Billionaire investor Ray Dalio told Bloomberg that opportunities in China and Singapore can’t be neglected.
The founder of Bridgewater Associates – the world’s largest hedge fund – spoke about how his personal investments and family office’s philanthropic efforts have been focused on the region.
“It’s a part of the world that one can’t neglect and not only because of the opportunities it provides but you lose the excitement if you’re not there,” Dalio said when asked about his family office’s plans in the region. “And so our objective is to be there both economically and investment-wise.”
Dalio’s comments come as some on Wall Street question the long-term prospects of investing in China amid the country’s ongoing regulatory crackdown across sectors including fintech and education.
A mineral company backed by billionaires, including Jeff Bezos and Bill Gates, on Monday agreed to join mining firm Bluejay to hunt for metals used in electric vehicles.
KoBold Metals will spend $15 million to search for nickel, copper, cobalt, and platinum as part of BlueJay’s Disko-Nuussuaq project in Greenland, the world’s biggest island, BlueJay said in a statement.
In return, KoBold will have a 51% stake in the project, London-based Bluejay said.
KoBold, which is privately owned, uses artificial intelligence, machines, and computing to look for the raw materials needed for electric vehicles, according to its website.
The mineral company’s principal investor is Breakthrough Energy Ventures, a climate and technology fund led by Microsoft co-founder Bill Gates, the statement said.
Billionaire investor Ray Dalio said he would rather own bitcoin than bonds in an interview aired on Monday at the Consensus by CoinDesk 2021 convention.
The Bridgewater Associates founder reiterated his view that the US dollar is on the verge of a devaluation, and he suggested that bitcoin could be an attractive savings vehicle in an inflationary scenario.
“The more we create savings in it, the more you might say, ‘I’d rather have bitcoin than the bond,'” Dalio said. “Personally, I’d rather have bitcoin than a bond.”
The billionaire investor has been bearish on bonds for quite some time, saying that the financial instruments pay less than inflation.
“I have some bitcoin,” Dalio also said during the interview, which was recorded on May 6. The investor didn’t say how much he owned.
He added that bitcoin’s greatest risk is its success. If it becomes a larger asset class and starts to pose a real threat to others like bonds, that could prompt a regulatory crackdown that could hinder the cryptocurrency. He said right now, bitcoin isn’t a true threat because it’s still small relative to other assets. The total value of bitcoin is slightly over $1 trillion, while the value of US bonds is about $23 trillion, according to Dalio.
Billionaire hedge fund boss Ray Dalio has said the biggest risk to cryptocurrencies is their own success, which could cause governments to crack down on them to ensure they control the money supply.
Talking about cryptocurrencies, Dalio told the Wall Street Journal “Future of Everything Festival” on Tuesday: “Its own biggest risk is its success, because as a storehold of wealth no government wants to have an alternative currency.”
The comments from Dalio, the founder and co-chief investment officer of investment titan Bridgewater Associates, came soon after regulators and watchdogs in both the UK and US hinted at official skepticism of crypto assets.
Bank of England governor Andrew Bailey said last week people should only invest in crypto “if you’re prepared to lose all your money.”
And Gary Gensler, the new head of the US Securities and Exchange Commission, said in a Congressional hearing the crypto world “could benefit from greater investor protection.”
Dalio said the future of cryptocurrencies is “exciting and unknown.” He added: “Crypto as a digital clearing mechanism and so on, very exciting, very bullish. Crypto as a storehold of wealth, very interesting. Probably will be important for us.”
But he said he remained concerned that governments could get tough on crypto if they feel their monetary sovereignty is threatened, something that he has talked about in the past.
Regulators around the world are increasingly focused on cryptocurrencies after bitcoin’s meteoric rise, with Turkey banning the use of crypto assets for payments and India flirting with an outright ban.
US regulators have not so far announced any plans to tighten crypto regulations, although some analysts have said that Gensler’s stance makes the approval of a bitcoin exchange-traded fund unlikely any time soon.
The US government’s massive stimulus spending raises the risk of inflation and could debase the dollar due to large amounts of money put into the system, Dalio said.
President Joe Biden’s $1.9 trillion stimulus package, along with his $2 trillion American Jobs Plan risk forming a bubble, with money overflowing in the economy, Dalio said. He suggested such risks should be carefully balanced, and “productivity” is essential to prevent the economy from overheating.
The hedge-fund manager believes stock markets are in a bubble that isn’t being driven by debt.
