Billionaire Ray Dalio says a Joe Biden win in November wouldn’t hurt the stock market in the long run despite initial ‘modest’ negative reaction

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  • Ray Dalio told that a Joe Biden win will be a “negative initially” for markets but won’t be bad in the longer term. 
  • The founder of Bridgewater Associates explained: “It’s all a matter of money and spending.” 
  • Dalio said that markets will do well in the long term if Biden were to raise spending, because this would depreciate the dollar and cause other assets like stocks to rise. He said this happened in the 1930s under President Roosevelt.
  • He added: “A Trump win I think would probably produce an initial beneficial reaction, probably longer, a little bit less. “
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Billionaire investor Ray Dalio said that a Joe Biden victory will be “a modest negative initially” but won’t be bad for markets in the long run, while a Trump victory will produce an initial beneficial reaction, but “a little bit less” in the longer term.

The founder of the world’s largest hedge fund explained in an interview with Top 1000 Funds released on Tuesday: “It’s all a matter of money and spending.”

Dalio said that if Joe Biden wins the presidency in November, the initial market reaction will most likely be “not good.” Corporate tax rates will rise, capital gains rates will rise, and offshore income will be taxed more. And then, there will be large fiscal stimulus, he said.

The markets would then react positively to the stimulus, but Dalio said that would really be because “the value of money is going to go down – that’s what makes everything go up.”

“We look at markets through the lens of a currency and so we judge everything on whether it goes up in that currency. But we sometimes make the mistake of not realizing that sometimes those things going up are really because the currency is going down, Dalio said.

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“When you print a lot of money and you produce a lot more debt, it makes it an unattractive asset. And so what we’ve seen is other assets – stocks, gold and so on – rise as real interest rates have gone down.”

Dalio also said that the Biden administration will implement policies similar to the Roosevelt administration in 1933. Roosevelt raised taxes through the marginal tax rate, but at the same time raised deficits and “spent a lot,” which deprecated the value of money. 

Even though the value of money had gone down, ” the stock market went up and the bond market went up because the deficits and the printing of money and the fiscal stimulation,” the billionaire investor said.

When asked what a Trump victory would mean for markets, Dalio said: “A Trump win I think would probably produce an initial beneficial reaction, probably longer, a little bit less. Capitalists like capitalists and capitalism … Either way you’re going to get a lot of stimulation, you’ll just get more with Biden.”

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