Why Top U.S. Stocks Could Be Risky Picks This Year - A Look at a Billionaire's Warnings.

Should you continue to focus on top US stocks this year? A billionaire finds clear words and explains why betting on the American stock market is now a very bad idea. What he advises instead...

Things were going well on the stock markets in 2023. American stocks in particular stood out. The Nasdaq 100 rose over 50 percent, the S&P 500 around 25 percent. This success was driven primarily by the incredible success of the Magnificent 7 stocks such as Nvidia, Tesla and Microsoft. But will this success continue in 2024?

A successful billionaire is now urging caution and using clear words. According to Jeffrey Gundlach (64), investor and CEO of DoubleLine Capital, the S&P 500 is currently a “pretty bad trade,” and he also urgently warns of an impending recession in the USA.

Billionaire warns about American stocks – that’s what’s behind it

“Business Insider” reported that billionaire Gundlach said in a webcast this week that after its rally last year, the S&P 500 is now at the same level as at the beginning of 2022. “That looks like a pretty bad trading venue with a double top,” said the billionaire. As defined by the Corporate Finance Institute, a double top is a chart pattern that indicates that the prevailing trend may reverse in the short or long term. This often indicates an end to an uptrend.

The billionaire also pointed out that the US stock market could not overtake the competition in an international comparison. He is no longer among the “world leaders” as he once was and warned that the dollar will become weaker in the next recession. That would then hit the S&P 500 harder than, for example, emerging markets. And according to Gundlach, recession is very likely. Several economic indicators are declining, and high public spending is also driving up national debt. “We will have a problem here,” said Gundlach. “This will get much worse when the recession comes.”

The billionaire therefore recommends value stocks rather than growth stocks. The Magnificent 7 stocks have been trending sideways since July - this indicates a shift in momentum. Overall, he doesn't seem very optimistic about the new stock market year: "I think that 2024 will be a year of high volatility: first with falling interest rates, then with a recession, then with a reaction to the recession."

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