Billionaire Ray Dalio Calls For "Minor Correction": HODL Equities?

Billionaire Ray Dalio, who founded the world’s largest hedge fund at Bridgewater Associates, sees a "minor correction."

Bid Declines Minor Corrections

In a LinkedIn article, Ray Dalio at Bridgewater Associates says We’ve Just Had a Taste of What the Tightening Will Be Like.

The headline sounds bearish, but the message sure isn't, as the key paragraph explains.

Still, these big declines are just minor corrections in the scope of things (see charts of stocks and bonds below), there is a lot of cash on the side to buy on the break, and what comes next will be most important.

Note the irony: "Big declines are minor corrections." We have not had big declines.

Note the complete silliness: "There is a lot of cash on the side to buy on the break."

Unless Dalio is purposely spouting nonsense to get his investors to stay in the markets, the world's largest hedge fund founder has no idea how markets work.

It is mathematically impossible for cash to come into the markets for the simple reason, as discussed ad nauseam, that for every buyer there is a seller. Sideline cash does not change when someone buys stocks or bonds.

Cash on the Sidelines

In the CNBC interview, Dalio also spoke of sideline cash.

"There is a lot of cash on the sidelines. I don't mean just investor cash. I think banks have a lot of cash. Corporations have a lot of cash. So we are going to be inundated with cash."

Sideline Cash Rebuttal

Question of the Day

Do hedge fund managers really believe this sideline cash nonsense or are they purposely feeding their clients BS?

Either way, Dalio's message appears to be "HODL equities".

By the way, on January 23 Ray Dalio taunted everyone at Davos: "Stupid to Hold Cash"

Mike "Mish" Shedlock

No. 1-20

Bitcoin is down by 58.1% from its peak, so there certainly is a miner correction. Wait ... minor? Never mind.


"hald" should have been "half"


to say that money never comes "into" the market is mostly just semantics. if I have $1b in stocks and Mish buys them from me for $2b, sure, he can say that money never came "into" the market b/c as his $2b came in, I took it out. But a lot would have changed. First, there would be $2b at risk, where there used to be $1b. Second, although there would still be $2b on the "sidelines," it would only be hald as much as it used to be relative to the portfolio just bought. It used to be 2x, now it's only 1x. So you can say money on net didn't some into the market, but a lot can change.