In a Reddit Ask Me Anything event earlier this month, billionaire investor Ray Dalio offered insights on the markets and economy, underscoring the importance of diversification, noting that the “flood” of money and credit would most likely continue. This according to an article in Bloomberg.
Here are key comments from the talk:
- Debt and currency: “Assets will not decline when measured in the depreciating value of money,” Dalio said, adding, “I believe that with the enormous amount of debt and money that has been created and will be created in the future, the most important thing to pay attention to is the value of debt and money relative to the value of assets and other currencies.”
- Stock market: Dalio noted that stocks could trade at 50 times earnings and advised investors to implement “smart diversification” among asset classes, currencies, and countries.
- Labor market: “My fear, which is turning into a reality, is those countries that are working the hardest are also increasingly finding ways to work the smartest, which is hurting the competitiveness of those who are working less hours and less efficiently.”
- Bitcoin, says Dalio, has emerged as an “interesting gold-like asset alternative” that could serve as a “diversifier to gold and other such store-hold of wealth assets.” He added, “as far as bitcoin relative to gold, I have a strong preference for holding those things which central banks are going to want to hold and exchange value in when they are trying to transact.”
- China: Dalio described China as a “very civilized society that is doing extraordinarily well and is not consistent with the stereotypes that one might believe are true,” adding that it should be “open-mindedly assessed based on evidence, rather than emotionally reacted against based on derogatory characterizations.”
- The U.S.: Dalio fears, may not be willing to “make the revolutionary changes that are needed to be on the best path for dealing with our circumstances,” adding that between now and the next presidential election in 2024, “we will face critical choices both domestically and internationally that will define the likelihood of having an internal and/or external existential conflict.”