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Home / Business / Why billionaire investor Ray Dalio hates cash and bonds and says the election will not change his view of the economy

Why billionaire investor Ray Dalio hates cash and bonds and says the election will not change his view of the economy



Ray Dalio, the founder, chairman and co-chief investment officer of Bridgewater Associates, the world’s largest hedge fund company, has experienced a difficult 2020. Although rival hedge funds have managed to outperform the market, Bridgewater’s flagship fund has been deeply affected. During the initial turmoil of the coronavirus pandemic.

Nonetheless, Dalio does have an enviable track record in his forty years in business, and he is as provocative as ever. In an interview with Barry Ritholtz, Chief Investment Officer of Ritholtz Wealth Management, he mentioned the difficulties the company faces. The pandemic surprised me. I think I have no advantage in the pandemic, that’s really stupid,” he said.

Dalio and Ritholtz discussed in detail the construction of the investment portfolio. Relative to the tiny returns offered by bonds, bonds are too volatile-“a day’s price change is greater than a year’s return,”

; Dario said. Cash is not another option. He said: “It has no volatility, but what it does is-as it is now, minus 2% per year,” he said, referring to inflation eroding its value. “So this is a non-volatile hidden tax that is levied at 2% per year. You will see a compound impact of 1-3% on life every year, which is huge.”

Balance is the most important thing. I don’t think you want cash. I don’t think you want bonds, and I do want you to have alternative wealth reserves, but diversified wealth,” he said. Through diversification, he means not only stocks and different sectors, but also currency Diversity and diversity of countries.

Gold GCZ20,
-1.24%,
Dario said that this is not a high return asset, but it is an effective diversified asset. In contrast, real estate is not a good reserve of wealth because it is not liquidity.Bitcoin BTCUSD and other cryptocurrencies
-2.68%
Suffer from three problems-they are difficult to trade, volatile, and they are at risk of government banning them.

Dario said that next week’s election is unlikely to make him reconsider his views on the economy. “If I were to be both parties, we would have a lot of deficits and monetization. I think that both parties will adopt an active policy toward China. However, a party will be more capitalist and it can be said that it favors asset owners. The remaining one People will support redistribution,” he said.

Dario said the bigger question is whether the country can unite. Capitalists “know about productivity and so on, but they don’t know how to divide it well. Socialists or those who are more on the left have problems in increasing productivity.”

buzzing

The COVID-19 situation in Europe is deteriorating. According to reports, Germany said it will close its restaurants for a month because French President Emmanuel Macron will outline the new restrictions in an evening speech. According to an analysis by Bloomberg News, in the United States, the number of hospitalizations in 32 different states increased by at least 10% last week.

The London gaming market shows that with six days to go before the election, former Vice President Joe Biden has a 66% chance of defeating President Donald Trump.

Microsoft MSFT,
+ 1.50%
Microsoft was the company’s headline news reported on Tuesday night. The software giant reported stronger-than-expected revenue and revenue for the first quarter. Like many of its competitors, Microsoft’s demand for its cloud service products has also boosted it.

General Electric Group GE
-3.79%
Reported third-quarter earnings and revenue were stronger than expected and rose in pre-market trading. MasterCard MA
-0.29%
After competitor credit card processor Visa V’s third-quarter results did not meet expectations, the company’s stock price fell.
-1.55%
Report after closing.

CEO of Facebook FB,
+ 2.23%,
Twitter TWTR,
+ 4.63%,
And Google owner Alphabet GOOG,
+ 0.86%
Will face a hearing in the Senate on a law that protects its social media sites from liability for content posted by users.

David Einhorn, founder of Greenlight Capital, said that the highest price in the market was September 2 and the stock market bubble had burst.

market

In a word. European stock markets plummeted, the UK FTSE 100 UKX,
-1.86%
It reached its lowest level since mid-April.

Futures of the Dow Jones Industrial Average YM00,
-1.75%
It dropped by nearly 500 points.

USD DXY,
+ 0.64%
Rising, the yield of the 10-year Treasury bill TMUBMUSD10Y,
0.759%
Decline to 0.76%.

chart

Currency strategists at Deutsche Bank said that the idea of ​​a policy maker’s trade-off between low unemployment or low transmission rates is not entirely in line with what happened during the second COVID-19 wave in Europe. The worst-hit countries have been closed. “It seems that some countries are working harder than others to contain the virus. The reason seems to be not just the overall degree of structural openness, but structural. [non-accelerating inflation rates of unemployment] Each economy is different in structure. Some countries seem to be in a structural position and can maintain fewer economic restrictions than others while maintaining a flat curve. They added that it is interesting that, although liquidity in the Eurozone declined due to the second wave, it was still higher than that in the US before Sunday.

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