Founder and Co-CIO of Bridgewater Associates Says "The Worst Asset You Can Have is Cash"

Mish

Ray Dalio, the founder, co-chairman, and co-CIO of Bridgewater Associates says we have low volatility in growth, in interest rates, and inflation. In such an environment, the worst asset to own is cash.

Dalio discusses interest rates with Bloomberg’s Tom Keene and David Gura on Bloomberg TV. In the interview, Dalio says the only time one should hold cash is in terrible economic conditions.

There you have it - cash is trash. Nothing can possibly go wrong buying stocks or even Bitcoin at these PEs and prices.

Mike "Mish" Shedlock

Comments (28)
No. 1-28
Maximus_Minimus
Maximus_Minimus

So the smart minds in the hedge fund business figure risk has been eliminated. Hmm, sound like 2007, again.

Realist
Realist

Holding a significant amount of cash, which declines in value due to inflation and low interest rates is rarely a good idea unless you are fairly certain a major decline in the economy is coming. If you listened to many of the "doom and gloom crowd" on this blog you may have been in cash for the last several years and missed out on a lot of asset appreciation.

Casual_Observer
Casual_Observer

Thanks to Mish I got out in March 2007. I reentered the market in 2009. The next crash will happen but it will be like Japan over many years. Ask folks in Japan if they wish they had gotten out at the peak of the Nikkei in the 80s. Most would say yes.

themonosynaptic
themonosynaptic

It totally depends on your timeframe. If you need the money next year, cash is a pretty good idea. If you need the money in 30 years time, cash isn't. Why is this so difficult?

caradoc-again
caradoc-again

.pion. . Dali

caradoc-again
caradoc-again

. assumption . allocated cash assumes Dali

RobinBanks
RobinBanks

Strange, because the first thing they teach you about business is that cash is king. I'm sure Ray has $50 dollars in his current account like so many Americans and Brits.

MaxBnb
MaxBnb

"I hate cash," says the Berkshire Hathaway chairman and CEO. "But it's a holding position until you find something else."
$90 billion

RB2
RB2
madashellowell
madashellowell

We all attempt to live by some principles, and the one thing common with most principles is that they seldom are profitable over any short period of time. The geniuses who will cast their future with any speculation scheme simply to prove how "smart" they are, are simply afraid to not do so will show them to be simpletons like so many others. What we must recognize i the very nature of speculation is wealth redistribution, not production or creation of wealth. Those buying bitcoin are betting that they will increase in value relative to the dollar. Winners and losers. The same for stocks, bonds, commodities or much of anything else.

madashellowell
madashellowell

While the smart people are seemingly profiting they seem completely unaware that the rest of us are NOT. They see themselves as simply protecting their wealth and REFUSE to acknowledge that it is THEIR actions that are actually destroying everyone else's "competing" assets. Why is cash devaluing relative to crypto? What would crypto be worth if people simply did not buy it? It's not like there is any natural DEMAND for crypto, stocks, bonds, etc. They strip value away from other assets through their appreciation.....the soaking up of value from any relative asset...the dollar. WE are doing this, not government or Shatoshi or anyone else. If the dollar is a poor investment, it is because a portion of our society has decided to abandon it....and not simply for protection but for PROFIT. Everyone else is the dumbass, right? Meanwhile assets values are diverging, further destroying those simply working for a living and trying to make their mortgage payments and subprime debt.

madashellowell
madashellowell

You see? I do NOT want to feel SMART when to do so DELIBERATELY destroys everyone else. Lets just stop pretending it's about being smart and admit that it is simple GREED. Principles are expensive and so can be the LACK of principles.

Boot6761
Boot6761

no one ever went broke taking a profit...its times like these when the smart money is starting to get out while Main Street is being encouraged to get in...have not heard much from John Paulson these days...telling everyone to buy the investment he and Goldman Sachs were shorting...When people like Ray start writing books and David Tepper is saying how much potential there is in the market...I start to get cautious....

Medex_Man
Medex_Man

"Vanity is definitely my favorite sin" -- Satan

madashellowell
madashellowell

"Taking" a profit? How about EARNING a profit? There IS a difference. Taking a profit is derived from removing wealth from someone else, redistribution. Earning a profit is actually providing benefit to others and being paid for it, NOT selling them something you bought cheaply for profit.

madashellowell
madashellowell

When the "smart" people are getting out, who are they selling to, the dumb people? That's got to feel really GOOD. Right? Suckers? Muppets? Losers? Winning?

madashellowell
madashellowell

No moral hazard here, is there?

