Ray Dalio: Cash more attractive than stocks, bonds thanks to Fed hikes – Markets Insider

• Billionaire investor Ray Dalio has doubled down on his faith in cash, saying they are currently more attractive than stocks and bonds.
• “The money used to suck. The money is pretty attractive now,” the Bridgewater founder said.
• Higher interest rates translate to a tight money supply in the economy, providing returns on the dollar, Dalio said.

Billionaire investor Ray Dalio has doubled down on his view that cash is no longer garbage, saying the dollar is more attractive than stocks and bonds.

Dalio’s reversal on the dollar comes as the Federal Reserve continues its most aggressive campaign of raising interest rates since the 1980s to control inflation.

“Silver used to suck. Silver is quite attractive now. It’s attractive relative to bonds. It’s actually attractive relative to stocks,” the Bridgewater founder said in a statement. CNBC Interview THURSDAY.

“You have the classic move that as rates go up, the money supply becomes tied. You lose the parts of the economy, the parts of the market that are the parts of the bubble that needed cash flow. So you see that’s reflected not just in long-lived stocks,” but in private equity and venture capital, he added.

Dalio, who coined the term “money is trash,” previously dismissed the dollar as virtually worthless in April 2020, as he expected near-zero rates and an inflated money supply to erode the value of dollars over time. But with the Fed raising interest rates sharply to contain price pressures, the dollar’s yield rose.

The U.S. dollar index, which measures the greenback against a basket of six currencies, hit a 20-year high last year on the back of rapid Fed rate hikes. Higher interest rates add support to the dollar as they tend to attract more foreign investment.

Meanwhile, stocks and bonds have been hit hard over the past year due to aggressive rate hikes, with the tech-heavy Nasdaq down about 34% last year.

“What is also happening is that we now have the accumulation of a lot of debt and money,” Dalio added. That means dealing with issues like the US debt ceiling. A continued accumulation of liabilities could ultimately impact the value of the dollar, he warned.