Ray Dalio is not a fan of bonds.
The founder of Bridgewater Associates, the world’s largest hedge fund company, condemned the “ridiculously low yields” of bonds in a blog post on LinkedIn on Monday, pushing for a diversified portfolio.
“The economy of bond investing (and most financial assets) has gone stupid. Instead of getting paid less than inflation, why not buy stuff – any stuff – that equals inflation or better instead? ”
(The return on the 10-year US Treasury TMUBMUSD10Y,
retired from a year high on Monday, ahead of a Federal Reserve meeting.)
Dalio has also never been a fan of holding cash – and he still isn’t.
“I believe that cash is and will continue to be nonsense (that is, having returns that are significantly negative in relation to inflation), so it pays to a) borrow cash rather than hold it as an asset and b ) higher yielding, non-debt investments, ”he wrote.
History and logic show that, when faced with the imbalance between supply and demand, which would cause interest rates to rise more than is desirable in the light of economic conditions, central banks will print the money to build bonds. buy and create yield curve controls. to put a limit on bond yields and devalue cash, ”said Dalio. “That makes cash terrible to own and great to borrow.”
Read: Opinion: Why inflation makes long-term bond holdings riskier than owning stocks
Dalio also warned that a US wealth tax, as suggested by Senator Elizabeth Warren, would only lead to capital outflows and attempts to avoid the taxes. “The United States could be seen as a place inhospitable to capitalism and capitalists,” he wrote.
So what does Dalio recommend in today’s market?
“I believe that a well-diversified portfolio of non-debt and non-dollar assets, along with a short cash position, is preferable to a traditional mix of stocks and bonds that is very different from the US dollar. I also believe that assets in the mature developed reserve currency countries will underperform the markets of Asian (including Chinese) emerging countries. I also believe that tax changes and the possibility of capital controls should be taken into account. ”