Hollis Johnson/Business Insider
- Ray Dalio of Bridgewater Associates said investors would be “pretty crazy to hold bonds” in this period in a Wednesday interview with Bloomberg.
- “If you’re holding a bond that gives you no interest rate, or a negative interest rate, and they’re producing a lot of currency and you’re going to receive that, why would you hold that bond?” Dalio said, referring to government bonds.
- Dalio said he likes gold, stocks, and some corporate bonds in the current environment.
- Read more on Business Insider.
Ray Dalio, who leads Bridgewater Associates, the largest hedge fund in the world, said that investors would be crazy to hold government bonds in the current environment where central banks are printing money and interest rates remain at historic lows.
“If you’re holding a bond that gives you no interest rate, or a negative interest rate, and they’re producing a lot of currency and you’re going to receive that, why would you hold that bond?” Dalio said in an interview with Bloomberg Wednesday.
He continued: “This period, like the 1930-45 period, is a period in which I think you’d be pretty crazy to hold bonds.”
Because central banks around the world are easing monetary policy and printing money, that changes the appeal of bonds, Dalio said. For investors looking for areas that could gain amid the market turmoil, he likes gold, some stocks, and corporate bonds of companies with strong balance sheets. These assets are poised to rise in the current market environment, according to Dalio.
Dalio’s fund was blindsided by the coronavirus pandemic that roiled global markets in February, leading to an epic sell-off. The firm’s flagship Pure Alpha Fund II was down about 20% for the year at the end of March. Dalio said that the fund was hit at the worst possible moment, as it had bet that markets would continue to rise this year.
Since, Dalio has doubled down on his views that “cash is trash,” arguing that it’s a poor investment even during the coronavirus pandemic.
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