Ray Dalio thinks investors shouldn’t skimp on adding gold or crypto to their portfolios. The famed investor is known for his takes on economic and financial risk. He sees gold and bitcoin as hedges against the devaluing of fiat currencies.
Hedge fund icon Ray Dalio hasn’t been feeling particularly upbeat about the prospects for America’s fiscal situation.
The founder of Bridgewater Associates, Dalio has lately been sounding the alarm on a brewing US debt crisis he believes is quickly approaching.
On an episode of the Master Investor podcast over the weekend, he discussed the current economy with host Wilfred Frost, stating that he thinks investors should allocate roughly 15% of their portfolio for either bitcoin or gold due to the currency debasement he sees unfolding as the US dollar is debased by rapid borrowing and deficit spending.
“If you were neutral on everything and optimizing your portfolio for the best return-to-risk ratio, you would have about 15% of your money in gold or bitcoin,” he said.
Dalio added that while he strongly prefers gold over bitcoin, he believes the real economic issue facing markets and investors is the devaluation of fiat money, a phenomenon which occurs in times of both economic excess and geopolitical tension, both of which apply to America’s current situation.
Citing previous historic examples, such as the market spasms of the 1970s, Dalio stressed the importance of holding an effective diversifier in your portfolio and holding 15% as a hedge against.
However, he also made it clear that he doesn’t think investors should “go overweight” in allocating more than 15% to these assets, stating that diversification was more important than trying to play the market.
Other financial experts, such as Ric Edelman, have said that it may make sense for investors to have as much as 40% of their portfolios allocated for crypto. But for someone like Dalio, a more measured approach is on brand.
“15% of a portfolio is a rather small share — after all, the remaining 85% can be invested however you like,” said Arthur Azizov, founder of B2 Ventures. “[Dalio] is simply encouraging people to have a solid foundation, so that in the event of unexpected circumstances, they have a more likely chance of making a profit.”
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