DoubleLine CEO Jeffrey Gundlach warned Tuesday that stocks are trading at levels that resemble the start of the last bear market and said investors would be wise to have a substantial part of their portfolio in cash. “The stock market on traditional measures — P/E, price to book, all that stuff — is as overvalued as it was two years ago, but bond yields are about 500 basis points higher at the short end, and about 400 basis points higher at other parts of the curve. So there’s a totally different valuation metric now,” Gundlach said at the Exchange ETF conference. The prior bull market for stocks peaked about two years ago, with the S & P 500 hitting a record high on Jan. 3, 2022. The index then fell about 25% to its bottom in October of that year, before rallying in 2023. It set a new record high last month. .SPX 5Y mountain The S & P 500’s previous bull market rally topped out in early 2022. That caution about stocks was reflected in Gundlach’s approach to a balanced portfolio. As opposed to a traditional 60-40 portfolio split between stocks and bonds, Gundlach said he preferred weights of 45% in bonds and 25% in cash “because I want to be able to buy things when they get cheap.” For equities, he highlighted Japan and India as foreign markets that he was optimistic about. Gundlach also said he would allocated 10% or so in real assets, such as gold. Gundlach has warned repeatedly that a soft landing or ” goldilocks ” outcome for the U.S. economy is unlikely. He also said Tuesday that there was a chance that interest rates could rise during the next recession, as opposed to falling like they have in most recent downturns. Despite his generally cautious outlook, Gundlach did say there were areas of commercial real estate and high yield debt that offered attractive yields and could be fairly safe for investors. DoubleLine manages about $100 billion in assets and has recently launched six ETFs, including funds focused on commercial real estate ( DCRE ) and an equal weight Fortune 500 fund ( DFVE ).