EddieJayonCrypto
21 Sep 25
DoubleLine's Gundlach warns US stocks are a 'hope trade,' urging investors to shift to non-US markets and currencies for better returns.
**DoubleLine’s Gundlach Warns: US Stocks Are a “Hope Trade”—Here’s Where to Invest Instead** Jeffrey Gundlach, the billionaire founder of DoubleLine Capital and self-proclaimed “Bond King,” is sounding the alarm on U.S. equities, arguing that the market’s recent rally is built on fragile foundations. In a recent CNBC interview, he called out the overvaluation of U.S. stocks, warning that investors are betting on future Federal Reserve rate cuts rather than real economic fundamentals. Gundlach’s critique centers on the idea that both stock and bond markets have already priced in aggressive rate cuts by the Fed. “Every time there’s talk of more interest rate cuts, the stock market rallies day after day after day, just on the same hope,” he said, referencing the “50-basis-point hope” that has driven gains. But he’s skeptical. “I don’t really like U.S. stocks as a dollar-based investor,” he added, a sentiment he’s held all year. So where should investors look instead? Gundlach is bullish on non-U.S. markets, pointing to the potential for outsized returns from currency fluctuations and diversification. He highlighted the Mexican bond market, which he said has surged 35% year-to-date for dollar-based investors. “When you translate the currency, you end up with tremendous results,” he noted, emphasizing that emerging markets like Mexico, Brazil, and others have delivered similar index performance to U.S. stocks—but with the added boost of currency appreciation. His advice isn’t just about avoiding U.S. equities. Gundlach has also been bearish on the U.S. dollar itself. In June, he warned that the dollar index (DXY) is in a “macro downtrend” and could collapse if it breaks a key diagonal trendline at 97. For investors, that means a weaker dollar could make foreign assets even more attractive, further compounding returns. The broader message? Gundlach isn’t just predicting a market correction—he’s urging a strategic shift. “You’re really better off in non-dollar markets,” he said, painting a picture of a global investing landscape where diversification and currency dynamics can outperform the U.S. market’s current euphoria. For investors, the question isn’t just whether the U.S. stock market will correct—it’s whether they’ve already missed the boat on the next wave of opportunities. As Gundlach puts it, “Hope is not a strategy.” What’s your plan?