Ray Dalio advocates investment diversification, but not in Bitcoin
Ray Dalio, a billionaire and founder of the investment firm Bridgewater Associates, said investors should not ignore traditional markets, CNBC reported on January 21.
Dalio warned about having Bitcoin, saying that it is not a medium of exchange or a store of value.
Dalio was interviewed at the World Economic Forum in Davos, Switzerland, where he advised investors to maintain a global and diversified portfolio in this market, while increasing their participation in the stock markets.
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Although Dalio acknowledged concerns about the recession, he argued that “cash is like garbage” due to the government’s ability to print it at will, something he believes they will be forced to do during a market downturn. Because of this, jumping into cash just before the eventual market crash is inadvisable, according to Dalio.
The billionaire recommends the balance, advising investors to keep “a certain amount of gold” in their portfolios.
However, its position on Bitcoin (BTC) was a bit negative, noting that it currently does not work as money:
“Money has two purposes: to function as a means of exchange and deposit of wealth, and Bitcoin is not effective in any of those cases now.”
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He added that Bitcoin volatility makes it unattractive for serious investment, while something like Libra could be a better option. Explaining his preference for gold as a store of value, he noted that central banks are some of the largest holders of the important metal:
“What do you prefer as reserves? What has been tried and worked? Will they have digital money in Bitcoin? They will have gold. That is a reserve currency.”
Bitcoin and the global economy
Frequent bitcoin is touted as “digital gold,” a reserve asset independent of government control.
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But while many believe in the Bitcoin value storage thesis, its performance so far has not indicated a significant correlation with global markets. Although it seems to have a slightly positive correlation with gold, the indices are so small that they can be attributed to the coincidence.
These may still be problems of the relative novelty of cryptocurrencies. As Professor Campbell Harvey of Duke University has pointed out, the sample size is still too small. Throughout thousands of years of history, gold was not always a reliable asset as a safe haven.
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