Dalio discusses interest rates with Bloomberg’s Tom Keene and David Gura on Bloomberg TV. In the interview, Dalio says the only time one should hold cash is in terrible economic conditions.
There you have it – cash is trash. Nothing can possibly go wrong buying stocks or even Bitcoin at these PEs and prices.
Mike “Mish” Shedlock
can I pay off debt with cash? Debt is garbage
Cash is trash until it is not and by that time cash (hard cash, digital or anything that comes close to liquid) will not just be king – it will be the emperor.
What Dalio neglects to mention: someone always has to hold all the cash balances that exist, just as someone has to hold all the shares that exist. There is no mysterious Wall Street Aether in which “unowned” cash or stocks float about. Thus the investor class as a whole can never escape a bear market; and someone will always be the owner of all that trashy cash. If he is right, and cash is trash, then he is really saying: “you have to find some idiot who hasn’t heard about this yet and persuade him to take it off your hands in exchange for his much more valuable Netflix shares”. If he is wrong, you will end up as the last or perhaps the penultimate greater fool. No-one can know for sure – but we can certainly make a few educated guesses. My guess is pretty much the opposite of Dalio’s.
I worked in fiance for +20 years, but happily escaped it. Reading and listening to people like Ray used to interest me, now it annoys me. When he talks about volatility, inflation and trashy cash, this is just his way of saying he doesn’t give a crap about normal Americans–just his own portfolio, fame, and glory. Why these charlatans and crony capitalists are given a platform to spew their anti-civilization rhetoric is beyond me.
Not what he said, he said there are times when cash is the best investment, such as the great depression when even a savings account in a bank was not safe, and just about any bear market where stocks lose value over an extended period. the penultimate digital currency will be transaction only, which means holding money will no longer be possible, which to my thinking would make gold the first and last place to park assets.
“Investing in stocks and bonds is not destructive to anyone.” It is when the market crashes. What happened to GM stock and bond holders? Since 2009, companies have bought back how many billions in stock and how has that helped build the economy? Also, how much debt do these companies have from buying back billions of dollars worth of stock? Debt leveraged stock buy backs.
For almost everyone in the USA, your hard earned money is going to be spent on Obamacare, illegal immigrants, and improving the lifestyles of corrupt politicians. You have nothing to invest — not in cash or stocks or bonds or anything else. Net net, Americans are sinking deeper and deeper into debt.
PS – Bridgewater was just given a MASSIVE tax break by the state of CT, because Dalio bought himself the outgoing governor. Unless you are in a position to buy a governor yourself, its best you don’t act like you are in the same boat as Dalio
“Dalio says the only time one should hold cash is in terrible economic conditions.” That sounds fine except for 50% crash, 50% crash. How big is the next crash? What will be the next crash? I remember one day walking into the edit bay and the DOW was down 1,000 points- just like that. It was the day of the flash crash. Some stocks had crashed to ZERO- no bid. It is easy for Dalio to sit in front of a mic with the DOW at 23,000 and say cash is trash- except, but people lose trust in something when it is turned into a huge financial fraud.
Guess, I’ll give away all my money. Doh! Actually, it’s in corp. grade bonds and doing well.
Investing in stocks and bonds is not destructive to anyone. Sale of stocks and bonds finances capital appreciation and BUILDS the economy. Short term buying and selling is just another form of gambling. The second become popular when the former stops working.
No moral hazard here, is there?
When the “smart” people are getting out, who are they selling to, the dumb people? That’s got to feel really GOOD. Right? Suckers? Muppets? Losers? Winning?
“Taking” a profit? How about EARNING a profit? There IS a difference. Taking a profit is derived from removing wealth from someone else, redistribution. Earning a profit is actually providing benefit to others and being paid for it, NOT selling them something you bought cheaply for profit.
“Vanity is definitely my favorite sin” — Satan
no one ever went broke taking a profit…its times like these when the smart money is starting to get out while Main Street is being encouraged to get in…have not heard much from John Paulson these days…telling everyone to buy the investment he and Goldman Sachs were shorting…When people like Ray start writing books and David Tepper is saying how much potential there is in the market…I start to get cautious….
You see? I do NOT want to feel SMART when to do so DELIBERATELY destroys everyone else. Lets just stop pretending it’s about being smart and admit that it is simple GREED. Principles are expensive and so can be the LACK of principles.
While the smart people are seemingly profiting they seem completely unaware that the rest of us are NOT. They see themselves as simply protecting their wealth and REFUSE to acknowledge that it is THEIR actions that are actually destroying everyone else’s “competing” assets. Why is cash devaluing relative to crypto? What would crypto be worth if people simply did not buy it? It’s not like there is any natural DEMAND for crypto, stocks, bonds, etc. They strip value away from other assets through their appreciation…..the soaking up of value from any relative asset…the dollar. WE are doing this, not government or Shatoshi or anyone else. If the dollar is a poor investment, it is because a portion of our society has decided to abandon it….and not simply for protection but for PROFIT. Everyone else is the dumbass, right? Meanwhile assets values are diverging, further destroying those simply working for a living and trying to make their mortgage payments and subprime debt.
We all attempt to live by some principles, and the one thing common with most principles is that they seldom are profitable over any short period of time. The geniuses who will cast their future with any speculation scheme simply to prove how “smart” they are, are simply afraid to not do so will show them to be simpletons like so many others. What we must recognize i the very nature of speculation is wealth redistribution, not production or creation of wealth. Those buying bitcoin are betting that they will increase in value relative to the dollar. Winners and losers. The same for stocks, bonds, commodities or much of anything else.
The song is a laugh…link to genius.com.
“I hate cash,” says the Berkshire Hathaway chairman and CEO. “But it’s a holding position until you find something else.”
$90 billion
Strange, because the first thing they teach you about business is that cash is king. I’m sure Ray has $50 dollars in his current account like so many Americans and Brits.
. assumption . allocated cash assumes Dali
.pion. . Dali
It totally depends on your timeframe. If you need the money next year, cash is a pretty good idea. If you need the money in 30 years time, cash isn’t. Why is this so difficult?
Thanks to Mish I got out in March 2007. I reentered the market in 2009. The next crash will happen but it will be like Japan over many years. Ask folks in Japan if they wish they had gotten out at the peak of the Nikkei in the 80s. Most would say yes.
So the smart minds in the hedge fund business figure risk has been eliminated. Hmm, sound like 2007, again.