Patterson is one of Dalio’s right-hand men and pointed out that at Bridgewater they are “absolutely” convinced that they must have raw materials in their portfolio.
“We don’t know if bonds, as an investment diversifier, are dead or in a coma. I think they are probably in a coma,” Patterson said. For this reason, Dalio’s team believes that in a diversified portfolio, commodities should now occupy the space that was reserved for bonds.
An economic disaster?
For the CEO of Bridgewater Associates, there is an imminent risk of economic disaster. Among the reasons, he believes that it could deepen the trade war between the United States and China. And, if not, “something else will,” says the billionaire.
“For a solid portfolio, the most important thing is to evaluate your current investment strategy, if you have one. You have to make sure that the money is not all in one place,” added the investor.
In that sense, he gave two key tips to cope with this volatile context:
1. Assess financial risks: “If you worry, you don’t have to worry.. And if you don’t worry, then you have to worry,” says Dalio. Worry drives you to take a close look at personal risks and encourages you to take action on them.
He also advised measuring financial risks in inflation-adjusted terms, “rather than the value of the current dollar.”
“If you have cash in a savings account, you’re probably accumulating value at a different rate than your other investments, since inflation taxes it,” he explained.
In the midst of chaotic times, he added, you need your emergency savings to be financed by a safe and well-diversified investment portfolio.
2. Save and diversify
“Cash is not a safe investment”Dalio stressed as inflation hit a 31-year high in the US. Instead, it’s best to build as diverse a portfolio as possible: include inflation-indexed bonds — a move Dalio recommended over regular bonds. , physical assets like gold, and digital assets like cryptocurrencies.
In May, Dalio had confessed to CoinDesk that he personally owns a “small amount” of bitcoins, despite having spent years criticizing cryptocurrencies.
“It’s a hedging bet, made solely for the purpose of diversification. I urge those who like bitcoin, or those who like gold, not to make an all-or-nothing decision,” he said. dialogue with CNBC.
Source: Ambito
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