“ “I believe that increasingly there will be questions by bondholders who are receiving negative real and nominal interest rates, while there is a lot of printing of money, about whether the debt assets they are holding are good storeholds of wealth. I believe that cash, which is non-interest-bearing money, will not be the safest asset to hold.” ”— Ray Dalio
That’s billionaire investor Ray Dalio making the case that U.S. dollars, perhaps, any currency, will prove a losing bet in this new era of COVID-19.
During a question-and-answer session on social-media platform Reddit, the founder of hedge fund Bridgewater Associates underscored a point that he’s made in the past, but one that has more resonance as the infectious disease that was first identified in Wuhan, China in December wreaks havoc on global economies and forces central banks and governments to unfurl an array of unprecedented fiscal and monetary stimulus efforts. Those measures are intended to help limit the severity of an economic downturn that looks certainly to amount to a world-wide recession.
Back in late January, in an interview with CNBC, Dalio made a similar call, saying “cash is trash. Those comments were the subject of widespread scorn as stocks tumbled and recent reports said that his flagship fund — the Pure Alpha Fund II — was down 20% on the year.
The Dow Jones Industrial Average DJIA, +3.44%, the S&P 500 SPX, +3.40% and the Nasdaq Composite Index COMP, +2.58% are between 18% and 21% below their February record highs.
But Dalio defended his skepticism toward cash...