Bridgewater Associates founder and former CEO Ray Dalio has issued a stark warning for investors, along with timely advice. The renowned market veteran believes that the US stock market, currently at all-time high levels, is headed for a financial “heart attack”, driven by rising US debt and geopolitical tensions.
To safeguard their wealth, Dalio recommends that investors seek refuge in gold, which he sees as a reliable hedge in the uncertain market environment.
Dalio, according to a Reuters report, said that gold might be a shield for investors from unhealthy markets, overburdened with debt.
Speaking at a launch event for Abu Dhabi Finance Week, scheduled for December, the hedge fund manager warned that as the US spends more to service its debts, this “squeezes out other spending” and builds up as plaque would in a clogged human circulatory system.
“A doctor would warn of a heart attack,” he said.
Portfolio Strategy by Ray Dalio
According to Ray Dalio, investors should hold 10-15% in gold in their portfolio, given its ability to act as a hedge during uncertain times.
“A well-diversified portfolio would have somewhere between 10% and 15% in the portfolio of gold,” said Dalio. His rationale is that since gold is uncorrelated with other assets, its value tends to rise during a crisis when other assets fall.
“Whose money do you own?” is the question, Dalio said, investors should ask when building a neutral portfolio as the world is turning “abundant in debt” and rife with geopolitical tensions.
Dalio’s comments come at a time when gold prices are trading at record high levels both in the international and Indian markets. The yellow metal was set for a fourth weekly gain today.
Gold prices have risen about 40% this year, driven by a soft dollar, strong central bank buying, dovish monetary policy and heightened global uncertainty.
Meanwhile, the S&P 500 and Nasdaq, which are up over 11% and 13%, respectively, so far this year, closed at record highs on Wednesday, as cooler-than-expected inflation data supported expectations that the US Federal Reserve will cut interest rates next week.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
