Cash is ‘stupid to own’ at this point, says Dalio

Cash and bonds are 'stupid to own' at this point, says Dalio

American billionaire investor Ray Dalio continues to warn about the dangers of holding cash and bonds amid increased money printing, as new daily Coronavirus cases in the United States topped 1 million.

Investments should be saved for stocks and inflation-hedge assets in socially and financially healthy countries, according to a LinkedIn post on Tuesday by the billionaire founder of Bridgewater Associates.

“This printing of money and buying of debt assets has driven interest rates so low that cash and bonds are stupid to own,” he wrote. “I think one should consider minimizing one’s ownership of cash and bonds in dollars, euros, and yen.”

Dalio notes that the amount of financial assets relative to real assets is dangerously high, which he says could lead to a “bank run” from financial assets to real assets. He also warns that all three major reserve currency empires —the United States, Europe, and to a lesser extent Japan—are in “poor financial shape.”

“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.”

“As the dominant power weakens and other powers get strong enough to challenge it, there are greater internal and external conflicts that lead to revolutionary changes in who has what wealth and power. That ends the old order and leads to the next new order. That is now happening.”

The warnings from Dalio come as COVID-19 cases in the United States topped 1 million, prompting some states to declare state of emergency. The average number of daily hospitalizations in the U.S. was 93,281 as of Monday, an increase of 35 percent in the last two weeks, according to data published by NBC news.

Ray Dalio is an American billionaire investor and hedge fund manager, who founded Bridgewater in 1975, and is regarded as one of the greatest innovators in the finance world. He is credited with having popularized many commonly used practices, such as risk parity, currency overlay, portable alpha and global inflation-indexed bond management.