Ray Dalio underplays the coronavirus in his latest media appearance.
Ray Dalio, founder of the world’s largest hedge fund was among the first high-profile fund to seek investment opportunities in China.
Here are just a few snippets of a piece we ran entitled, Ray Dalio Seeks Alpha in China dated August, which makes timely reading.
“China is now number one in fintech, number 3 in AI and machine learning, number 2 in wearables, number 2 in virtual reality, number 2 in educational technology, number 2 in autonomous driving” said Ray Dalio.
“They are running fast to be number one in those industries” added Ray Dalio.
“Ray Dalio, founder of the world’s largest hedge fund was among the first high-profile fund to seek investment opportunities in China”
China’s spectacular rise in the past could be why Ray Dalio underplays the coronavirus impact on China’s economy
But that argument is weak. Ray Dalio highlighted the view, in August of last year, that the next century would be China’s. Moreover, he implied that the deindustrialization of the west, particularly the US would continue.
“The evolution of China has been quite something” said Ray Dalio.
Per capita income since then (1984) increased by 26 times. The share of world GDP went from 2% to 22% which is comparable power to the US” said Ray Dalio.
“We will be looking at a very different world, in 5, 10, 15 years a very different US, Europe, Japan, and the emerging market will have big changes too” said Ray Dalio.
“Not investing in China is very risky” added Ray Dalio back in August.
“The evolution of China has been quite something”
So Ray Dalio remains bullish on China, despite the US-China trade dispute, and now Ray Dalio underplays the coronavirus
But the coronavirus could be, in the words of David Tepper “a game-changer”, if so it would make having bets on both horses in a race futile. China is currently in a wartime battle with the coronavirus, the country is in lock-down and there is no guarantee that the draconian measures being implemented by China’s Xi Jinping Communist government will work.
What if the coronavirus can be spread by rodents, bird droppings or stray dogs?
So with Wuhan, China’s 11 largest cities being the epicenter of the coronavirus to say that China’s economy is handicapped will probably be the understatement of the year.
From an investor’s standpoint, there are no wins to be made betting on a dying horse.
Ray Dalio was urging investors to have bets on “both horses in a race” back in August.
“we are at the tip of the iceberg” – World Health Organization
Ray Dalio underplays the coronavirus, meanwhile, the authorities are preparing us for the worst-case scenario
Coronavirus cases outside China ‘could be a spark’ for bigger fire, said the World Health Organization (WHO) on February 10. Just a day earlier WHO’s we are at the “tip of the iceberg” comment made world headlines.
Hot on the heels of WHO’s comment the scientific comment went diligently to work trying to figure out the size and shape of that very iceberg. The numbers are apocalyptic with the super spreading virus infecting 60%-80% of the world’s population.
Here come a few concerning figures scribbled on the back of a fag packet, which could also explain why WHO is panicking.
If the virus has a 1% kill rate that means that at the very least 60 million people infected with the virus won’t get to see 2021.
Ray Dalio underplays the coronavirus, meanwhile, China’s Xi Jinping recently said that his nation is battling a mysterious “demon” virus
But China’s Xi Jinping reportedly said that China will be “more prosperous” after the virus too.
So perhaps this is all about creative destruction, maybe that is why Ray Dalio underplays the coronavirus
If this is a worst-case scenario, like Europe’s Black death then in the long run, if we aren’t converted into ash and dust, there will be plenty. Moreover, the government’s number crunchers won’t need to think creatively on how to statistically eliminate the growing army of people left out in the Fourth Revolution economy where humans need not apply for jobs.
“a game-changer” – David Tepper
Ray Dalio underplays the coronavirus because maybe he knows that after Europe’s Black Death plague, Europe’s economy surged.
If you think that this is beginning to feel like the coronavirus game of thrones where those left standing take it all maybe you are bang on the money.
Ray Dalio underplays the coronavirus view is a contrarian one
The coronavirus has made even ardent Wall Street bulls knees tremble.
David Tepper has called it “a game-changer” fearing that this could be the catalyst for at least a 10% drop in stocks from its very high. That is the bullish optimistic view, as there is no need to state the obvious.
“What concerns me most if you did have a downturn” said Ray Dalio. “We are now 11 years in expansion — whether that’s one, two, three years forward, with the larger polarity that exists, the wealth gap and the political gap, I would be more concerned about that” he added.
Ray Dalio underplays the coronavirus could be a very costly mistake
For an early clue on how the coronavirus is causing the global economy to go into free fall take a look at logistic companies and logistic indicators. This is often a good place to go for a heads up on where the global economy is trending. For example, the Baltic Dry Index has collapsed, if this an early warning signal then the global economy could be staring down the double-barrel of a global depression.