Ray Dalio to investors: Stay away from bonds and cash

Bridgewater Associates founder and co-chairman Ray Dalio is advising investors not own bonds or cash for the foreseeable future.

Speaking earlier this week at the Bloomberg New Economy Forum, the Westport-based hedge fund executive stated central banks “changed the economics of borrowing” through their ability to print money and buy financial assets to meet the challenges created by the Covid-19 pandemic.

“In my opinion, don’t own bonds, and don’t own cash because they’re producing a lot of debt and producing a lot of money to fund it, and so that’s changing the nature of capital flows,” he said.

Dalio’s advocated avoiding bonds as an investment because of the historically low interest rates remain at historic lows, adding that investors have been skeptical over traditional 60/40 portfolio ”“ with bonds in the 40% share ”“ adding that the return on bonds has diminished over the past year. Instead, he advised investors to focus on companies and national economies that are “orderly and will prosper in this environment” while avoiding corporations and nations that appear to be in a state of disorder or worse.