(Business Insider) It was hard to lose money in 2019. The S&P 500 returned 29%, emerging-market stocks gained 15%, oil increased 34%, gold swelled by 19%, and US bonds climbed 8.7% in aggregate.
Still, many experts say it's unlikely that investors will reap similarly broad-based returns across asset classes in 2020.
But Jeffrey Gundlach, the CEO and chief investment officer of the $140 billion investment firm DoubleLine Capital, sees opportunities on the horizon — and a simple theme ties them all together: aweaker US dollar.
"It seems like it's just about time for the dollar to weaken," he said on a recent webcast.
Gundlach is adamant that the US dollar will depreciate for three main reasons: foreigners starting to divest from the US, the Federal Reserve's continued insistence upon printing money, and a blown-out budget deficit.
With the prospect of a weaker US dollar front and center in his forecast, Gundlach sees an enticing buying opportunity brewing in one asset class in particular: commodities.
Historically speaking, when the US dollar weakens, commodities prices rise.
Gundlach said that in the past 100 years, this relationship has moved to 0.1 only three times: 1929, in the 1960s, and today. The finding implies that right now commodities look wildly undervalued on a valuation basis.
"I think with the weaker dollar, the valuation in the US, the Bernie Sanders digestion that has to happen in terms of market risk — I think that this black line is going to head up during 2020," he said. "This is a really huge buy signal — on a valuation basis — for commodities."
Still, Gundlach's call is primarily catered toward an investor with a longer-term time horizon — and he's quick to say that this trade may take a while to materialize.
"I don't think you want to invest solely on valuation using this chart because you can notice how long it can take to work," he said. "Back to late '50s into the early '70s, this went nowhere. You didn't lose any money in commodities, but you didn't do any better than the Dow Jones."
He added: "Maybe it will be a 2021 event. But certainly, valuation is on your side."
An investor looking to get broad exposure to commodities could purchase the Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF.
In addition to Gundlach's bullishness on commodities, he's also in favor of non-US equity markets. Once again, his recommendation is based on an expectation that the US dollar "should weaken." Of particular interest to him is the iShares MSCI Emerging Markets ETF.
"You could just buy EEM again," he said. "I think you'll have another good year there. I think EEM will be better than the developed world and certainly better than the United States if the dollar is falling."
Lastly, in an unrelated call to the weaker US dollar forecast, Gundlach shared his thoughts on bitcoin. In 2019, he recommended that investors purchase the cryptocurrency — and his call was spot on. Bitcoin rose 95%.
"I think bitcoin's going to go higher in the near term," he said. "I think it could go as high as $15,000 in 2020."