"New bond king" Gundlach warns that US stock valuations are too high: recommends increasing cash and physical asset allocation, buying gold on pullback.

Jeffrey Gundlach, Chief Investment Officer of DoubleLine Capital, who is known as the "new bond king", recently stated in an interview with Bloomberg that current financial market valuations are at high levels, and investors should not excessively bet on risky assets. He believes that the market had previously relied on expectations of Federal Reserve rate cuts to drive growth, but with inflation pressures still present and the future of interest rates uncertain, this trading logic is facing challenges. Gundlach said that at the beginning of the year, the market had anticipated two to three interest rate cuts by the Federal Reserve this year, but this expectation has significantly weakened. He bluntly stated that if investors' core reason for buying risky assets is simply "there will be two rate cuts this year", then they may be heading in the wrong direction. He believes that in 2026, the Federal Reserve may not necessarily cut rates, and the risks of raising rates cannot be ruled out. Due to the situation in the Middle East, rising oil prices, and fluctuations in inflation, market confidence in rate cuts has decreased. In terms of asset allocation, Gundlach suggests that investors increase defensive positions. His latest suggested portfolio includes: holding 20% cash, and allocating 20% to physical assets, such as commodities. He stated that a cash position can help investors maintain flexibility during market fluctuations, while physical assets can provide some protection in an inflationary environment and in the context of a decrease in the purchasing power of the dollar. According to reports, Gundlach has increased his suggested allocation of physical assets compared to his recommendation of 10% to 15% last year. Gold remains one of Gundlach's favorite assets. He said that if the price of gold falls below $3500 per ounce, he will "buy heavily". Market reports suggest that the $4100 to $4200 range is seen as the initial target for establishing a position. Business Insider reported that Gundlach did not provide a specific percentage for gold allocation, but he had previously stated that a gold allocation of up to 25% is not "excessive". Gundlach's cautious assessment contrasts with the recent new highs in major U.S. stock indexes. Despite the continued popularity of tech stocks and AI-related assets, he believes that stock valuations are already "very, very high" in the context of ongoing risks of rising interest rates. He warns that high-valued assets may face revaluation pressure if inflation heats up again or if Federal Reserve policy turns more hawkish. Looking at the market background, recent U.S. economic data still shows resilience, but inflation, energy prices, and geopolitical conflicts continue to disrupt policy expectations. Gundlach's advice reflects that some macro investors are moving from "chasing risky assets" to "preserving liquidity and increasing inflation-resistant assets" in their allocation strategies. For ordinary investors, his viewpoint is not simply bearish on the market, but emphasizes the importance of enhancing portfolio defensive capabilities through cash, commodities, and gold in a high valuation environment.