Hedge fund manager and CEO of Bridgewater Associates Ray Dalio warned against holding cash and bonds, noting that inflationary hedges such as bitcoin are useful additions to an investment portfolio.
However, the veteran money manager, who is worth $17 billion, also warned that crypto could be banned by certain overbearing governments like China in the future.
Ray Dalio founded Bridgewater Associates in 1975 in New York to change the investment landscape. Despite suffering a significant setback in 1982, he bounced back and now manages $150 billion in assets. The veteran investor achieved a legendary status in the finance world for his innovative insights into financial markets.
In May last year, Dalio revealed that he is now interests in helping the next batch of investors realise their dreams to become all they can be.
Cryptocurrencies aren’t going away. Buy Bitcoin here.
He warned people against accumulating cash as the US economy undergoes a seismic shift due to corona-virus policies that fueled debt creation and debt monetization to the detriment of interest rates. The author of Principles: Life & Work, a book on investing and management, Dalio believes that cash and bond ownership should be minimized.
In a LinkedIn post, he said:
I think one should consider minimizing one’s ownership of cash and bonds in dollars, euros, and yen (and/or borrow in these) and putting funds into a highly diversified portfolio of assets, including stocks and inflation-hedge assets, especially in countries with healthy finances and well-educated and civil populations that have internal order.
Dalio goes on to present graphs in support of his argument, and how corona decapitated the world order. The three major currency reserves,– US, Europe and Japan, have struggled since the beginning of the crisis that originated from the Chinese institute of virology. And while the investor praised China’s progress in the past, he warned to keep an eye on the emerging superpower – lamenting The US’ inability to keep up.
The billionaire also on the importance of not putting all of one’s eggs in one basket. Ray Dalio’s advice is to be prudent and study the socio-political landscape before making investment decisions.
That sad, Dalio thinks it is now time to invest in cryptocurrencies, telling investors to keep some amount of capital in Bitcoin. He recommends starting with about 1-2%, which helps to offset losses, if any. Earlier he expressed his doubts about bitocin and crypto due to volatility. But he changed his mind along with a plethora of investment legends last year.
In December 2020, he revealed that he was impressed by how bitcoin is written, how is remained free from hackers while achieving growth.
Back then, he said:
I think that bitcoin (and some other digital currencies) have over the last ten years established themselves as interesting gold-like asset alternatives.. with similarities and differences to gold and other limited-supply, mobile (unlike real estate) store-holds of wealth.
Dalio regards bitcoin as the new gold.
Still, given the emerging nature of the asset class, Dalio also stresses that governments have historically been wary of cryptocurrencies. This is probably why he talks about the possibility of cyrpto being made illegal in some places (like China) since governments would find it tough to regulate it (which could lead to a one size fits all approach). The rogue emerging power has banned bitcoin at least seven times since its inception in 2009.
However, Dalio’s peers at venture capital firm Andreessen Horowitz believe that the US should take the exact opposite approach to China.
“This is an opportunity for the United States, because we should be doing the exact opposite in my mind in this realm of what China is doing,” said Katie Haun, a partner at Andreessen Horowitz in October last year.
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