While much of the financial advice you hear in the media needs to be taken with a grain of salt, every now and then you hear a nugget of truth. In this case it’s coming from legendary hedge fund investor Ray Dalio, who was recently interviewed at the World Economic Forum in Davos, Switzerland about his views on the economy and investing.
Like many people who are even just casually observing the behavior of stock markets, Dalio believes that stock markets are currently overvalued but urges investors to ride the market melt-up as long as they can. The key, though, in his thinking is that investors need to remain highly diversified. That means investing in global stocks, investing across different industries, and retaining a highly balanced portfolio. That obviously isn’t something that many investors looking to profit from Facebook, Apple, Amazon, and Tesla are doing.
But more importantly, Dalio stressed that every investment portfolio had to have at least some amount of gold. Gold is a natural hedge against falling stocks, and it’s far superior to cash. As Dalio said, “cash is trash.” Not only does cash not gain a return for investors, it actually loses money each year due to inflation.
Gold is superior in that it continues gaining in the long term, far outpacing cash. Just remember, the purchasing power of a $20 bill has fallen precipitously over the past century. In 1913 a $20 bill would have paid for a month’s rent for a house. Now a $20 bill isn’t even enough for a night at a motel. Compare that to a $20 gold piece, which today can still get you a month’s rent or more.
If you’re still heavily invested in stock markets, have you begun to think about investing in gold? Are you aware of the dangers that a stock market downturn can pose to your retirement savings? And do you know how to get started in protecting your assets?
Now’s the time to invest in gold, before the next crisis hits. The last thing you want is to have to scramble like mad to protect your assets and end up making the wrong moves or investing in the wrong types of gold products. Do your homework now and get ready for the crash, so that when it finally comes you’ll be able to rest easy knowing that your wealth is safe and secure.