Dalios Buckling Up

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What's going on?

Legendary hedge fund manager Ray Dalio said stocks are going to keep dropping, with a few key metrics suggesting weve not yet hit rock bottom.

What does this mean?

Ray Dalios $140-billion hedge fund reckons stocks have further to fall. After all, markets are dropping because seemingly unstoppable inflation is set to collide with an immovable recession. And when that happens, Dalio says a few key boxes need to be ticked before share prices return to an upward trajectory. First of all, the economy needs to be in a clear and steady decline, and thats not happening just yet, despite the tearful headlines. Second, interest rates need to be falling that ones a definite nope. And third, stock returns need to look as tempting as a 2pm nap when the coffee wears off. Those three misses make a strikeout according to the umpires at Bridgewater, who see stocks sliding even further.

Why should I care?

The bigger picture: Its not gospel.
Expert analysts at institutions like Bridgewater earn a pretty penny for their efforts, but their big paychecks dont mean theyre always right: for every ace investor counting on one outcome, theres another betting on the opposite. Differences of opinion make a market, so soak up expert opinion, but make sure youve got a few grains of salt to hand when you do. In the end, its your money on the line.

Zooming out: Say hes right.
Investings about staying ahead of the game. If you think Dalios right that is, you think stocks wont hit rock bottom until interest rates ease and a recession sets in then the iShares US Treasury Bond exchange-traded fund (ETF) could be what youre looking for. Bonds tend to do well during recessions, and the ETFs 14% cheaper this year thanks to the ever-climbing interest rates that keep sapping its price.

Originally posted as part of the Finimize daily email.

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