As the founder of $160 billion investment behemoth Bridgewater Associates, Ray Dalio tends to have a fairly good idea of how the market is moving.
So when he comments on macro trends, people tend to listen. And recently, he made a couple of rather pointed statements about cash that have pundits perking up their ears.
Talking to CNBC at the World Economic Forum in Davos, Switzerland, Dalio warned investors to stay out of cash:
Cash is trash... Get out of cash. There's still a lot of money in cash.
Generally, Dalio is suggesting that people stop holding onto cash and instead diversify into other assets as part of a "global and well-diversified portfolio."
He added to this proclamation by saying the Fed won't be able to help stimulate the economy by adjusting rates:
We're going to have larger deficits which we're going to print money for... At a point in the future, we still are going to think about what's a store holder of wealth. Because when you get negative-yielding bonds or something, we are approaching a limit that will be a paradigm shift.
Business Insider extended Dalio's commentary, saying, "Dalio warned the value of hard currency would be eroded by a weaker dollar and growing money supply."
So if holding cash isn't going to be a good idea, it's a good idea to consider adding some resilience to your portfolio.
Better to Take a Balanced Approach
Dalio added a "zen-like" insight for retirement savers, while also endorsing precious metals like gold as an asset for the future:
You have to have balance ... and I think you have to have a certain amount of gold in your portfolio.
Diversifying with physical assets like gold and silver sure sounds like reasonable advice for retirement savers. So why won't more billionaires speak up about that?
In a recent 5 Min. Forecast from Agora Financial, Jim Rickards offered one possible reason more billionaires aren't offering pointed commentary about how much gold they have in their own "balanced" portfolios:
Of course, they won't say so on TV because they don't want to spook retail investors into dumping their stocks and bonds.
So in spite of what billionaires may or may not be telling us, it's probably better to take a balanced approach with our own retirement portfolios.
After all, Dalio believes that the next recession is looming, saying, "There's a good probability in the next [presidential] term you'll get a downturn."
And Scott Minerd of Guggenheim Partners agrees with this latter sentiment, commenting that defaults and downgrades will compound the economic trouble potentially arriving in the near-term: "The timing is hard to predict, but this reminds me a lot of the lead-up to the 2001 and 2002 recession."
"Balance" in your portfolio sounds more and more like a good idea.
Don't Wait for the Next ‘Billionaire Panic’
When billionaires like Minerd and Dalio sound the alarm, it's usually a good idea to listen. But it isn't a good idea to wait until they sound the next one.
The time to consider "adding balance" to your retirement portfolio is now. Examine your risk exposure, including the asset classes in your retirement.
Then consider adding physical assets like precious metals to the mix. There's a reason the ultra-wealthy are keeping their own stores of gold and silver. Perhaps you should consider joining them.
Peter Reagan is a financial market strategist at Birch Gold Group. As the Precious Metal IRA Specialists, Birch Gold helps Americans protect their retirement savings with physical gold and silver. Discover more by clicking here now.
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