Bitcoin began to fall early in 2018. "One after another you start to see various sectors of the market give it up" after cryptocurrencies sold off heavily, Gundlach said. After each of the major stock indexes "rolled over," he said the bull market was "down to the FAANGs." But even those bellwethers of growth didn't last. The five FAANG stocks – Facebook, Amazon, Apple, Netflix and Google parent Alphabet – are currently in or near bear markets.
"That was kind of the last straw" of the bull market, Gundlach said.
But it was only when the trade war between the U.S. and China collided with the Federal Reserve's rising interest rates that the sell-off began in earnest. In early October "suddenly the market seemed to wake up to the fact that this was real and the next day the stock market tipped over," Gundlach said. Additionally, he thinks that President Donald Trump's trade fight with China is not going to get better anytime soon.
"I think [the trade war] gets worse," Gundlach said. "We're probably going to ratchet up the tariffs."
He said his best idea for 2019 is "capital preservation." Gundlach defines that as "high-quality, lower-volatility, lower-duration bond funds," he said.
Gundlach predicted in March that the closely watched 10-year Treasury yield would hit 3 percent and send stocks tumbling. His call came true a few months ago, as October was one of the worst months for U.S. stocks since the financial crisis.
Gundlach revealed in February that he was betting against Facebook shares. He said his short was due to falling public perceptions of the company. Facebook's stock is down more than 13 percent since Gundlach's call.
He also in 2017 envisioned bitcoin cratering, saying that "if you short bitcoin today, you'll make money." At the time, bitcoin traded at about $16,000. The cryptocurrency now trades at about $3,400, losing about 75 percent of its value this year.
DoubleLine has more than $120 billion in assets under management, according to the firm's website.
WATCH: Doubleline's Gundlach on tariffs