Avoid Cash, Think in Inflation-Adjusted Dollars, Crypto Helps Diversify – Featured Bitcoin News

Billionaire Ray Dalio, the founder of the world’s largest hedge fund, Bridgewater Associates, has shared his investment strategy with cryptocurrency as part of his portfolio. Because inflation eats away cash, he warned that cryptocurrency is the worst form of investment.

Ray Dalio’s Investment Advice: Cash Is Depreciating, Diversify Portfolio Well

Ray Dalio is the founder of Bridgewater Associates. He shared his investment strategies last week. He currently serves as Bridgewater Associates’ chairman and co-chief investment officer. His firm’s clients include endowments, governments, foundations, pensions, and sovereign wealth funds.

In an interview with Yahoo Finance, published Friday, he explained that he views cryptocurrency “as an alternative money in an environment where the value of cash money is depreciating in real terms.” Referring to bitcoin, he opined:

I think it’s very impressive that, for the last 10, 11 years, that programming has still held up. It hasn’t been hacked and so on. It has a high adoption rate.

When asked how concerned he is about inflation, Dalio replied: “I’m significantly concerned about it. Because the amount of money and credit that has to be produced and is budgeted, it is a large increase.”

The billionaire noted that “cash is trash,” adding: “Cash, which most investors think is the safest investment, is, I think, the worst investment, and that is important because it loses buying power.” He pointed out that “cash, like this year, you’ll lose 4% or 5% to inflation. And so pay attention to those, because I believe that that’ll be the worst investment.” The Bridgewater Associates boss continued:

The one thing I would say to investors is don’t judge anything in your returns or your assets in nominal terms, in terms of how many dollars you have. Consider it as inflation-adjusted dollars.

Dalio then spoke about diversification. “I’m very big on diversification,” he said, adding that “The important thing is to diversify one’s portfolio well, because we know from the surprises in the balance.”

He detailed: “We also know that those asset classes, on average, significantly outperform and will significantly outperform cash and that they move between each other in a way that has to do with correlations because when things go down — when the economy goes down — then bonds will do better than stocks, and so on and so forth.”

According to the billionaire, cryptocurrency like bitcoin can diversify portfolios. “I view crypto as a small piece of that. And the message is cash is going to be a problematic asset, and hold that other diversified portfolio of assets,” he added, stressing:

Look at it as a whole, not in nominal terms. To truly diversify your portfolio, diversification must include international diversification to countries.

Concerning cryptocurrency, he has previously said that he is a bitcoin owner (BTC). He reportedly stated that he now also has ether (ETH) “I don’t own a lot of it,” he said without revealing which cryptos or how much he owns.

Marketwatch interviewed Bridgewater Associates’ founder last week.

I’m not an expert on bitcoin, but I think it has some merit as a small portion of a portfolio.

“Bitcoin is like gold, though gold is the well-established blue-chip alternative to fiat money,” he further opined.

Nonetheless, Dalio warned: “Bitcoin has a number of other issues. It will likely be banned in certain places if it poses a danger to the governments. However, it may not be banned in every place. I don’t believe that central banks or major institutions will have a significant amount in it.”

What do you think about Ray Dalio’s investing advice and comments about bitcoin? Please leave your comments below.

Kevin Helms

Kevin, a student of Austrian Economics and evangelist since 2011, discovered Bitcoin. He is interested in Bitcoin security and open-source software, network effects, and the intersection of cryptography and economics.