Stop investing and hold cash. It's the best option now, says investment legend Ray Dalio

It is probably clear to all of us that it is not going to be a good time. But is it so bad that it would be better not to invest at all? It's an extremely radical view, but the legendary Ray Dalio stands by it. Today, let's take a look at why!

Ray Dalio now recommends holding cash

Most investors will agree that despite market downturns and all the scrambling we experience, it's always better to stay invested. But Ray Dalio - legendary investor and author of many books - now has a different opinion.

The billionaire has doubled his exposure to cash and said it is now more attractive than stocks and bonds.

"Cash used to be nonsense. But now it's quite attractive," said the Bridgewater founder . Higher interest rates translate into a limited money supply in the economy, which offers some returns on the dollar, Dalio said.

https://www.youtube.com/watch?v=L2PA8QgJMnI

Dalio flipped his view on the dollar at a time when the Federal Reserve is continuing its most aggressive campaign of raising interest rates since the 1980s to control inflation.

The Fed is approaching 25-year highs with the current hike. Source

"You have the classic move that when rates rise, the money supply becomes tied up. You lose parts of the economy, parts of the market that are bubbles. You're losing the ones that needed cash flow.

https://twitter.com/SquawkCNBC/status/1621126492569698304

Dalio, who has always coined the term "cash is trash," has previously dismissed the dollar as virtually worthless in April 2020, expecting near-zero rates and an inflated money supply to reduce the value of the dollar over time. However, as the Fed has sharply raised interest rates to curb price pressures, the dollar's yield has risen.

The dollar rose to a 20-year high last year thanks to the Fed's rapid rate hikes. Higher interest rates give the dollar a boost because they tend to attract more foreign investment. Meanwhile, stocks and bonds have been hit hard over the past year as a result of aggressive rate hikes. Technology and risk stocks in particular have taken the biggest hit.

The Nasdaq has now recovered slightly. But it is still in a deep decline from its highs.

Disclaimer: This is by no means an investment recommendation. This is purely my summary and analysis based on data from the internet and other sources. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.