U.S. billionaire Ray Dalio says new investors should have a diversified portfolio as economic and geopolitical headwinds persist.
“I would like to have diversification, because what I don’t know is going to be much greater than what I do know,” said Dalio, founder of one of the world’s largest hedge funds, Bridgewater Associates.
“Diversification can reduce your risk without reducing them sharply, if you know how to do it well,” he said at the Milken Institute Asia Summit in Singapore last week.
“Pay attention to the implications of the great disruptions that are going to take place because the world will be radically different in five years. And it’s going to become radically different year by year,” he explained.
The artificial intelligence evolution has caught the hedge fund manager’s attention too — but Dalio said he recommends investors put money in companies that adopt this new technology, rather than those creating them.
“It’s like going through a time warp. We’re going to be in a different world. And the disruptors will be disrupted,” Dalio said. “I don’t need to pick those who are creating the new technologies. I need to really pick those who are using the new technologies in the best possible way.”
Asia, an ‘exciting region’
Speaking to the audience at the summit in Singapore, Dalio said the city-state is a “very special place, in what will be a very exciting region.”
“The world landscape is changing, the world order is changing … And with Singapore as essentially a hub, it’s a terrific place to be.”
Asked about the growing number of family offices being set up in Singapore, Dalio shared the three biggest considerations one should take when choosing a country to invest in.
A country needs to have a good income statement and balance sheet, an environment of civility where “people [are] working together to make good things happen,” he said. The side that the country takes when an international conflict arises is also an important factor to consider, he added.
He highlighted that the biggest mistake investors make is “believing that markets that performed well, are good investments, rather than more expensive.”