Billionaire Ray Dalio: Cash is Now a Relatively Attractive Asset Class
Billionaire investor Ray Dalio believes that the popular saying “cash is trash” is no longer accurate in today’s macroeconomic landscape. During a recent discussion at the Greenwich Economic Forum, Dalio stated that financial conditions have changed significantly in recent years, making cash a relatively attractive asset class, at least for the time being.
Dalio acknowledged that his previous statement about cash being trash received a lot of attention, but he clarified that it was when cash had minimal value. However, with the current expected returns, cash now appears relatively attractive due to its decent real return of around 1.5% and the absence of price risk.
In the past, Dalio emphasized the importance of minimizing cash exposure to avoid losses caused by currency debasement. However, he now recognizes that given the current circumstances, cash can be a viable investment option.
Changing Perspective on Cash
In December 2021, Dalio expressed his belief that cash was the worst investment due to its loss in buying power caused by inflation. He advised investors to assess their returns and assets in terms of inflation-adjusted dollars rather than nominal terms. According to him, cash could lose around 4% to 5% of its value due to inflation.
Hot Take: Cash as an Attractive Asset Class
Billionaire investor Ray Dalio has shifted his perspective on cash as an asset class. While previously stating that “cash is trash,” Dalio now believes that changes in financial conditions make cash a relatively attractive option. With a real return of approximately 1.5% and no price risk, cash is now seen as viable in comparison to other investments. However, Dalio still advises investors to consider the impact of inflation on their assets and returns. This change in perspective highlights the importance of adapting investment strategies to evolving market conditions.
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