‘Get out of trash. There’s still a lot of money in cash.’


Ray Dalio

If there are investors who believe cash is king amid this market bull run, they ought to think again, suggests Ray Dalio.

The billionaire founder of the hedge fund Bridgewater Associates said during a CNBC interview on Tuesday on the sidelines of the World Economic Forum in Davos, Switzerland, that investors should be buying this market, rather than seeking safety in cash.

“Cash is trash,” said the hedge-fund luminary, who founded Westport, Conn.–based Bridgewater in 1975. The investment-management firm looks after some $160 billion.

Dalio’s comments, to be sure, echo others he has made previously. In fact, at Davos back in 2018, the honcho famously said investors were going to “feel pretty stupid” if they were holding cash as stocks climbed toward records. Markets tumbled soon thereafter on the back of increasing worries about Sino-American trade tensions, but they later recovered.

However, the decline came uncannily close — within a few short weeks — to Dalio’s 2018 cash bashing.

This time, the investor, who is worth $18.7 billion, according to Forbes, says that he’s advocated that investors maintain a diversified portfolio of stocks. He didn’t, however, specify his ideal makeup for a diversified portfolio, which has traditionally been one that holds 60% stocks and the rest in fixed-income assets.

Dalio’s market commentary comes as the Dow Jones Industrial Average

DJIA, -0.52%

 , the S&P 500

SPX, -0.27%

and the Nasdaq Composite

COMP, -0.19%

indexes are trading near all-time highs, though equities were retreating from those record heights early Tuesday.

Recent gains have caused some concern among strategists, analysts and traders that stocks have run up too far and too fast, amid optimism about a so-called Phase 1 trade pact between China and the U.S., and monetary stimulus from the Federal Reserve.

There is some reason to believe, however, that investors have grown too sanguine on equities.

The Bridegewater founder isn’t the only high-profile investor waxing optimistic about stocks. A monthly fund-manager survey conducted by Bank of America found that managers were holding on to their lowest proportion of cash since 2013, even though the percentage of managers expecting global economic growth to improve rose seven percentage points to 36%.

That survey comes as the International Monetary Fund on Monday published an economic forecast that was slightly weaker than one published in October.

Still, Dalio isn’t the only high-profile investor waxing bullish on equities.

Last week, David Tepper, a prominent hedge-fund manager, known for a number of correct calls, told CNBC’s Joe Kernen that he “has been long and will continue that way.” He equated the stock market to a horse and said: “I love riding a horse that’s running.”

Check out the CNBC video below:

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2020-01-21