Barry Ritholtz Interviews Jeff Gundlach

July 14, 2014 8:43 AM

I just listened to Barry Ritholtz interview Jeff Gundlach in the very first Masters in Business series at Bloomberg.  If the rest of the interviews are anywhere close to this first one, we’re all in for a treat.

I’m a big fan of using sentiment in my trading, Jeff and Barry had some great discussions on market sentiment - here are a few of my favorites.

  • Jeff noted in March ‘09, the Daily Sentiment Index (DSI) of bulls on the SPX was just 2%.  Compare that to the 93% we saw coming into 2014.  One was a generational buying opportunity, the other was a flat 1Q.
  • 67 of 67 economists coming into 2014 were looking for higher interest rates.  Of course they’ve now gone down and long-term Treasuries are the top performing asset class.
  • Coming into 2014, the DSI on gold was just 3%, with gold and gold shares being left for dead.  Again, gold is now one of the top performing non-traditional assets classes in ‘14. 
  • Barry pointed out that near its peak, 92% of the ownership in Apple (AAPL) was institutional. Who’s left to buy?  
  • In 2012, Schwab put out a research piece that found the two biggest holdings were Apple (AAPL) and Gold (GLD).  This of course was right before both had massive corrections.
  • Jeff added that by the end of 2013, all of the massive inflows to gold funds from 2011 and 2012 were reversed.  So entering 2014, you had removed most of the froth on gold and only strong hands were left holding.
  • Lastly, Jeff gave this awesome summary of how he uses sentiment.  Using sentiment can be dangerous, as sometimes people get in way too early.  And we all know that the synonym for early is wrong.  You have to wait for it to be very, very extreme.  

Be sure to take a listen to the whole interview below.  You won’t be disappointed.  

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