Tags: Gundlach | investment | success | failure

What Can Be Learned From Gundlach's Investment Home Run

By    |   Wednesday, 08 April 2015 09:30 AM


All of us will have both successes and failures as we invest in financial markets. But it's the lessons we learn from each that will determine the ultimate success of our investing.

It's always useful to learn how this process plays out with star investors, and Jeffrey Gundlach,
CEO of DoubleLine Capital, shared his experiences with The Wall Street Journal.

For the sake of brevity we're just including an investment success that he discussed. If you want to read about a failure, just click here.

As for the success, Gundlach began buying debt investments in early 2008 when bad news in the credit markets had pushed them down to 65 cents on the dollar. He bought even though he realized prices might keep dropping, which they did.

"If fundamental value is compelling, you should keep buying," Gundlach told The Journal. "It’s OK to take short-term losses." DoubleLine ultimately scored profits of $20 billion from the strategy.

The lesson: "Identifiable problems aren’t a reason to stay away from an investment, they’re a reason to look," Gundlach said. "The whole trick to investing is identifying when problems are already discounted in prices."

Meanwhile, investment icons from Vanguard Group founder John Bogle to Berkshire Hathaway CEO Warren Buffett constantly extol the virtues of index mutual funds and ETFs.

So it's no wonder that retirement expert Tom Sightings sees them as a helpful tool for retirement investing. "Investing is so complicated," he notes in U.S. News & World Report.

"How do I make the time? No time? No expertise? No problem. Invest in stock and bond index funds. They usually do better than managed funds. Many financial institutions offer both mutual funds and exchange-traded funds that index stocks and bonds."

You won't get fabulously rich from these funds, but you will enjoy the same returns as the overall market, with less risk than if you buy individual stocks and bonds.

And there's an added bonus. "If you own an index fund, chances are you are diversified," Sightings explains.

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All of us will have both successes and failures as we invest in financial markets. But it's the lessons we learn from each that will determine the ultimate success of our investing.
Gundlach, investment, success, failure
365
2015-30-08
Wednesday, 08 April 2015 09:30 AM
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