Throwback Thursday: Sell Everything or Buy?

Sometimes it is fun to look back and see who made the correct call on the markets. High profile investors make bold calls but are seldom held accountable for the bad ones. Yet, the media will go back to the "big" names year after year because they generate clicks for their ad dollars. Unfortunately this doesn't bode well for your investment portfolio if you take their newsworthy headlines as actual investment advice. Let's take a look back two years to the summer of 2016 when two of the most prominent investors, Bill Gross and Jeffrey Gundlach, were screaming SELL!

Sell stocks and buy gold

In July 2016, both Gundlach and Gross were essentially making the same call: buy gold and sell stocks. Here are their quotes starting with Bill Gross:

"I don’t like bonds; I don’t like most stocks; I don’t like private equity."

"Real assets such as land, gold, and tangible plant and equipment at a discount are favored asset categories. But those are hard for an individual to buy because wealth has been 'financialized.'"

Gundlach took it a step further saying "Sell Everything."

“The artist Christopher Wool has a word painting, ‘Sell the house, sell the car, sell the kids.’ That’s exactly how I feel – sell everything. Nothing here looks good. The stock markets should be down massively but investors seem to have been hypnotized that nothing can go wrong.”

He cited weak economic growth and stagnant corporate earnings as the reason to stay away from stocks.

Gundlach was a fan of gold, and the stocks of gold-mining companies.

Here is the performance of gold versus the S&P 500 since August 2016 -- the S&P 500 is up almost 30% versus gold falling over 9%.

Runnymede got it right

The Runnymede team can proudly say that unlike Gross and Gundlach, we made the right call two years ago. On July 5th, 2016, I wrote a blog post titled, "Will S&P earnings drive the market to new heights?" We saw an improving economy coming out of a short, mild industrial recession. The S&P earnings had been terrible for 5 of 6 quarters with negative growth; however, we saw that earnings were likely to return to solid double-digit growth. Because of this, we turned more bullish on equities and our clients benefited.