Founder of the world’s largest hedge funds says the ‘magnitude’ of the next downturn will be epic

Published:May 13, 2017 10:59 p.m. ET

Bridgewater’s Ray Dalio has bad news for stock-market investors

Thos Robinson/Getty
It is all downhill from here.

By

MARKDECAMBRE
Ray Dalio of Bridgewater Associates has some good news for Wall Street investors, and some bad news.

First the good news: The founder of the world’s largest hedge fund, which boasts $102 billion under management, says the global economy is “at or near its best,” with few, if any major risks, on the horizon. Against, the backdrop ofever-rising equity prices, including the Dow Jones Industrial AverageDJIA,-0.11%the S&P 500 indexSPX,-0.15% and the Nasdaq Composite IndexCOMP,+0.09%hovering around all-time highs, the short-term picture looks halcyon. Even London’s benchmark FTSE 100UKX,+0.62% closed at a record on Friday.

“The economy is now at or near its best, and we see no major economic risks on the horizon for the next year or two,” Dalio wrote in a post on LinkedIn Friday.

Now, the bad news: over the longer term, Dalio’s outlook isn’t so sanguine.

“So we fear that whatever the magnitude of the downturn that eventually comes, whenever it eventually comes, it will likely produce much greater social and political conflict than currently exists,” he writes.

Presently, global markets appear to be stabilizing more than eight years after the global financial system was brought to its knees. Central bankers have underpinned much of the growth in equity markets by keeping benchmark borrowing costs ultralow, Dalio said.

President Donald Trump has vowed to implement an array of policies that will stoke fresh animal spirits in the U.S. economy, and equity investors world-wide appear to have pinned at least some of their hopes on those pro-business policies coming to fruition.

http://www.marketwatch.com/story/he...ws-says-for-stock-market-investors-2017-05-12

 

Stockman says by the fall it will be terrible.I don't think anybody knows when the top will be in.

 

I hope he's wrong but rationally I know he probably isn't.

 

In the meantime enjoy it while it lasts.

 

The reason why it will be a catastrophe is because there isn't any slack in credit. Is that what Dalio is saying? Also, unless there is a crazy productivity boost. One of the two needs to happen before THE END OF TIMES

 

It's called short selling

 

If you call heads enough times, eventually it'll turn up heads! Then you can say i told you so! Write a book, publish newsletter, become a talking head and fortune teller...

 

and who cares.
"on a long enough timescale the rate of survival for everyone is zero."

 

He as a HF leader is in a perfect position to put his money where his mouth is. So is he in cash or short?

 

He runs a 160bn risk parity fund (which probably controls 500bn of gross assets) on which they will be long until the market turns and then they will quickly get out, exacerbating the selloff and proving his prediction right.