Ray Dalio: Risks Are Rising While Low Risks Are Discounted

Ray Dalio of Bridgewater Associates just posted his current markets views on LinkedIn. He comments on the recent lack of volatility.

As a rule, periods of lower risk/volatility tend to lead to periods of greater risk/volatility. That is reflected in our aggregate market volatility gauge (see below), and markets are pricing in volatility to remain low next year too.

Ray also highlights several risks that are rising under the surface, while the markets have remained calm:

...prospective risks are now rising and do not appear appropriately priced in

...corporate leveraging up has been high because interest rates are low

...we are seeing 1) two confrontational, nationalistic, and militaristic leaders playing chicken with each other

...the odds of Congress failing to raise the debt ceiling [are] rising.

It’s hard to bet on such things, one way or another, so the best that one can do is be neutral to such possibilities.

He also recommends an allocation to gold.

You can find the full post here:

Risks Are Rising While Low Risks Are Discounted


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