Discussing Apple’s stock in bear market territory and the fiscal cliff, with Jeff Gundlach, Doubleline Capital CEO & CIO
Warren Buffett’s 2018 Activist Investment
Most investors are aware of Warren Buffett's most high profile long-term investments. However, there is one long term investment that is often overlooked. Q2 2020 hedge fund letters, conferences and more This is building materials maker USG, which was owned by Berkshire Hathaway for more than 17 years before it was acquired in 2018. If Read More
Video and computer transcript below:
let’s welcome jeff gundlach who is joining us on the phone. good call. you’re still sticking with 400s? yes, about 425. i started shorting and made its way to 700 and now it’s in the lower half of that range. it just seems to me that apple — when i was speaking with gary kaminsky back in september, it’s an over-believed stock. every meeting i have, everybody owns it and the product innovators, as i said before, isn’t there anymore. i’m struck by this mini ipa dthing. i think you’re not innovative and that would be some sort of innovation and it starts to get really powerful vertical at about 425 and i really think that when stocks go vertical and i get tired and peak out, it goes back to the point at which it goes vertical. i think what is happening today with the obama win, i think a lost people are starting to realize that maybe as we talked about back in april the capital gains tax increase might take down some of the stocks that have been extremely profitable but have large embedded capital gains. yes, herb greenberg was talking about exactly that. do you see that given the status quo is what we’re presented with this morning on november 7th, are we closer to going over the cliff or do we i really don’t think you’re going to get a compromise. i think that’s awfully optimistic. here we have an election result which basically keeps the contentious aspects of congress still in place. the white house is still in place. i don’t know why everyone suddenly thinks that just because obama didn’t have as much support this time four years ago, somehow he’s going to lose any of his enthusiasm for his policies and i really don’t think republicans, maybe they underperformed a little bit in the governor race. i don’t think they are going to lose any enthusiasm. but i think it’s possible that this thing gets punted down the road. what bothers me is some parts of the fiscal cliff will be enacted, like funding for obamacare which is a tack increase on wealthy people. a lot of people think if the republicans and democrats just shook hands and smiled at each other they could flip a light switch and make the fiscal cliff go away. it’s a cobbling together of quite a few pieces of legislation, some of which like the funding of obama care is not going to be repealed. there will be some impact from tax increases at the end of the year and the last thing that bothers me about all of this, when you survey, there’s going to be a compromise or postponement. i agree with that. i think politicians are always at the 11th hour, they find a way to punt things. what if they don’t punt it. the shock to the markets would be pretty monumental if at 98% of the investors expect no such shock. howard dean last night here on cnbc was encouraging the fiscal cliff. he’s like, hey, we’ve got to solve the deficit. do it.let’s go over it. how bad would it be for the markets? how bad would it be for the economy? i would ask questions like that and say, it kind of depends on your time frame and what youmean by bad. there’s short-term bad that has long-term good and short-term bad that has long-term good. and i think you want the answers to be given. is the united states going to e government or is it going to pay for the government? this question really has to be answered. the sooner it gets answered — we have to figure it out. that’s the case with all ofthese asset purchases and financing schemes in europe. josh brown, you have a question? i was curious, you raised quite a bit of cash sometime around the midpoint of this year. i think you’re close to 18 or 19%. what are the things you’re looking for or the sign posts that would tell you, hey, this is what we’ve been looking for, let’s allocate a bit more to whatever you think is priced appropriately? is activity like this or not necessarily?i’m really looking for higher volatility in the market as a general theme and volatility is what investors really hope for when they are positioned in cash. i did have as high as 24% position and some things got shook up in the springtime and took it down to 15%. you have to remember, the bond market itself has huge pockets of it that yield zero, like two-year treasuries, three-year treasuries that cash doesn’t have much of an opportunity costand the market, when one invests in a broad fund, if you’re doing an index type of fund, you’re doing a lot of those securities that yield nothing. i have to make the decision every single morning i get confronted with this on my risk report, you’re sitting on 15% cash, do you really want to do that? i like that rather than having like a one-year or two-year treasury. but i really think that we are going to see some pretty significant volatility that enters the market as we deal with this uncertainty and about the fiscal cliff and administration and what they are going to do with tax increases on rich people and also potentially dividends and capital gains. jeff, thanks so much for joining us. kudos on the apple call. thanks very much. i hope to join you again sometime soon. yes, in the studio at some point. we’ll show you once again what is going on with greece. moroting in the streets. this is the backside of the parliament square. once again, there’s an austerity vote today in greece. in other words, the parliament has to pass a budget that includes deep, deep cuts. that’s why the people are in the streets. they are angry about yet even more cuts. we’ve seen this movie many times before. add this to the list of worries of europe. we’ll also talk about the big leadership change in china that’s coming up which could also be problematic for the markets.