WildBull
WildBull

Investing in stocks and bonds is not destructive to anyone. Sale of stocks and bonds finances capital appreciation and BUILDS the economy. Short term buying and selling is just another form of gambling. The second become popular when the former stops working.

Snake
Snake

Guess, I'll give away all my money. Doh! Actually, it's in corp. grade bonds and doing well.

RonJ
RonJ

"Dalio says the only time one should hold cash is in terrible economic conditions." That sounds fine except for 50% crash, 50% crash. How big is the next crash? What will be the next crash? I remember one day walking into the edit bay and the DOW was down 1,000 points- just like that. It was the day of the flash crash. Some stocks had crashed to ZERO- no bid. It is easy for Dalio to sit in front of a mic with the DOW at 23,000 and say cash is trash- except, but people lose trust in something when it is turned into a huge financial fraud.

Medex_Man
Medex_Man

For almost everyone in the USA, your hard earned money is going to be spent on Obamacare, illegal immigrants, and improving the lifestyles of corrupt politicians. You have nothing to invest -- not in cash or stocks or bonds or anything else. Net net, Americans are sinking deeper and deeper into debt.

PS - Bridgewater was just given a MASSIVE tax break by the state of CT, because Dalio bought himself the outgoing governor. Unless you are in a position to buy a governor yourself, its best you don't act like you are in the same boat as Dalio

RonJ
RonJ

"Investing in stocks and bonds is not destructive to anyone." It is when the market crashes. What happened to GM stock and bond holders? Since 2009, companies have bought back how many billions in stock and how has that helped build the economy? Also, how much debt do these companies have from buying back billions of dollars worth of stock? Debt leveraged stock buy backs.

truthseeker
truthseeker

Cash has been trash for the last 8 years but that doesn't mean it will be so tomorrow. Debt, leverage, bonds, stocks and bitcoin are the places to be. Normally bull markets end in dramatic fashion with extreme volatility so that will be the warning to get out. I said this the other day "what if this time is different," This phrase in and of itself is a contrary indicator meaning things will be the same as always so this old bull will end the same way as always but I wonder. What if something so horrific happens that shuts down all the markets and the banks in the world. At some point governments the world over will force their central bankers to do whatever it takes-that means provide liquidity-to get the banks and the markets open. Once the printing press gets started bond markets won't just collapse, they will cease to exist. It seems to me that the two biggest things pushing these markets up are low interest rates and debt. I admit this is very dark but it is all directly related to cultural decadence of drug and porn addiction, weak leadership, corruption and the loss of traditional values and the rule of law.

Ambrose_Bierce
Ambrose_Bierce

Not what he said, he said there are times when cash is the best investment, such as the great depression when even a savings account in a bank was not safe, and just about any bear market where stocks lose value over an extended period. the penultimate digital currency will be transaction only, which means holding money will no longer be possible, which to my thinking would make gold the first and last place to park assets.

Musashi
Musashi

I worked in fiance for +20 years, but happily escaped it. Reading and listening to people like Ray used to interest me, now it annoys me. When he talks about volatility, inflation and trashy cash, this is just his way of saying he doesn't give a crap about normal Americans--just his own portfolio, fame, and glory. Why these charlatans and crony capitalists are given a platform to spew their anti-civilization rhetoric is beyond me.

Pater_Tenebrarum
Pater_Tenebrarum

What Dalio neglects to mention: someone always has to hold all the cash balances that exist, just as someone has to hold all the shares that exist. There is no mysterious Wall Street Aether in which "unowned" cash or stocks float about. Thus the investor class as a whole can never escape a bear market; and someone will always be the owner of all that trashy cash. If he is right, and cash is trash, then he is really saying: "you have to find some idiot who hasn't heard about this yet and persuade him to take it off your hands in exchange for his much more valuable Netflix shares". If he is wrong, you will end up as the last or perhaps the penultimate greater fool. No-one can know for sure - but we can certainly make a few educated guesses. My guess is pretty much the opposite of Dalio's.

ttffrun
ttffrun

Cash is trash until it is not and by that time cash (hard cash, digital or anything that comes close to liquid) will not just be king - it will be the emperor.

surfaddict
surfaddict

can I pay off debt with cash? Debt is garbage


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