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'Cash is trash', says billionaire investor Ray Dalio


Investors shouldn’t miss out on the strength of the current stock market, according to the head of one of the world’s largest hedge funds Ray Dalio. He advises people to dump cash for a diversified portfolio.

“Everybody is missing out, so everybody wants to get in,” Dalio told CNBC, referring to people who have been reluctant to put money in stocks.

“You have to have balance… and I think you have to have a certain amount of gold in your portfolio,” said the founder of Bridgewater Associates.

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Dalio has been bullish about the yellow metal, advocating for nearly three years that between five and 10 percent of investors’ portfolios should be in gold.

He has warned that investors should get out of cash, as central banks continue to print money. “Cash is trash. Get out of cash. There’s still a lot of money in cash,” he said.

The billionaire also warned against more speculative investments like bitcoin. “There are two purposes of money, a medium of exchange and a store hold of wealth, and bitcoin is not effective in either of those cases now,” he said.

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Dalio’s firm, Bridgewater, manages about $160 billion. He has been repeatedly calling for investors to avoid staying on the sidelines of the stock market and in 2018 declared that those holding cash were “going to feel pretty stupid” for missing the market’s run-up.

Although the American investor said that he sees a low chance of a recession in 2020, he warned investors to look out further ahead. The risks arise from current monetary policy, which will be less effective when a downturn does come.

“At a point in the future, we still are going to think about what’s a storeholder of wealth. Because when you get negative-yielding bonds or something, we are approaching a limit that will be a paradigm shift,” he said.

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