Stocks, bonds - pretty much everything is overvalued, 'bond king' says

By Barbara Kollmeyer

Investors will lose money 'betting on the dollar as a dominant asset,' says Jeffrey Gundlach

Jeffrey Gundlach, CEO of DoubleLine Capital (pictured here in 2017), is out with a new warning about "highly overvalued" financial assets and is urging investors to start diversifying away from the U.S. dollar.

The investor known as the "bond king" is warning that most financial assets are "overvalued" and urging investors to diversify away from U.S. markets and set aside more cash.

"You talk about 60/40. That means you have 100% financial assets. I think in equities today, investors should have a maximum 40%, and most of that in non-U.S. equities," DoubleLine CEO Jeffrey Gundlach told Bloomberg's "Odd Lots" podcast in an interview that aired on Monday.

Gundlach was referring to a traditional investment strategy that suggests investors place 60% of their investments into stocks and 40% into bonds. He sees non-U.S. stocks as attractive as the dollar continues to fall - the ICE Dollar Index DXY has lost more than 8% so far this year.

"You're doing much better as a dollar-based investor in local-currency emerging-markets stocks" and even European stocks, because of euro strength, he noted. Among the biggest emerging-market exchange-traded funds, the iShares MSCI Emerging Markets ETF EEM is up over 30% this year, while Vanguard's FTSE Europe ETF VGK is up 28%.

Gundlach also advises that investors drop their bond exposure to 25% from 40%, again putting some of that in non-dollar fixed-income investments such as emerging markets - which he said are "by far the highest-performing sector for dollar-based investors in the fixed-income market this year."

Elsewhere, he now says 15% exposure to gold - down from 25% - is plenty, as "that trade has played out very well." Gundlach praised gold as a "real asset class" earlier this year. The precious metal (GC00) is up 54% this year but has eased off its highs recently.

Read: Gold's moves in 'lockstep' with U.S. stocks could point to a brewing market danger

"And the rest I would be in cash, because I think valuations are just incredibly high. And the health of the equity market in the United States is among the least healthy in my entire career," he said, noting that all the "classic valuation metrics are off the charts."

He added: "And of course, the market is incredibly speculative, and speculative markets always go to insanely high levels. It happens every time." Gundlach is widely known for correctly predicting the housing-market collapse in 2007, which was the primary trigger of the global financial crisis.

He sees speculation as being rife in the artificial-intelligence theme, noting that markets tend to price in big transformations "quickly and excessively," as it did with the internet in the early 1990s. "One has to be very careful about momentum investing in mania periods, and I feel that's where we are right now" with AI, Gundlach said.

He warned that American exceptionalism likely won't continue, noting that investors often make the mistake of being slow to change their allocations after long periods of outperformance. "I owned no foreign currencies for decades, and then starting about 18 months ago, I had to pull the trigger," he said. "I think you're going to lose money by betting on the dollar as dominant asset."

Gundlach also repeated a warning he has sounded in the past two years - that there is a crisis building in private credit. He said "the garbage lending has gone to these private markets, and private credit has been very popular, and it's now increasingly overallocated to by large asset pools."

Concerns over private credit have been simmering in the latter part of 2025, following the collapses of U.S. auto-parts supplier First Brands and car dealership Tricolor. Last month, JPMorgan Chase CEO Jamie Dimon warned about the potential for more widespread credit problems.

Read: The almighty bond market says the AI bubble won't pop anytime soon

-Barbara Kollmeyer

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11-17-25 1015ET