“There’s two types of bubbles,” Dalio said. “There’s the debt bubble when the debt time comes back, and you can’t pay for it, and then you have the bubble bursting. And the other kind of bubble is the one where there’s just so much money and they don’t tighten it as much, and you lose the value of money. I think we’re more in the second type of bubble.”
Dalio has been a long-time admirer and advocate of China. He has previously said the country isn’t perfect, but should be “open-mindedly assessed based on evidence.”
He rejected the idea that China’s repression of largely Muslim minorities in the province of Xinjiang should influence investor decisions.
“I don’t really understand, and I don’t study the human-rights issues. I follow what the laws are on those particular things,” he said, and added that the US too has human-rights concerns. “Would I not invest in the United States because of those?”
The billionaire also touched upon Robinhood and its popularity among retailer investors. Having previously expressed concern about the GameStop saga being a product of wealth inequality, he suggested the trading app is a progressive step for the investing world.
“It’s information. It allows you to play the game. And there’s nothing like doing it in amounts you can afford,” Dalio said. “It’s a real plus, but it has some drawbacks, too.”
The Federal Reserve is going to have to revamp its quantitative easing program and buy more bonds to help limit the rise in interest rates, according to hedge fund billionaire Ray Dalio and first reported by Bloomberg.
In a Saturday panel at the China Development Forum, Dalio said the recently passed $1.9 trillion COVID-19 stimulus bill will lead the US government to raise more money by issuing more treasury bonds, further worsening the “supply/demand problem for the bonds.”
That supply and demand problem for bonds will lead to a further rise in interest rates, which has already wreaked havoc on certain parts of the stock market like the high-growth technology sector as the 10-year Treasury yields climbed to a pre-pandemic high of 1.75% last week.
A continued rise in interest rates “will prompt the Federal Reserve to have to buy more [bonds], which will exhibit downward pressure on the dollar,” Dalio said. The Fed already buys about $120 billion in bonds per month.
In a dire scenario, Dalio explained that the world is “very overweighted in bonds” that have a negative yield, and that “not only might there be not enough demand, but it’s possible that we start to see the selling of those bonds,” according to Bloomberg.
According to Bank of America, there is currently $13.7 trillion in negative yielding debt. In the event that bonds are liquidated by investors, “that situation is bearish for the dollar,” according to Dalio.
Despite the concerns, Fed Chairman Jerome Powell said last week that its current monetary policy is appropriate, and pushed back against the idea that the recent jump in interest rates pose a problem to the economy.
Bridgewater Associates boss Ray Dalio does not like what he sees when he looks out across the market.
In a major blog post on Monday, he said there are “classic bubble dynamics in so many different assets.”
Dalio, ranked by LCH Investments as the best-performing hedge fund manager of all time, said a long-term debt cycle that has seen investors gorge on bonds may be about to end, which could be “traumatic for most everyone.”
The founder of $150 billion fund Bridgewater spoke for many investors who are concerned about the recent jitters in the bond market continuing and becoming destabilizing.
He also said that the “economics of investing in bonds… has become stupid,” while sharing some strategy ideas to combat low returns. And he said the US may become “inhospitable to capitalists.”
Here are 12 of the key quotes:
1. “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.”
2. “The increased supply of money injected into the system bids up investment asset prices and can cause financial market bubbles even when actual economic conditions are still weak.”
3. “Bonds have been in a 40-year bull market that has rewarded those who were long and penalized those who were short, so the bull market has produced a large number of comfortable longs who haven’t gotten seriously stung by a price decline. That is one of the markers of a bubble.”
4. “The economics of investing in bonds (and most financial assets) has become stupid…. if you buy bonds in [the US, Europe, Japan or China] now you will be guaranteed to have a lot less buying power in the future.”
5. “If bond prices fall significantly that will produce significant losses for holders of them, which could encourage more selling.”
6. A major bond-market sell-off would be “traumatic for those who are holding the debt assets and traumatic for most everyone though it eventually reduces the ratios of debt and debt service to incomes. It is also traumatic for capital markets, capitalism, and economies. During this credit/debt collapse people realize that they don’t have as much buying power as they thought and financial and economic conditions worsen.”
Major policy changes
7. “If history and logic are to be a guide, policy makers who are short of money will raise taxes and won’t like these capital movements out of debt assets and into other storehold of wealth assets and other tax domains so they could very well impose prohibitions against capital movements to other assets (e.g. gold, Bitcoin, etc.) and other locations. These tax changes could be more shocking than expected.”
