Ray Dalio, one of the most famous hedge fund managers in the world, and the founder of the world’s largest hedge fund, Bridgewater, says that the world has lost its mind. The eccentric hedge fund founder recently published a blog post entitled “The World Has Gone Mad and the System Is Broken” in which he argues that zero rates, weak returns, and growing inequality are leading to something bad. What exactly that “bad” was remained unclear.
FINSUM: We agree that these are issues, but we are pretty tired of vague doom and gloom prognostications. We like a highly specific catalyst for such forecasts.
Probably the world’s most famous hedge fund manager, Ray Dalio, who runs the largest hedge fund in the world, has just made an interesting comment about equities. Dalio, who runs Bridgewater, says that he does not see a big bust coming in equities, just a “great sag”. Speaking about corporate debt levels and the risk of a blow up in fixed income, Dalio says “Those extremities we are reaching are not such that it is likely to have a debt crisis. But you have reached the limits of that so it creates a big sag versus a big bust”.
FINSUM: We think this is a pretty nuanced view. A big meltdown similar to 2008 does not seem likely, but a long-term growth overhang from too much debt does seem a distinct possibility.