Billionaire Ray Dalio, the founder of the world’s largest hedge fund, Bridgewater Associates, has shared his investment strategy with cryptocurrency as part of his portfolio. He warned that cash is the worst investment because it is eaten away by inflation.
Ray Dalio’s investment advice: liquidity is depreciating, diversify the portfolio well
Bridgewater Associates founder Ray Dalio shared his investment strategy last week. He is currently President and Co-Chief Investment Officer of Bridgewater Associates. His firm’s clients include endowments, governments, foundations, pensions and sovereign wealth funds.
I think it’s very impressive that, for the last 10, 11 years, that programming has still held up. It hasn’t been hacked and so on. And it has an adoption rate.
When asked how concerned he was about inflation, Dalio replied, “I’m very concerned about this. Because the amount of money and credit that needs to be produced and is budgeted for is a big increase.
The billionaire noted that “cash is trash,” adding: “Cash, which most investors think is the safest investment, is, I think, the worst investment, and that is important because it loses buying power.” He pointed out that “cash, like this year, you’ll lose 4% or 5% to inflation. And so pay attention to those, because I believe that that’ll be the worst investment.” The Bridgewater Associates boss continued:
The only thing I would say to investors is not to judge anything about your returns or your assets in nominal terms, in terms of how many dollars you have. See it in terms of inflation-adjusted dollars.
Dalio proceeded to talk about diversification. “I’m very big on diversification,” he said, adding that “The important thing is to diversify one’s portfolio well, because we know from the surprises in the balance.”
He detailed, “We also know that these asset classes, on average, dramatically outperform and will significantly outperform Cash and that they move between them in a way that has to do with correlations, because when the going goes down. – when the economy goes down – then bonds will do better than stocks, and so on.
The billionaire believes that cryptocurrency, like bitcoin, can help diversify portfolios. “I view crypto as a small piece of that. And the message is cash is going to be a problematic asset, and hold that other diversified portfolio of assets,” he added, stressing:
Keep looking at it in real terms, not in nominal terms. And this diversification must also be international diversification based on countries, not just asset classes, in order to have a really well diversified portfolio.
Regarding cryptocurrency, he previously admitted that he owns bitcoin (BTC). This week, he reportedly said that he also owns ether (ETH). “I don’t own a lot of it,” he said without revealing which cryptos or how much he owns.
In an interview with Marketwatch last week, the founder of Bridgewater Associates said:
I’m no bitcoin expert, but I think it has merit as a small part of a wallet.
“Bitcoin is like gold, though gold is the well-established blue-chip alternative to fiat money,” he further opined.
Nonetheless, Dalio warned, “Bitcoin has a number of other issues. If it is a threat to governments, it will likely be banned in some places when it becomes relatively attractive. It may not be banned everywhere. I don’t think central banks or large institutions will have a large amount of it. “
