Ray Dalio U-turns on his very long-held view that ‘cash is trash’

“The information have adjusted and I’ve improved my intellect about cash as an asset: I no for a longer time feel hard cash is trash,” Dalio wrote in a tweet on Monday.

“At present interest fees and with the Fed shrinking the harmony sheet, it is now about neutral—neither a very superior or extremely lousy deal. In other terms, the short-phrase interest amount is now about appropriate.”

With the Federal Reserve mountaineering desire premiums, personal savings account APYs may well boost, this means funds may well earn some interest while stocks—which have suffered a risky year—could be however to hit their minimal.

Dalio’s opinions marked a pointed U-flip from his prolonged-held view that income is not an asset worthy of holding.

The billionaire investor—who founded Bridgewater Associates, the world’s biggest hedge fund—argued in early 2020 that “cash is trash,” urging buyers to dump income in favor of diversifying their portfolios.

He held on to this check out for a long time, doubling down on his assertion that “cash is nonetheless trash” in a CNBC job interview as just lately as Might 2022.

Warming to hard cash as an asset places Dalio nearer in line with many buyers who are employing the asset as a hedge towards existing financial headwinds like soaring inflation and expanding recession fears.

Very last month, a Lender of America study of buyers who collectively managed additional than $600 billion exposed that fund managers’ hard cash holdings ended up at their optimum ranges since the article-9/11 shock.

“Super bearish” sentiment was driving the phenomenon, BofA analysts reported, with investors pouring money into income and retreating from shares.

In the meantime, Citigroup asserted in September that the U.S. greenback was the only asset traders could use as a economic downturn hedge this year.

“The only put to cover is in U.S. dollar cash,” the bank’s analysts said in a investigate notice.

The greenback has had an incredible run in 2022, with the dollar index getting close to 16% so considerably this calendar year to achieve 20-12 months highs. In accordance to ING, the currency is probably to continue to be at “lofty levels” for the rest of the year.