Ray Dalio on India's rise

ray dalio on india's rise

Ray Dalio on India’s rise

India is nicely positioned to take advantage of changing dynamics in the world order, which is witnessing a shift after the US dominated it for decades after the Second World War, according to Ray Dalio, founder of the world’s biggest hedge fund, Bridgewater Associates.

He listed certain distinct advantages that India has.

“India is projected to have the fastest growth in the world of any sizeable or developed economy,” Dalio, also author of The Changing World Order, said here Friday. “There is the development of a middle class. There is vast improvement in education levels and infrastructure and all this is happening in combination with capital formation which is taking place.”

He also listed stability and order as well as neutrality as important factors in India’s emergence on the global stage. Not being engaged in conflict is important for economic growth, said Dalio, founder, chief investment officer, and member of the Bridgewater Board. In contrast, he said, the US was engaged in a conflict with China.

“(Prime Minister Narendra) Modi’s leadership, stability and the broad level of support from the government have been there,” he said.

Dalio, who ranks as the most successful hedge fund manager in the world with Bridgewater Associates managing assets of $168 billion at the end of 2022, has built a reputation by betting for and against markets. He became famous for turning a profit for his clients during the stock market crash in the US in 1987.

He said he makes investments by monitoring multiple factors and going deep into historical trends. He attributed his learning to studying economic cycles over centuries.

“I have to make macroeconomic investment decisions everyday,” he said. “Many things that surprise me happened not just in my lifetime but many times in history. Three big forces draw my attention. First is understanding the mechanics of credit, money, debt and economies. The second is internal politics of a country. The third influence is change in global order.”

Putting into context the high interest rate and tight credit markets in the US, Dalio talked about how debt has come to influence the state of things there.

“Credit creates buying power. It also creates debt,” he said. “That debt can be paid by hard money or soft money which means they have to print money. The world’s biggest treasury market, the US, produced an enormous amount of credit and debt. This is having an impact on interest rates and credit markets and the economy that we are looking at.”

He advised investors to stay away from bonds and debt investments in over-indebted countries or those that are quickly piling up debt and instead focus on investing where productivity is high.

“Investors should diversify. No one country, no one asset class. No one currency,” he said on the approach to investing in volatile times. He also advised investing in countries where leadership is good, citing India as an example.

His also outlined his investment philosophy in brief.

“There are three things that I look at,” Dalio said. “Do they earn more than they spend? This applies to a country or company. Do they have internal cohesion so that there is healthy competition which leads to productivity? Are they in a threatening world order or state?”

For more news like this visit The Economic Times.

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