Ray Dalio speaks to CNBC at the Future Investment Initiative in Riyadh, Saudi Arabia, October 30, 2024.
CNBC
A post-election America worries US billionaire Ray Dalio, who has repeatedly called for reform in a political landscape filled with what he sees as irreconcilable differences between the Democratic and Republican parties.
At the Future Investment Initiative conference in Saudi Arabia on Wednesday, the founder of investment firm Bridgewater Associates discussed major geopolitical and election concerns, the problem of the rising U.S. deficit and how investors can best position their portfolios.
“Both candidates worry me,” Dalio told CNBC. “This left, right and fight against each other is a problem because it is becoming more and more extreme. I think there needs to be a unification of Americans in this middle and major reforms made. … There has to be a strong leader. “I think that brings big reforms … None of the candidates are doing that for me.”
Dalio noted that Republican presidential nominee Donald Trump is “much more capitalist” than Democratic nominee Kamala Harris and is therefore better for domestic capital markets. However, he warned that there would be large deficits in a bipartisan economy. Both candidates have big differences, including on tax policies, he added, noting that Trump's plan to raise higher tariff revenues could lead to a rise in prices depending on how much those revenues are converted into internal productivity.
The consequences of the election are “actually more of a left-right issue, and that’s a shame because we need to bring the country together in an intelligent way and make big reforms. This is what we have to do,” Dalio said. “The debt is concerning, the internal conflict is concerning, the external conflict is concerning and certainly the climate and the costs of climate are concerning.”
Dalio said he remains concerned about the increase in the supply of U.S. Treasury bonds. About a third of U.S. Treasury securities are owned by foreigners, creating a supply-demand problem that poses more upside than downside risks for investors, he said.
“We have a real debt problem. … I think one man’s debt is another man’s wealth,” Dalio said. “The treasury market is the foundation of all capital formation. At some point, when you combine that with the internal conflict issue, when there is a downturn – when the downturn comes – I worry about internal political and social conflicts.”
When positioning his portfolio, the famous investor said that gold should be part of a diversified and balanced strategy that reduces overall risk.
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