Bridgewater Associates’ Ray Dalio believes hiding in cash bodes ill in today’s environment, but buying stocks could be worse. “Of course, cash is still junk,” Dalio said Tuesday on CNBC’s “Squawk Box” at the World Economic Forum in Davos. “Do you know how quickly you lose purchasing power in cash? Equities are trashier.” The founder of the world’s largest hedge fund said having a global and well-diversified portfolio in this market is important, and real assets – physical assets like real estate, energy and infrastructure – should be considered by investors in an inflationary environment. “We’ve moved into an environment where assets that perform well, almost like the ’70s, are real assets. Assets with real returns are the best investments in a number of ways,” Dalio said. The Federal Reserve and other central banks around the world have started to roll back extraordinarily accommodating Covid-era monetary policies, which could create imbalances in markets, the billionaire investor said. “The Federal Reserve will sell. sell individuals. Foreigners are selling and the US government is selling because it needs to fund its deficit,” Dalio said. “So there will be a supply-demand problem. That means there’s going to be a bottleneck.” Dalio added that investors haven’t positioned themselves well enough to hedge against decades of inflation and should be looking at different assets to diversify their portfolios, including bitcoin. “I don’t think the world is managing appropriately the part of their portfolio that should be inflation-linked assets. These are institutions and individuals,” Dalio said. “Bitcoin has made a tremendous achievement over the past 11 years. It’s a tiny percentage of my portfolio. I think you need to look at the broader range of assets that serve this purpose.”
