Sense on Cents

What is it that distinguishes the greatest athletes in sports, such as Michael Jordan, Bobby Orr, Wayne Gretzky, Peyton Manning, Magic Johnson, Larry Bird? While these ‘best of the best’ have and had many extraordinary athletic skills, those who love the game know that these world class athletes were able to see exceptionally fast moving action in slow motion. (In Manning’s case, he still does!!) As such, they played the game three steps in front of their teammates and four steps in front of the competition. As a result, special things happened.

In the world of investing, there are a handful of investment managers who possess similar instincts. Jeff Gundlach of DoubleLine Capital is one of them. Two months ago, Jeff was the keynote speaker at a Morningstar conference. Let’s roll the tape, as I highlighted Jeff Gundlach Sees 10Yr Treasury Rallying to 2.5%:

3. What does Gundlach predict for government bonds?

He said there hasn’t been a single day when the U.S. government bond market has failed to be the beneficiary of risk concerns globally, especially over the euro. “And as long as that’s the case, the probability is the 10-year Treasury is going to go to the yield of two-and-a-half percent,” he said. “Which sounds very low, but it’s been there before. In Japan, when they were dealing with similar problems, the bond yield stayed below that level for 20 years. So the bond market outlook in government bonds, for the time being, is positive.”

Where was the 10Yr Treasury when Gundlach made this call? (more…)