8. “The United States could become perceived as a place that is inhospitable to capitalism and capitalists. Though this specific wealth tax bill [proposed by some Democrats] is unlikely to pass this year the chances of a sizable wealth tax bill passing over the next few years are significant.”
9. “Because I believe that we are in the late stage of this ‘big debt cycle’…, 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.”
10. “Rather than get paid less than inflation why not instead buy stuff-any stuff-that will equal inflation or better? We see a lot of investments that we expect to do significantly better than inflation.”
11. “I believe a well-diversified portfolio of non-debt and non-dollar assets along with a short cash position is preferable to a traditional stock/bond mix that is heavily skewed to US dollars.”
12. “I also believe that assets in the mature developed reserve currency countries will underperform the Asian (including Chinese) emerging countries’ markets. I also believe that one should be mindful of tax changes and the possibility of capital controls.”
Hedge-fund manager Ray Dalio hosted a Reddit “Ask Me Anything” session on December 8. In response to Redditors’ questions on what he expects for financial markets, he explained why a “flood of money and credit” that’s unlikely to recede will lift asset prices.
The self-made billionaire also touched upon his thoughts on Bitcoin, why he admires China’s leadership, his concerns over the US economy, and the future of jobs.
Dalio, founder of the world’s largest hedge fund Bridgewater Associates, has a net worth of $15.5 billion, according to the Bloomberg Billionaires Index.
Here are Dalio’s 10 best quotes from the Reddit session:
1. “I think that Bitcoin (and some other digital currencies) have, over the last ten years, established themselves as interesting gold-like asset alternatives, with similarities and differences to gold and other limited-supply, mobile (unlike real estate) store holds of wealth.”
2. “As far 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.”
3. “The Chinese leadership is extremely knowledgeable in the lessons of its history and how things work. What I would convey to you and my fellow Americans is that they have a lot of internal disagreement and processes for dealing with it well within the government, so it does exist. Whether or not it is more productive to have the entire population in those discussions is a matter of opinion.”
4. “It is a very civilized society that is doing extraordinarily well and is not consistent with the stereotypes that one might believe are true. It is by no means perfect (nor is any other country) and should be open-mindedly assessed based on evidence, rather than emotionally reacted against based on derogatory characterizations.” – on what people that ignore China are missing.
5. “We are in a flood of money and credit that is lifting most asset prices and distributing wealth in a way that the system that we’ve come to believe is normal is unable to, and that is threatening to the value of our money and credit.”
6. “It is important to diversify well in terms of currencies and countries, as well as asset classes. Internally, this is taking place in a politically and socially threatening environment, which will affect taxes, spending, and how we are with each other. Externally, there will be greater competition, particularly by China.”
7. “I think that between now and the mid-term elections in 2022, and between then 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.” – on the evolution of US leadership.
8. “I worry that we are our own worst enemies and/or that we collectively aren’t willing to make the revolutionary changes that are needed to be on the best path for dealing with our circumstances. However, it is certainly possible that we can get on that path.” – on the superpower status of the United States.
9. “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.” – on the future of jobs and workplace culture.
10. “What is most important is inventiveness – the capacity to get much more out of an hour’s work.”
Last week, Ray Dalio, investor and founder of the world’s largest hedge fund Bridgewater Associates, gave away 10,000 “charity gift cards” each worth $100. Anyone could claim a gift card and donate it to their charity of choice.
All 10,000 gift cards were claimed within two hours, a sign of the massive need many nonprofits find themselves in due to the coronavirus pandemic’s economic downturn.
Now, other leaders in the business community are joining Dalio in his effort to fund another round of giveaways. The list of leaders include Netflix CEO Reed Hastings, Instagram co-founder Kevin Systrom, media mogul and Thrive Global founder Arianna Huffington, and author and podcaster Jay Shetty.
“I was so happy that so many people signed up, but felt terrible that others were closed out,” Dalio said in a social media post.
The number of gift cards to be made available in this upcoming round has yet to be determined, per a spokesperson for Dalio. The new gift card launch is expected this week.
For the famed investor, the initiative is a chance to rethink holiday gifting amid a time of dire need. Dalio has previously spoken about inequality in America, saying in an April interview that America’s jarring inequality is a “national emergency” that is threatening capitalism.
“Imagine the impact we could have if people started giving each other the ability to donate to their favorite charities rather than giving them useless material stuff,” Dalio said in a statement.