Ray Dalio analyses COVID-19 from a well-seasoned investor’s mindset in his latest post entitled, “My Thoughts About The Coronavirus.” Ray Dalio, nickname hedge fund king, founder, and CEO of the world’s largest hedge fund Bridgewater needs no introduction.
Ray Dalio analyses COVID-19 makes compelling read, particularly for those interested or active in the world of investing.
“It will most likely lead to an uncontained global health crisis that could have high human and economic costs”
Ray Dalio analyses COVID-19 from three perspectives, the virus, the economic impact, and the financial impact
“They will all be affected by highly emotional reactions” wrote Ray Dalio.
Ray Dalio analyses COVID-19 from a virus perspective and he believes that the black swan event is likely to lead to a global pandemic.
“It will most likely lead to an uncontained global health crisis that could have high human and economic costs” wrote Ray Dalio. Indeed, COVID-19 is already a global pandemic with the death toll passing 3,000 worldwide as the second person dies in the US.
But COVID-19 contagion and its impact will vary according to location, political system, and the population’s willingness to follow orders from the authorities, according to Ray Dalio.
“I believe that China will excel at this”
RAY DALIO (on containing the spread of COVID-19)
So Ray Dalio analyses COVID-19 and he suggests that from a virus perspective liberal democracies, free movement of people, non-authoritarian governments, underfunded health systems are most at risk from the virus
In other words, a democratic dictatorship (which sounds like an oxymoron) is likely to come up trumps in the brave new world of COVID-19.
COVID-19 could become a silent killer of liberal democracies, free movement of people, and non-authoritarian governments. If so, we could be willingly sliding down the slippery slope into authoritarian ultra-nationalism, fascism
But let’s keep with the plot, that Ray Dalio analyses COVID-19 and he suggests that China’s democratic dictatorship style is likely to better contain the spread of COVID-19.
“I believe that China will excel at this, major developed economies will be less good but OK, and those who are weaker than them in these respects will be dangerously worse” wrote Ray Dalio.
Ray Dalio analyses COVID-19 from an economic perspective and he suggests that it will have a significant short term impact followed by a rebound.
“It seems to me that this is one of those once in 100 years catastrophic events that annihilate those who provide insurance against it and those who don’t take insurance to protect themselves against it” – Ray Dalio
Ray Dalio can’t say for sure that COVID-19 won’t have a long term impact
Ray Dalio notes the already dysfunctional monetary policy, widening wealth gap and polarized politics is already stressing the system to near breaking point.
But Ray Dalio analyses COVID-19 from a market impact too and this is where his work makes timely reading. COVID-19 will further weigh on the corporate earnings recession as revenues and guidance are cut, although the billionaire hedge fund manager also sees a V shape recovery. “The actions taken to curtail business activities will certainly cut revenues until the virus and business activity reverse which will lead to a rebound in revenue. That should (but won’t certainly) lead to V- or U-shaped financials for most companies” he wrote.
“During the drop, the market impact on leveraged companies in the most severe” he added.
So Ray Dalio analyses COVID-19 and it is summed up in a nutshell below.
“It seems to me that this is one of those once in 100 years catastrophic events that annihilate those who provide insurance against it and those who don’t take insurance to protect themselves against it” he said.