Ray Dalio Thinks Investors Aren’t Ready for the Next Bear Market

Ray Dalio, chair and chief investment officer of Bridgewater Associates, feels that stock investors aren’t prepared for the next bear market. According to CNBC, in a discussion at the Greenwich Economic Forum, Dalio said he doesn’t “think there’s much to protect investors” during a downturn. He added that “the world by and large is leveraged long.”

Dalio suggested investors “should have a strategic asset allocation mix.” He believes that the current bull market has been partly propelled by lower interest rates. As the Fed is in tightening mode, the upside could be limited. He believes that the Fed will have to look at asset prices before economic activity (SPY) (DIA). Dalio, however, likes China (FXI).

Ray Dalio also likes gold. His hedge fund maintained its stake in the SPDR Gold Shares ETF (GLD) and the iShares Gold Trust ETF (IAU) during Q3 2018 despite lower gold prices. Bridgewater Associates kept its holdings at 3.91 million GLD shares and 11.31 million IAU shares in the third quarter. As we’ve discussed, Dalio recommends that investors’ portfolios hold 5%–10% gold. In a LinkedIn post in August last year, he wrote, “If you don’t have 5-10% of your assets in gold as a hedge, we’d suggest that you relook at this. Don’t let traditional biases, rather than an excellent analysis, stand in the way of you doing this.”