Billionaire investor Ray Dalio has emphasized the importance of diversification in investment portfolios to safeguard against varying economic conditions.

According to Dalio, concentrating bets in one asset class exposes investors to significant risks, making it essential to spread investments across different types of assets, he said in an X post on November 5.

Dalio highlighted gold as a key alternative asset that plays a vital role in balancing a portfolio. He noted that holding a certain amount of gold, or an equivalent alternative form of money, provides effective diversification.

“As an investor, you don’t want to concentrate your bets — you want diversification, so you’re protected in different economic environments. That’s why alternative assets like gold are so valuable in balancing your portfolio,” Dalio said. 

While gold should not dominate a portfolio, its presence helps protect against downturns in other assets during periods of economic stress.

Keeping portfolios resilient 

The Bridgewater Associates founder further stressed that successful investing requires proper diversification to keep portfolios resilient even when some assets underperform. 

Dalio suggested that thoughtful diversification, including exposure to gold, is a strategic way to hedge against uncertainties and potential financial disruptions.

Notably, Dalio’s remarks on gold come as the metal trades at new highs above $4,000, amid his persistent warnings about the health of the global economy. 

As previously reported by Finbold, Dalio warned that mounting global debt and rising stagflation risks could strain the financial system, which increasingly relies on turning debt into money. 

With limited liquidity and currency pressures likely pushing policymakers toward a weaker dollar, he argued that gold is better positioned than paper currencies and traditional assets to preserve value and outperform in this environment.

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