Ray Dalio: An Economic Downturn Could Lead to Depression-Like Conditions
The Bridgewater founder painted a grim picture of current economic conditions
The Ray Dalio Depression chatter is picking up again. In a LinkedIn post, the hedge fund manager said three factors could hammer investors. He cited high global debt, weak central banks, and trade wars as reasons we could see Depression-like conditions.
Dalio had earlier warned of a “paradigm shift” in the current economic environment that could catch investors on the wrong foot. Dalio recommended investing in gold.
Deflationary forces and central banks
The hedge fund manager warned of deflationary conditions sparked by a surge in production capacity. Dalio said central banks had to tackle this situation by lowering interest rates amidst very dovish monetary conditions.
These factors would “lead to enormous deficits that would be monetized, creating the blow-off in bonds that is the reciprocal of the 1980-82 blow-off in gold,” he said.
Deja vu? Ray Dalio Depression chatter
Dalio said we should draw a parallel from conditions that prevailed in 1935-45, and study the “mechanics of what happened then (and in other analogous times before then) to understand the mechanics of what is happening now.”
In a disconcerting warning Dalio wrote:” “If/when there is an economic downturn, that will produce serious problems in ways that are analogous to the ways that the confluence of those three influences produced serious problems in the late 1930s.”
Dalio’s flagship fund falters
Dalio’s Pure Alpha fund is down 6% thus far during the current year. That compares rather unfavorably with MSCI World Index’s 13% return.
The fund made a call, so far proved incorrect, that interest rates would rise.
Latest Alternative Investment News
Lloyds Banking Group (LON: LLOY), Britain’s biggest mortgage provider, will acquire a minority stake in loyalty app Bink, according to a report by Sky News for an undisclosed amount that…
An iconic property in Bel Air, Los Angeles, designed by internationally acclaimed English architect John Pawson changed hands last month for $133 million and the buyer was Coinbase (NASDAQ: COIN)…
VegTech Invest advisory has launched the VegTech Plant-based Innovation & Climate ETF (Ticker: EATV), its first financial product. The ETF offers exposure to publicly traded companies actively innovating with plants…
Chinese AI company Parametrix.ai has raised $100 million in a Series B round led by Sequoia China and joined by existing investors 5Y Capital and Gaorong Capital. Though the valuation…