Ray Dalio says cash is not a safe place right now despite volatile markets

Bridgewater Association’ Ray Dalio holds firm to his belief that cash is not the place to stay despite the volatility in the market triggered by the new Covid omicron variant.

“Cash is not a safe investment, not a safe place because it will be taxed by inflation,” the founder of the world’s largest hedge fund said Tuesday on CNBC. “Squawk Box.”

In turbulent times, it’s important to have a balanced and secure portfolio, the billionaire investor says.

“You can reduce your risk without reducing your profits. You won’t time this market. Even if you are a great market timer, things happening can change. changes the world, so it changes what can be priced into the market,” said Dalio.

The omicron strain of Coronavirus, which was first identified in South Africa, rocked the stock market on Black Friday after the World Health Organization labeled it as “variation of concern.” The Dow Jones Industrial Average slide 900 points on friday to endure worst day since october 2020. Futures posted another day of sharp declines after Monday’s rally on Wall Street as investors watched the unfolding health crisis.

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The stock market recovered quickly from the pandemic bottom in March 2020 thanks to the massive monetary and fiscal stimulus measures implemented by the government and the Federal Reserve to support the economy. However, the excess money supply in the system can create certain economic and political problems, Dalio said.

“You cannot raise the standard of living by increasing the amount of credit in the system because that is just more money chasing the same amount of goods,” he said. “It’s going to affect financial markets in the ways we’ve seen, and it’s going to affect the inflation rate. It’s not going to raise living standards in a significant way. When inflation starts to flare up, it’s not going to raise standards of living. political consequences.”

A key inflation gauge spiked in October, accelerating at fastest speed since the early 1990s. The personal consumption expenditures price index excluding food and energy, a measure closely followed by Federal Reserve policymakers, rose 4.1 percent.

The central bank has struggled with inflation that has been stronger and more persistent than they had anticipated. Officials said they believe inflation has reached a point where they can begin to taper off the amount of monthly stimulus they are providing through bond purchases.

“What we’re seeing has happened so many times in history; it’s like watching the movie again,” Dalio said. Ray Dalio says cash is not a safe place right now despite volatile markets

Emma James

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