Jeffrey Gundlach, chief executive of DoubleLine Capital, warned scared investors that they should consider capital preservation by putting their money in cash, gold or Treasurys while avoiding U.S. stocks.
He also urged panicky Americans to calm down and take it easy when it comes to investing.
"You don't have to be out there making speculative bets on Tesla all time, it's OK to make money slowly," Gundlach told
CNBC. "The markets take the stairs up and the elevator down. It's important not to be in the elevator," he said.
Gundlach's DoubleLine said it will look for opportunities in select markets following the selloff triggered by the U.K. referendum to exit the European Union,
Bloomberg reported.
“The Brexit outcome suggests the public mood for change is even greater than we had thought,” the Los Angeles-based firm said in a statement posted on its website Friday.
“While the referendum result triggered selling in U.S. stocks and widening in credit spreads, and much greater repricings in risk assets on the Continent, we continue to emphasize capital protection while looking to take advantage of dislocations in select markets.”
Gundlach, whose $60 billion flagship DoubleLine Total Return Bond Fund is up 2.5 percent this year, said in a June 14 webcast that he expected U.K. voters would choose to remain in the trade bloc.
He sold all his European stocks Thursday before the votes were counted, taking advantage of a strong rally over the previous week, he told
Reuters on Friday.
Gundlach said the firm bought beaten-down European stocks a week ago and exited its position late Thursday because "basically I thought it was free money when I bought them and we sold into the huge rally Thursday."
MSCI's 46-country All World index rose 1.36 percent on Thursday to a two-week high.
On Friday, however, world stocks fell than $2 trillion in value as Britain's vote to leave the European Union triggered 5 percent to 10 percent declines across Europe's biggest bourses and a record plunge for sterling.
Gundlach, who insisted for months that Britain would "Bremain" in the European Union, said about the Brexit vote: "Yes, I am surprised. It suggests the public mood for change is even greater than I thought."
Gundlach had asserted that polls reflect people's complaints and frustrations rather than the actions they will actually take. "When it comes up for a vote, I think it will fail," he said last week.
All told, Gundlach said about his purchase last week of European equities: "That was the shortest hold of my life."
The DoubleLine Total Return has returned 2.53 percent year-to-date, trailing the benchmark Barclays Aggregate, which has posted returns of 4.15 percent for the same period. The fund has a much lower duration than the Treasury-heavy Barclays Aggregate, so it has not benefited as much as many other funds this year from the rally in Treasuries.
Additionally, corporate bonds have been very strong relative performers this year, and DoubleLine Total Return holds no corporate debt.
DoubleLine Core Fixed Income Fund, which invests in a wider selection of fixed income sectors, has returned 4.28 percent year to date.
(Newsmax wire services contributed to this report).
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