When Ray Dalio says Cash is Trash, and Bonds are Crazy…

by paperlevel

I just want to make some sense of Ray Dalio’s recent comments:

Bridgewater Associates’ Ray Dalio, founder of the world’s largest hedge fund, said investors would be “crazy” to hold government bonds now and possibly for years because of money-printing by central banks to rescue the global economy.

“This period, like the 1930-45 period, is a period in which I think you’d be pretty crazy to hold bonds,” Dalio said Wednesday on the Bloomberg Invest Talks webcast. “If you’re holding a bond that gives you no interest rate, or a negative interest rate, and they’re producing a lot of currency and you’re going to receive that, why would you hold that bond?”

How does this square with Dalio’s famous “all weather” portfolio that is 70% government bonds? Is that portfolio no longer valid? Or are bond funds in particular exempt from his sentiments in the above quote?