Finimize - 👀 Dalio peeks over the edge

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Today's big stories

Ray Dalio’s hedge fund decided to sit tight, predicting stocks will keep on sliding
Berkshire Hathaway upped its stakes in Japanese commodity firms, and you can trade the same companies without spending billions – Read Now
Société Générale and AllianceBernstein announced a joint stock business

Dalio’s Buckling Up

What’s Going On Here?

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

What Does This Mean?

Ray Dalio’s $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 that’s not happening just yet, despite the tearful headlines. Second, interest rates need to be falling – that one’s 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: It’s not gospel.
Expert analysts at institutions like Bridgewater earn a pretty penny for their efforts, but their big paychecks don’t mean they’re always right: for every ace investor counting on one outcome, there’s another betting on the opposite. Differences of opinion make a market, so soak up expert opinion, but make sure you’ve got a few grains of salt to hand when you do. In the end, it’s your money on the line.

Zooming out: Say he’s right.
Investing’s about staying ahead of the game. If you think Dalio’s right – that is, you think stocks won’t 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 you’re looking for. Bonds tend to do well during recessions, and the ETF’s 14% cheaper this year thanks to the ever-climbing interest rates that keep sapping its price.

You might also like: The deeper details behind Bridgewater’s revelation.

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Analyst Take

Buffett’s Berkshire Hathaway Has A Monstrous Japanese Bet

By Russell Burns, Analyst

If you had an investing moodboard, you’d probably have at least four photos of Warren Buffett surrounded by pink hearts.

Well, Buffett’s Berkshire Hathaway has just upped its stakes in the five biggest Japanese commodity-trading companies.

That’s not surprising when they’ve returned some out-of-this-world returns in the last two years – and when you take into account the long-term factors propping up the sector.

So that’s today’s Insight: why Berkshire believes in Japanese commodity firms, and whether you should too.

Read or listen to the Insight here

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