Ray Dalio sees a pivotal year ahead where forces could collide in 2024.
Speaking last month in Davos, Ray Dalio reiterated the five forces which repeated through history; the debt money, economic force, internal and external conflict force, which includes geopolitical struggle for the control of the world order.
Ray Dalio noted climate change as another factor disrupting food supplies and trade and killing more people than technology.
“So we have all of these forces coming together in 2024,” he said.
“we have all of these forces coming together in 2024”
Ray Dalio noted that each force impacts and influences other forces.
“The presidential election will affect the markets, and then the markets will also affect the amount of money we are spending on war,” he said.
“I think 2024 will be a pivotal year,” he said.
What is his investment state of play as Ray Dalio sees a pivotal year ahead?
Ray Dalio recommends a diversified portfolio in terms of asset class and country location.
“You can’t look at the market as a whole. You have to look at the pieces and the different countries.
I think the inflation rate is in the vicinity of 3 and 3.5%, then you have to add in a yield, which is between more than 2%, and then you have got to look at geopolitics. I don’t think those risks are priced into the market,” he said.
“You can’t look at the market as a whole. You have to look at the pieces and the different countries”
Ray Dalio sees a pivotal year with the US presidential election scheduled to take place in November
He thinks both candidates, Biden and Trump, could be detrimental to the markets.
“Our big worry is whether both sides accept the decisions of the elections,” he said.
Even today, the Supreme Court rules that each will live the lives that the others want them to live.
We are coming into an environment where politics has become a political weapon. So now we are having fights between the extreme left and right. There is conflict between the left and right,” he said.
“A neutral portfolio doesn’t mean you move closer to cash because cash is a trashy investment over a long period” – Ray Dalio
Ray Dalio sees a pivotal year with domestic US politics
“Do we get through this where we have a sensible government or irreconcilable differences?”, asked Ray Dalio
Ray Dalio sees a pivotal year, so how is he playing it?
He thinks markets are not super attractive or unattractive, aside from politics. “So you are going to come into an environment where there will be greater risk,”
Ray Dalio recommends investors structure their portfolios towards a neutral position.
“A neutral portfolio doesn’t mean you move closer to cash because cash is a trashy investment over a long period,” he said.
Of course, Dalio didn’t spell out how to structure a neutral portfolio because he wants you to buy into his latest neutral portfolio fund.
But we can only assume a neutral portfolio means diversification of assets where risks cancel each other out in the portfolio with some precious metals if it all goes pear-shaped.