Though fairly skeptical of cryptocurrency as an investment, the world’s most renowned hedge fund manager Ray Dalio finds digital assets “interesting”. He also holds a small amount in his diversified portfolio.
Dalio believes the world is at a stage where we are going to see different types of money. On The David Rubinstein Show on Bloomberg, he highlighted that some governments will not legally accept cryptocurrencies, particularly bitcoin, as its market capitalization is too large. The hedge fund manager feels crypto is getting too much attention for nothing.
Being skeptical and bullish at the same time, Dalio thinks the Federal Reserve has been too slow to implement a monetary policy. He even blamed the recent stock market’s losses on the Fed’s plans to raise interest rates later this year. Dalio says higher rates will only make borrowing more expensive and reduce the present value of future cash flows. Asset prices have already plunged as investors face an era of tighter fiscal and monetary policies.
Dalio said gone are days when the governments dumped money and there was not much inflation, and no tightness. Coming back to cryptos, the hedge fund manager pointed out that digital assets are vulnerable, trackable and some governments are banning them already. He believes traditional currencies will face more competition from digital versions and others alike.
Dalio also warned that “cash is trash”. He said the most important thing an investor could do is not stay in cash due to threats of taxes and inflation along with negative real rates.