“This is a big, big moment,” says Jeffrey Gundlach. The vocal bond investor warned his peers that interest rates are ready to rise from their historically low levels and asset managers need to be “defensive.”

In his quarterly webcast yesterday, the DoubleLine Capital CEO (pictured above) presented a rather bleak picture of the investment environment. Gundlach said investors should reduce duration in their portfolios, move money into cash and buy protection against volatility before rates rise and inflation picks up. Bonds with lower duration, which usually mature sooner, are considered less risky than those with higher duration.

The fact that pension funds (which are underfunded) are increasing their allocation to bonds over stocks in a hunt for yield seems like “mass psychosis” given how low interest rates are, he said. Negative rates by central banks have been ineffective in reviving global growth. Gundlach sees warning signs of recession in US manufacturing and unemployment data.

Regardless, the Federal Reserve may hike interest rates again before the market is prepared. Policy makers won’t want to look like they are being held hostage by traders, he said in an interview with Reuters. Gundlach highlighted a particular Bloomberg Terminal function, World Interest Rate Probability (WIRP), as the culprit. It shows the market isn’t pricing in a rate hike until the end of the year.

The US election is another reason interest rates will go up. Gundlach predicts Donald Trump will win the race in November. Either way, both Trump and Hillary Clinton indicate that they will increase fiscal stimulus and this could lead to an increase in the cost of government borrowing, he said.

Gunlach’s latest advice comes a month after he said to “sell everything.” One of the few assets he does like is gold and says he hasn’t sold any of the metal this year. (See some of the top slides from the webcast here.)