If they were allowed only one investment in 2023, a panel of industry experts came up with 30-year Treasurys, gold, a REIT and one equity stock. And all of them feared that too much speculative money is still chasing some bad ideas.  

Day three of DoubleLine Round Table Prime 2023, titled “Best Investment Ideas,” showcased the picks of panelists Jeffrey Gundlach, CEO of DoubleLine; Jeffrey Sherman, DoubleLine’s deputy CIO; James Bianco, president and macro strategist at Bianco Research; Danielle DiMartino Booth, CEO of economic research firm Quill Intelligence; Charles Payne, author and Fox Business anchor; and David Rosenberg, president of economic consulting firm Rosenberg Research & Associates.

“I’m going to go with what cannot be shaken or stirred, and I’m talking about bond. Long bond,” Rosenberg said, opening the conversation and adding that he specifically meant the U.S. Treasury 30-year STRIP, also known as a zero-coupon bond. His pick was seconded by Gundlach.

Bianco also said he would play long, but for him the investment of choice would be gold.

“If you want to take a speculative trade that’s ready to go, the price of gold has only recently started to move, and it’s got a big catch up to come,” he said.

“That’s my number two,” Rosenberg chimed in.

Payne was the only panelist to choose a specific equity. “I wrote down a stock, United Rentals,” he said, looking at his notes. “I’m going to hold onto that stock. I got it last year, [and it’s] up 15%. I love it as a domestic play and for some other macro issues.”

Booth introduced her pick by identifying the macro issue that led her to it.

“One thing that no one’s mentioned is quantitative tightening, and I think that continues on in the background,” she said. “Therefore, I go to [Ares Real Estate Income Trust], and I’m looking to go short in that position because I think that the less liquidity available to these types of vehicles, the more they’re just going to get pummeled.”

In addition to the investment they’re most sure about, the panelists brought the DoubleLine Prime 2023 event to a close discussing a topic that at times might seem so inconceivable that few people in the investment world discuss it regularly: depopulation.

“The slowing birth rate in the world, and particularly in America and China,” Payne said, introducing the subject. “We won’t see anything major near-term, but I think when we wake up to it, I might be too late to turn it around.”

Gundlach agreed and offered a second take on the same issue.

“China had decades of increase in the labor force, and now it’s going the other way,” he said. “If you want to play that theme, it’s not for one year, it’s not for five years, but India because the demographics are nearly identical to where China was 35 years ago.”

Both Rosenberg and Bianco agreed with Gundlach on the rising presence of India as a population leader in decades to come.

“India has very useful demographics and the strongest growth in the world,” Rosenberg said. “Their stock market recently just came off a record high. It was a huge outperformer last year.”

“And as early as this year, they’re due to surpass China as the most populous country on the planet,” Bianco said. “So we’re going to have to update our thinking that all the people live in China. It might be that all the people live in India.”

Booth said her final global thought was that the Fed is not the only monetary-policy power engaged in a form of quantitative tightening.

“We forget what 2018 felt like when the world started shrinking its balance sheet. That’s going to continue,” she said. “The one thing J. Powell will not talk about is that balance sheet, so we could be facing a situation where he wants to keep shrinking it even if he begins to lower interest rates. It’s out there, but I think people should really be paying attention to the contraction in liquidity rates.”

One thing all the panelists agreed on was that the equity markets still have too much speculative money flying around, a topic they discussed at length.

“2022 saw an amazing feat. The Ark Fund was down 65%, and it got inflows,” Bianco said, naming Cathie Wood's fund. “There’s no other example of a large fund anywhere that could be down that much and still get inflows. And the inflows by all analyses seem to be hot, speculative money.”

Speculators are thinking the fund used to be at $160 and it dropped to $30, so now is a good time to buy, he said. “They’re thinking it’ll pop to $45 and they’ll get out at 50% because it’s then going to $10.”

“We’re still degenerate gambling that it’s going to pop?” he queried. “This level of speculation is not gone from the market yet. We still have some steps to go before we finally get rid of it all.”