Gundlach Says `Protracted Decline' Is Coming for S&P 500 Index

Hedge Funds Are Attempting to Buy the Dip

Investors should be prepared to sell into an eventual rebound to avoid further losses in the falling stock market, according to Jeffrey Gundlach, chief investment officer of DoubleLine Capital.

“I expect a protracted decline in the S&P 500,” Gundlach said Wednesday in an e-mail message responding to questions from Bloomberg. “Investors should sell the bounce-back rally which could come at any time.”

The stock declines are caused by economic weakness, as evidenced by “horrifically weak commodity prices,” said Gundlach, whose $52.3 billion DoubleLine Total Return Bond Fund beat 94 percent of its Bloomberg peers in 2015 and 99 percent over the past five years. “These declines are not causing the economic weakness globally, they are symptoms of the economic weakness globally.”

Gundlach said he didn’t want to predict the specific duration or degree of the market decline.

“The primary trend is down at this time,” he said.

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