Ray Dalio dispenses advice on cash, bonds and Bitcoin


Hedge fund owner and CEO of Bridgewater Associates Ray Dalio warned investors that cryptocurrency could be banned and advised against holding cash and bonds. A controversial statement for sure, but it is not easy to ignore the advice of a man with a net worth of over $17 billion and a lifetime of experience in investment.

Ray Dalio founded Bridgewater Associates in 1975 in New York to change the investment landscape. Despite suffering a crushing setback in 1982, he bounced back, and today, his hedge fund manages around $150 billion in assets. The monetary wizard has achieved legendary status in the financial community for his innovative style and insights.

Ray Dalio promotes bitcoin

Why is cash losing its shine? It could be because Ray Dalio is promoting Bitcoin.

In May of last year, he revealed that he now wishes to spend his days helping others realize their dreams and become the best they can be.

He cautioned people against accumulating cash as the US economy undergoes a sea change as the pandemic has fuelled increase in debt creation and debt monetization has had an adverse effect on interest rates. The author of Principles: Life & Work, a book on the philosophies of investing and management, Ray Dalio clearly opines that one should minimize their cash and bond ownership.

In his LinkedIn post he states, “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.”

He goes on to present graphs and arguments that support his opinion and how the Pandemic has decapitated the world order. The three major currency reserves– US, Europe and Japan, have struggled to find a foothold since the start of the crisis. Although he has praised China’s progress in the past and kept an eye on the emerging superpower, he laments America’s inability to keep up.

The billionaire stresses on the importance of not putting all of one’s eggs in one basket. Ray Dalio’s investment advice is to be prudent and study the socio-political landscape before making monetary decisions.

He believes that it is time to start investing in cryptocurrencies and exhorts investors to keep some amount in Bitcoin. He recommends starting with about 1-2%. A diversified portfolio will help offset losses, if any, and also give you leverage. Earlier, he had expressed his doubts about cryptocurrencies and their valuations as they tend to be volatile. But, in December 2021, he revealed that he was highly impressed by how bitcoin is written, how they have managed to remain secure from hackers and achieved growth. He shares that bitcoin and gold will work as a hedge against inflation. Dalio regards bitcoin as new gold.

Only a limited amount of Bitcoin is available for mining. This is how it has been designed and it could be one of the factors why some investors feel it could yield higher returns in the long-term. After bitcoin becomes an established entity in the market, demand could far exceed supply, driving up its value.

Dalio, however, cautions against being overly optimistic. He stresses on the fact that governments have historically been wary of cryptocurrencies. This could be why he mentions that it can be outlawed in some places. Dalio is of the opinion that since it is a murky area, governments would find it tough to regulate it and hence decide to ban it.

Recently, the minutes of a meeting by the Federal Reserve System caused an uproar in the markets with shares of bitcoin taking a hit. However, Ray Dalio’s investment advice could hold you in good stead as companies are slowly beginning to accept cryptocurrencies as a valid form of payment.

The post Ray Dalio dispenses advice on cash, bonds and Bitcoin appeared first on Industry Leaders Magazine.


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