Ray Dalio, the founder of Bridgewater Associates and a billionaire investor, has stated that the rapid growth of global debt represents an increasing risk for investors and that more attention should be paid to assets such as gold and bitcoin.
According to Dalio, recent changes in the US Treasury bond market indicate that the long-term 'big debt cycle' has entered its advanced stage. As government borrowing increases, more bonds are entering the market, but investor demand is not growing at the same pace, which puts pressure on interest rates and currencies.
The renowned investor argued that if the debt burden continues to rise, governments may face two difficult options. The first is to maintain high interest rates to increase demand for bonds, thereby suppressing economic growth. The second option is for central banks to create more money, which would lead to a weakening of the currency's purchasing power.
Dalio stated that the US federal debt has reached approximately $32 trillion, with annual interest payments of about $1 trillion. He predicted that if current trends continue without significant policy changes, US debt could grow to $55-60 trillion over the next 10 years.
In this risky environment, Dalio advises investors to diversify their portfolios across various asset classes and countries, particularly emphasizing the need to invest in economies with strong income structures and sustainable balance sheets. He suggests reducing the proportion of debt instruments, such as bonds, in portfolios while increasing positions in gold and a limited amount of bitcoin.
Dalio argued that allocating approximately 10-15% of a portfolio to bitcoin could reduce overall risk and positively impact returns. Regarding bitcoin, he maintained a more cautious approach, recommending allocating only a small portion of a portfolio to it.
*This is not investment advice.
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