Ray Dalio says cash is not a safe place right now despite heightened market volatility

Ray Dalio says cash is not a safe place right now despite heightened market volatility

Bridgewater Associates’ Ray Dalio stood by his perception that cash is not the place to be despite the volatility within the markets triggered by the brand new omicron Covid variant.

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

Throughout turbulent instances, it is also necessary to be in a safe, well-balanced portfolio, the billionaire investor stated.

“You can reduce your risk without reducing your returns. You will not market-time this. Even if you were a great market timer, the things that are happening can change the world, so it changes what could be priced into the market,” Dalio stated.

The omicron Covid pressure, first recognized in South Africa, rattled the inventory market on Black Friday after the World Well being Group labeled it a “variant of concern.” The Dow Jones Industrial Common slid 900 factors Friday to endure its worst day since October 2020. Inventory futures indicated one other massive down day following a rebound on Wall Road Monday as buyers monitored the continued well being disaster.

The inventory market rebounded swiftly from the pandemic backside in March 2020 because of the huge fiscal and financial stimulus measured that the federal government and the Federal Reserve orchestrated to assist the economic system. Nonetheless, the surplus cash provide within the system might create sure financial and political issues, Dalio stated.

“You can’t raise living standards by raising the amount of money in credit in the system because that’s just more money chasing the same amount of goods,” he stated. “It will affect financial markets in the ways we’ve seen and it will affect inflation rate. It won’t raise living standards in an important way. As inflation then begins to bite, it has political consequences.”

A key inflation gauge spiked in October, accelerating at its quickest tempo because the early Nineteen Nineties, in keeping with costs for private consumption expenditures excluding meals and power, a measure intently adopted by Fed policymakers.

The central financial institution has been wrestling with inflation that has been extra aggressive and chronic than they’d anticipated. Officers have stated they consider inflation is on the level the place they’ll begin steadily decreasing the quantity of month-to-month stimulus they’re offering by way of bond purchases.

“What we are seeing happen has played out many, many times in history; it’s like watching the movie over again,” Dalio stated.

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