Jeffrey Gundlach, founder of DoubleLine Capital, LP and former CIO of Trust Company of the West (TCW) opened the Morningstar Investment Conference in Chicago on Wednesday, June 23, with a story from Jack Bogle. Bogle, of course, is the industry statesmen who founded Vanguard. Before founding Vanguard, he’d been at Wellington, where he was, Gundlach quoted Bogle as saying, “fired with enthusiasm! I can identify with that,” Gundlach quipped, a nod to his resignation/firing in late 2009 from TCW.
Gundlach may have the last laugh, noting that his new fund complex, open only a few months, has passed the $1 billion in assets under management milestone, just “last night.”
He was the keynote address at the 2007 Morningstar Investor Conference, warning early that the mortgage securities market was “a total, unmitigated disaster.” That alarm was sadly true and three years later, Gundlach warns that, “deflationary pressure is undeniable.”
Gundlach is also very conscious about government debt and especially unfunded liabilities in Medicare and Social Security–”in 2009 [there was] $62.3 trillion in…promises to pay against a $14 trillion economy.” Further, that’s up “$36 trillion over the past seven or eight years” versus a total cumulative economy of $104 trillion over that same time.
But the debt that individuals in America have accumulated over the past six decades concerns Gundlach too. Using debt to fund lifestyles which he notes started in the 1950s when television assumed “mind control” of the American population, creating a culture of “consumerism” in which people borrowed to fund their lifestyle–is partly to blame for where the economy is now in America.