Ray Dalio, arguably one of the best investors of his generation, says that cryptocurrencies are impressive, while at the same time stating that cash is a “problematic asset” and the “worst investment”.
Billionaire investor, and CEO of one of the best performing hedge funds over years, Dalio was a former sceptic of Bitcoin, saying that it was a bubble. However, he has finally changed his opinion this year, and has bought into both bitcoin and ethereum.
In an article on Business Insider Australia, Dalio stated that he didn’t own a great deal of either cryptocurrency, but as an advocate of a well-diversified portfolio, he believed that it was necessary to hold at least a small part in crypto.
Explaining how he saw digital assets as good investments, he said:
“I view it as an alternative money in an environment where the value of cash money is depreciating in real terms. And I think it’s very impressive that for the last 10-11 years, that programming has still held up. It hasn’t been hacked and so on. And it has an adoption rate.”
On the other hand, he was scathing in his condemnation of cash, calling it the worst investment:
“Cash — which most investors think is the safest investment — is I think, the worst investment. Don’t judge anything in your returns or your assets in nominal terms, in terms of how many dollars you have. View it in terms of inflation-adjusted dollars,”
He added.
“And so cash — like, this year, you’ll lose 4% or 5% to inflation. And so pay attention to those, because I believe that that’ll be the worst investment.”
With his assessment of cash being something that would have its purchasing power whittled down over time, Dalio remarked that it was best to have a portfolio that was diversified in assets as well as in the countries where they were based.
“Hold that other diversified portfolio of assets — keep it, look at it in real terms, not nominal terms. And that diversification should be also international diversification from countries, not just asset classes, in order to have a truly well-diversified portfolio.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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