Ray Dalio, billionaire investor and chairman and chief investment officer of Bridgewater Associates, the largest hedge fund in the world, recently spoke at the seventh annual Delivering Alpha conference, presented in New York City by CNBC and Institutional Investor. As usual, when Dalio speaks publicly on investing, the wider financial world takes note. Dalio has a reputation for being one of the savviest and most successful investors active today. In his recent speech, he addressed an audience of investment professionals on topics including Gary Cohn, gold, and the U.S. dollar, among others.
A Cohn Departure Would be 'Terrible'
On the subject of Gary Cohn, one of President Donald Trump's top economic advisers, Dalio speculated that a Cohn departure would be "terrible" for the markets at large. "It would undermine future economic progress, in terms of reforms, and it would present a challenge in putting together the administration," he opined, according to the Market Watch blog. Dalio also predicted that Cohn's departure might make it a challenge for the administration to attract the foremost talent.
On Gold and the Dollar
Dalio reiterated the importance of gold, particularly during turbulent times on the geopolitical front. He suggested that every portfolio should be comprised of 5% to 10% gold holdings, and that the U.S. dollar's role in the global economy should not be taken for granted. Dalio pointed to the North Korea situation as an example of a geopolitical tension point that might have much broader implications for the investment world on the whole. He also speculated that China is "quizzical" about the current political environment in America, including President Trump.
GDP Growth of 2.5% to 3%
Dalio stood by his previous prediction that the economy would likely see GDP growth at an annualized rate of 2.5% to 3%, which comes in below President Trump's predicted 4% growth rate. His reasoning for this determination includes the fact that the U.S. economy "has never had so many obligations that have to be paid," Dalio said. "It isn't just a matter of debt, but also pensions, health care. Those are going to be drains on productivity."
He said that the economy suffers from "the strains of a highly burdened economy," comparing it to the late 1930s, a period after the Great Depression with similar issues of income inequality, among others.
Dalio predicted that some of Trump's tax agenda would be passed, but likely in a diminished form. "Corporate tax cuts will come later, and will probably be something like 23%," he offered. Trump has publicly called for a tax rate of 15% in those cases. Dalio did not offer a projected timeline for when new rates might be enacted. (See also: Leon Cooperman: Stock Market Valuations Are 'Full But Fair.')