There was a time in the world where the phrase “cash is king” ruled supreme… According to billionaire Ray Dalio, founder of the biggest hedge fund in the world, that time is now over.
“I believe cash is and will continue to be trash (i.e., have returns that are significantly negative relative to inflation), so it pays to a) borrow cash rather than to hold it as an asset and b) buy higher-returning, non-debt investment assets.”
Dalio feels that bonds may now be just as bad as cash, thanks mainly to the recent bond frenzy, stating that the “economics of investing in bonds… has become stupid.”
But bonds are not the only asset he feels this way about. He also stated that he sees signs of “classic bubble dynamics” all across the markets.
“There’s just so much money injected into the markets and the economy that the markets are like a casino with people playing with funny money.”
“They’re buying all sorts of things and pushing yields on everything down. Now you have stocks that have gone up, and you have classic bubble dynamics in so many different assets.”
These factors and ones similar led him to follow with the statement that the US may become “inhospitable to capitalists.”
Dalio feels that we are in the late stage of this “big debt cycle” and that “one should be mindful of tax changes and the possibility of capital controls.”
In mid-2019, the Bridgewater Associates leader made his case on gold and explained why he believed the precious metal is an effective diversifier.
He commented, “Additionally, for reasons I will explain in the near future, most investors are underweighted in such assets, meaning that if they just wanted to have a better-balanced portfolio to reduce risk, they would have more of this sort of asset. For this reason, I believe that it would be both risk-reducing and return-enhancing to consider adding gold to one’s portfolio. “
Coming from the world’s largest hedge fund owner, we think he may be on to something.
And as history has shown us, especially in the last 12 months, change is a must.
The reality now is that the money printer is in hyperdrive with trillions in stimulus spending and in recent news, federal tax rates could be increasing soon.
If you’re like us, don’t try to keep up with the uncertainty swirling around. Learn how to diversify and protect your wealth and retirement with assets like gold by calling American Hartford Gold at 800-462-0071.