at buying timber property. The price of lumber is depressed because the number of housing new starts is down.

You can always cut the timber, plant grass, and run livestock on it. Turning it into cropland would be much more difficult and take years.

Jack Spirko would advise permaculture such as fruit and nut trees. BTW, Jack is very good: www.survivalpodcast.com

[tiki]

I have planted quite a few fruit trees in the past few years and we have about 5 fully mature pecan trees.