‘When you don’t know, the best investment strategy is to be smartly diversified across geographic locations, across asset classes, and across currencies.’
That’s how Ray Dalio, founder of hedge-fund behemoth Bridgewater Associates, says he’s approaching the stock market in light of the coronavirus outbreak, according to his latest LinkedIn post.
Dalio said fears of the spreading coronavirus have triggered a “flight-to-quality market action” that continues to pressure stocks while giving a lift to hedges such as gold GC00, +0.80% , bonds and the dollar DXY, -0.17% .
“Let me be clear that I’m a ‘dumb shit’ when it comes to pandemics because what I don’t know about them is more important than what I do know,” he acknowledged. “We expect to do a lot more homework that will give us a richer perspective.”
At last check, the Dow DJIA, -0.50% was down double-digits, with the S&P SPX, -0.63% and Nasdaq COMP, -0.70% both firmly lower as well. Gold, seen as a safeguard against equity pullbacks, was building on recent advances.
“We want to pay attention to what’s actually happening, what people believe is happening that is reflected in pricing (relative to what’s likely), and what indicators that will indicate the reversal,” wrote Dalio, who’s made more money for his clients since 1975 than any other hedge fund, according to Bloomberg.
Last week at the World Economic Forum in Davos, Dalio told CNBC in an interview that investors should be buying this market, rather than sitting on the sidelines. “Get out of trash,” he said. “There’s still a lot of money in cash.”