There’s one number in markets that could determine the path ahead for stocks — and it’s not the price of oil, Wall Street’s “Bond King” says.
Jeff Gundlach, the famed fixed-income investor and CIO of DoubleLine Capital, said he was eyeing a key level in the VIX index — a measure of market volatility also known as the stock market’s “fear gauge” — to assess the outlook for stocks.
If the VIX were to surpass a level of 40, that could signal that the worst of the sell-off is over — and that it may be time for investors who have been waiting on the sidelines to get back into the market, Gundlach told CNBC on Monday.
“If the VIX gets above 40, you know, maybe that’s your signal that things are washed out and it’s time to buy,” Gundlach said, later adding that he would want to wait for a “real wash out” in stocks before adding stocks or credit investments to his portfolio.
The VIX has surged since the start of the US-Israeli war with Iran, but is well-below the threshold Gundlach flagged. The index spiked to over 29 in early March, up 10 points from its level prior to the start of the conflict.
If the index were to hit a level of 40, that would imply that stocks are the most volatile since last year’s “Liberation Day” market crash.
Gundlach said he believed the market was in the midst of a “revaluation phase,” in which investors’ profits are thin across the board as various asset classes are repriced. As an example, he pointed to the recent decline in gold, one of the hottest investments in 2025 that has since plummeted into a bear market, down more than 20% from its January peak.
Given gold’s recent decline, now could be a “good opportunity” for investors to increase their allocation to the metal and other commodities, Gundlach said. However, stock and bond prices don’t look “cheap enough” to suggest investors should jump back in, he added.
Despite high levels of volatility amid the AI disruption panic and the Iran war, the S&P 500 is down just 4% this year.
“I’m not terribly enthusiastic about credit or stocks at this point,” Gundlach said. “I would want to see the VIX go higher,” he added.
Other market forecasters have warned stocks could see further downside before the market regains its footing. Last week, Morgan Stanley said it saw as much as 7% downside in stocks before the market hit a bottom, while Goldman warned clients of a deeper stock correction as the Middle East conflict continues.