Ray Dalio is saying that cash is not a safe place right now despite heightened market volatility

Ray Dalio is saying that cash is not a safe place right now

December 2, 2021: -Bridgewater Associates’ Ray Dalio stood by his belief that cash is not the place to be despite the market volatility triggered by the new Covid omicron variant.

The billionaire investor said it’s also essential to be in a safe, well-balanced portfolio during turbulent times.

“You can lessen your risk without making any difference in your returns. You will not market-time this. Even if you were a great market timer, the happening things can change the world, so it then changes what could be priced into the market,” Dalio said.

The omicron strain of the coronavirus, identified in South Africa, rattled the stock market on Black Friday after the World Health Organization labeled it a “variant of concern.” The Dow Jones Industrial Average slid 900 points on Friday to suffer its worst day since October 2020. Stock futures indicated a big down day following a rebound Monday on Wall Street as investors monitored the ongoing health crisis.

The stock market rebounded swiftly from the pandemic bottom in March 2020 thanks to the massive fiscal and monetary stimulus measures the government and the Federal Reserve orchestrated to support the economy. Although the excess money supply in the system could create specific economic and political problems, Dalio said.

“You can’t raise living standards by increasing the amount of money in credit in the system due to that’s just more money chasing the same amount of goods,” he added. “It will affect financial markets in the ways we’ve seen, and it will affect the inflation rate, and it won’t significantly raise living standards. As inflation then started to bite, it has political consequences,” he further said.

A key inflation gauge spiked in October, accelerating at its fastest pace since the early 1990s. The personal consumption expenditures price index excluding food and energy, a measure followed by Federal Reserve policymakers, surged to 4.1%.

The central bank is wrestling with inflation that has been more aggressive and persistent than anticipated. Officials have said they believe inflation is when they can start gradually reducing the amount of monthly stimulus they are providing through bond purchases.

“What we are seeing happen has played out many times in history; it’s like watching the movie over again,” Dalio said.

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