Ray Dalio, founder of the hedge fund Bridgewater Associates said in an interview that the recent Trump tax cuts could lead to even bigger gains in the stock market. And he added quote, "If you're holding cash, you're going to feel pretty stupid."
That is the point Dalio tried to drive home on Tuesday during an interview on CNBC at the World Economic Forum in Davos, Switzerland.
“We are in this Goldilocks period right now. Inflation isn’t a problem. Growth is good, everything is pretty good with a big jolt of stimulation coming from changes in tax laws,” Dalio said, referring to the health of the U.S. market as well as what he sees as an improving global economic climate.
Dalio said corporate tax cuts in the U.S. are expected to deliver a further jolt to economy and stock market entering its ninth year.
The prominent investor, who runs the largest hedge fund in the world with about $150 billion in assets, said we're in the late part of the cycle and predicts we will see "a market blowoff" rally, fueled by cash from banks, corporations and investors.
"There is a lot of cash on the sidelines. ... We're going to be inundated with cash," he said. "If you're holding cash, you're going to feel pretty stupid."
Against that backdrop, Dalio says hanging on to cash, rather than investing in risk assets, like stocks, may be a misguided strategy that could cost investors.
Bridgewater is the world's largest hedge fund, managing about $160 billion, according to its website. Dalio started the firm in 1975 out of his two-bedroom apartment in New York City. He is now worth an estimated $17 billion, according to Forbes.
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