Ray Dalio Buys Big Into China & Gold – The Reasons Why Are Unsettling

Speaker 1: Ray D’Alessio, he runs the largest hedge fund in the world called Bridgewater, which has over 150 billion dollars of assets under management. Now, if you’re a nerd like me, you’d like to dig into the portfolio and stock moves of the billionaire investors of the world. And I’ve done this recently with Dalio and his fund, Bridgewater. And I got to say, I found some very interesting results. He’s invested heavily into both Chinese stocks and gold.

Now, what we’re going to do in this video is I’m going to show you the exact stocks that he’s bought and sold in the recent quarter. And then I’m going to go over the underlying reasons why he’s made quite a few strange investments. Now, he’s completed over 50 different investments recently. So I’m not going to go over them all. But I will show you the main ones and the ones that stuck out to me. The first thing we’ve got to talk about is his gold investments. Now, it’s never a surprise when I see Dalio buy gold because he’s known as a gold advocates, but recently he’s bought a lot of it. We can see here that he’s bought one point four million shares and the SPDR Gold Trust, that’s about 260 million dollars of it. Then he went on further and bought around four point one million shares in the iShares Gold Trust Ticker symbol IAU. So that one’s worth around 75 million dollars, and that’s a big amount of money, over 330 million dollars being put aside directly into gold. I mean, when you consider that gold just sits there, it doesn’t do anything. It’s not productive like a stock or a business. So the question becomes, why the thing you need to realize about gold as it’s used as a protection mechanism, a safety measure, so to speak. You see, often when a lot of money is printed, a recession hits stocks, starts to go down and people look for security. So they go to the symbol of security, which is gold. And it’s for this reason, during rough times, gold does well and can increase or hold its value. And this is why Dalio says, I believe it will be both risk reducing and return enhancing to consider adding gold to one’s portfolio. And he’s been putting his money where his mouth is recently. He’s purchased a lot of gold. Now, the next thing that I’m going to point out, I find even more interesting than his gold purchase. Dalio is investing a lot of money into China right now. Let me show you this. So Dalio with Bridgewater bought six hundred seventy two thousand shares in the Chinese company Alibaba. And this recent 2020 quarter that’s worth around 190 million dollars are the ticker symbol for that is Babba, by the way. But he also bought four point one nine million shares in a Chinese largecap ETF ticker symbol FXI. That’s worth around one hundred and eighty five million. Then he bought almost one million shares in Jadi Dotcom, the Chinese e-commerce company.

He bought 110000 shares of Nettie’s the Chinese Internet technology company as well as us. He bought Panji Stock, the second largest Chinese online marketplace. And on top of all of this, he bought BIDU Stock, China’s version of Google. And along with all of these, he bought a bunch more other Chinese companies. He bought so many. I can’t go through them all. But what does this all mean? It means Dalio is putting a high amount of his focus and money on China and Chinese investments. I mean, I don’t know if you guys have gone through and been reading his LinkedIn articles recently, but he’s got some interesting opinions out there. And to be honest, I probably shouldn’t call them opinions because they’re based on facts. But nevertheless, what he points out is quite unsettling. He’s written a whole set of articles on the topic, The Changing World Order. These articles start by saying, I believe that the times ahead will be radically different from the times we’ve experienced so far in our lifetimes, though similar to many other times in history. He then further goes on to explain the rise of China and how they’re growing more and more powerful every year. But then you look at the United States and you see a noticeable slowdown in growth and other patterns suggesting a decline in dominance. So there might be a changing of guard between these two countries at some point in the future. And you can certainly see this with the way Ray D’Alessio is investing. He wants a piece of China’s growth. And so he’s buying up a lot of their shares. If you look on Bridgewater’s website, it further proves the sentiments. They say looking forward, China is poised to continue growing as a driver of global economic and financial activity and presents a rare opportunity for global investors to access a large liquid and highly diversified. Markets consistent with this reality, we have spent the past several years expanding our already deep engagement with China, increasing our holdings of Chinese assets and our global weather strategy, and launching a new strategic allocation to Chinese markets. You see, the thing that we need to realize is that China is an extremely fast growing country. Their GDP, the way of measuring the economy, is growing at an average rate of around six to seven percent. When you look at the USA, it’s around three percent. And this is why China is catching up in terms of economic production. As you can see, back in 2006, there was a massive gap between the USA’s economy and China’s thirteen point eight trillion compared to 2.8 trillion. Then you fast forward to 2018. That gap has been massively reduced, twenty two point three trillion compared to fifteen point five. And it’s expected that as time passes along, that gap will reduce by even more. Basically, China’s flourishing and their companies are producing a lot of outputs and we all know what this leads onto. It leads on to making a lot of profits. Ray Dalio, he’s no slouch. He’s not silly. He knows this and he’s investing in a lot of Chinese companies. This way he will receive a piece of those profits as China grows.

You know, Alibaba was his biggest Chinese investments, the technology and massive e-commerce company. Some people call them China’s version of Amazon because of their similarities. But they do a lot more than just e-commerce. They operate in cloud computing. They’re big players in artificial intelligence and eSports as well. When you look at the second largest investment, which was a Chinese ETF, a typical dallier move, we all know he loves ETFs. He bought four point one nine million shares and the iShares China Cap ETF ticker symbol FXI. This fund gives access to fifty of the largest Chinese stocks straight away. It puts Dalio in a strong position across the whole of China. So you can see from the way he’s playing the game now that he’s certainly got a large foot in the door when it comes to the Chinese market. OK, so recently Dalio bought a lot of gold. This helped secure up his portfolio in case of a market crash. He’s also been diversifying a lot into the Chinese markets. This gives him a great opportunity to profit as China grows and acts as a safety policy as well because of the United States stock market fails. Well, he still has money in China, but this does not mean that Dalio is not betting on the USA anymore. In fact, his biggest purchase was a USA ETF. He bought about four hundred ninety million dollars worth of the SPDR S&P 500 ETF. That’s 500 large companies in the United States. So he’s basically doing the typical Dalio moves. But this time I would say to a more extreme extent, Dalio is a diversified at heart. If you look at his investment fund Bridgewater, their portfolio will always be well diversified. He’s not going to be like Charlie Munger and only own three stocks for his entire portfolio. But when we look at his recent moves, his 20/20 stock moves, he has taken this diversified approach to a higher level. He’s seen the dodgy market conditions that we’re in and thought let’s go a lot deeper into gold. Let’s expand a lot more into China, because if things do change, Dalio wants to be prepared. And change, by the way, is not a highly unlikely thing to happen. Now, those who follow Dalio will know that he’s been calling an inflated market for quite some time now. He said recently. Today, the economy and the markets are driven by the central banks and the coordination with the central government, he remarked. We’re in a situation now where they’re the market makers, including the value of money. The market’s p e level typically reflects current conditions. Markets have historically loved Fed margins, low inflation, stability and by inference, low levels of uncertainty.

This 2020 is apparently one of the most impressive mismatches in history, he concludes. Why he’s saying basically is that the economy is doing terrible. We’re printing a lot of money. There’s so much uncertainty out there and this is something that the stock market usually doesn’t like. But in twenty twenty, apparently normal logic and reason don’t apply because the stock market’s at an all time high right now. It’s as if the economy is going full steam ahead. But it’s not USA, GDP actually decreased by thirty two point nine percent and the second quarter of twenty twenty, and it’s expected to stay a net negative this year. So we’re in an inflated stock market that is propped up by the central governments and central banks. And I think this is a key reason why we’re seeing so much diversification from dallier right now and gold and Chinese stocks.

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