Guru Feedback from Barron's Mid-Year Roundtable

Most participants in this year’s Barron’s Roundtable think “the markets will soon get more interesting, and not in a pleasant way,” according to the publication’s recent summary, which includes excerpts from comments by market heavy-hitters such as Jeffrey Gundlach and Mario Gabelli.

“After all,” the article says, “U.S. stocks are expensive, the economy is dullsville, and interest rates are about to rise.” Noting that the market’s gains have been unevenly distributed since the last Roundtable (held January 9th of this year), the article quotes Delphi Management founder Scott Black who says small- and mid-cap value stocks have been “left in the dust.”

Here are some highlights:

Jeffrey Gundlach, CEO, DoubleLine Capital says the “complacency” that’s currently being reflected in the market, is “alarming,” but adds, “the market is entering a seasonally weak period right now,” adding that he doesn’t expect stocks (globally) to end the year higher than where they are now. Gundlach also favors non-U.S. over U.S. stocks. “Europe is cheap compared to the U.S.,” he says, adding, “but it’s tricky, because the cheap can get cheaper…But foreign markets have started to outperform.” As for how investors can best participate, Gundlach advises, “Peel off part of your U.S. index fund and put the money into overseas markets. Don’t worry about week-to-week moves. Look ahead two years.”

Mario Gabelli, Chief Investment Officer, Gabelli Funds, maintains a positive outlook regarding the president’s plans for infrastructure spending, lower taxes and increased military spending. He sees “the consumer improving at an accelerating rate. Jobs are being added, wages are going to rise, taxes are likely to fall, and a higher earned income tax credit could help.” As far as advice for investors, he says they “should tighten risk-management strategies to their portfolios. I expect the FANG stocks and the Nasdaq to have a big selloff.”