Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund with $150 billion in assets, interviewed by CNBC at the World Economic Forum in Davos, Switzerland
The Takeaway: Even though asset prices are higher than they have been in the recent past, it’s not smart to sit on the sidelines. U.S. and world economic conditions are good, and the climate of low interest rates supports higher asset valuations.
That doesn’t mean you should be greedy or that the market is immune from pullbacks. Several things could prompt a correction at any time.
But it does mean that, for most people, the best way to reach your long-term goals is to participate in the markets and invest in a diversified portfolio of good quality, growth investments, rather than a pile of cash which earns nothing and loses purchasing power by the day.
Understand your risk tolerance, and always diversify your portfolio to include less-risky and less-correlated assets. Keep a long-term perspective and focus on your ultimate investment objectives, not tomorrow’s headlines or short-term price changes.