Billionaire investor Ray Dalio , founder of the world's largest hedge fund Bridgewater Associates, said he would invest in "hard money" like gold and bitcoin while avoiding debt assets, as most major economies face rising indebtedness problems.
"I believe that there would likely be a pending debt money problem," he said in a speech at a financial conference in Abu Dhabi on Tuesday. "I want to steer away from debt assets like bonds and debt, and have some hard money like gold and bitcoin."
Gold and bitcoin have both been trading near record highs as investors seek hedges against economic uncertainties, geopolitical tensions and new monetary policies. Bitcoin surged past US$100,000 for the first time last week amid US president-elect Donald Trump's welcoming rhetoric towards the digital asset. Hard money refers to a currency backed by a physical commodity like gold and silver, or bitcoin for its stable and controlled supply.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge , our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
He added that the indebtedness seen in the US, China and all major countries except Germany has increased at "unprecedented levels" and the amount will not be sustainable.
"It is impossible for these countries to be able to not have a debt crisis in the years ahead that will lead to a great decline of [money] value," Dalio said.
"Debt, money and the economy" represent one of five big forces he has identified that will drive "just about everything", he said.
The other forces include countries' internal political order, driven by wealth and value gaps, and external geopolitical order, stemming from power conflicts such as US-China tensions.
"Acts of nature" such as droughts, floods, pandemics and climate change are the fourth category, while the fifth is the invention of new technologies.
Gold and bitcoin are trading near records highs as investors try to hedge economic uncertainties. Photo: Shutterstock alt=Gold and bitcoin are trading near records highs as investors try to hedge economic uncertainties. Photo: Shutterstock>
On disruptive technology, Dalio said he wants to invest in companies that are using it to improve their businesses rather than companies that are selling the most products or services.
Dalio relinquished control of Bridgewater in October 2022, after stepping down as CEO in 2017 and chairman in 2021. His current role involves mentoring the committee that has oversight over the firm's investment strategies.
"Don't get too caught up on the twists and turns of the day-to-day headlines, and instead, think more about the big forces," he said. "Think strategically as well as tactically, taking a global perspective while recognising that what you don't know about the future is more than what you do know."
Diversification and functionality should be built into one's investment strategy to be in a position to deal with threats and opportunities, he added.
Last year, Dalio opened a branch of his family office in Abu Dhabi, the capital of the United Arab Emirates (UAE), in a move to push into the Middle Eastern states that make up the Gulf Cooperation Council.
He praised the organisation of six member states - Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain, and Oman - as a regional centre for investment, as it is "where families can live well and their children could be well educated".
This article originally appeared in the South China Morning Post (SCMP) , the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.