By Steve Goldstein
For years, Ray Dalio has made his disdain for cash abundantly clear.
The founder and co-chief investment officer of Bridgewater Associates, the world’s largest hedge fund, told everyone who would listen that cash was trash, a point he repeated to the MarketWatch “Best New Ideas In Money” festival just two weeks ago . Dalio said cash was still a “trash investment,” though perhaps he showed signs of tweaking his long-held worldview, as he said the true utility of cash depends on how it compares to others.
Now, he’s changed his mind. “I no longer think cash is trash,” said Dalio, in a late Monday tweet . “At existing interest rates and with the Fed shrinking the balance sheet, it is now about neutral—neither a very good or very bad deal. In other words, the short-term interest rate is now about right.”
This is a view that investment bank Morgan Stanley has been espousing for some time. At virtually no risk, the 6-month Treasury bill /zigman2/quotes/211347049/realtime BX:TMUBMUSD06M +0.35% on Tuesday morning yielded just under 4%. That compares to the 1.74% dividend yield on the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.73% , the 3.57% yield on the 10-year Treasury /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +2.76% and the 2% yield on the iShares Core U.S. aggregate bond ETF /zigman2/quotes/200660887/composite AGG -0.59% .
Granted, if the market turns higher, cash will be left behind. That’s the risk/return tradeoff. Stocks rallied on Monday and stock futures were stronger early Tuesday. Dalio typically has a defter touch than, say, Jim Cramer, but perhaps his throwing in the towel on cash is the sign that now is the time to get out of it and put money to work.
After Monday’s 765-point outburst for the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.90% , U.S. stock futures /zigman2/quotes/209948968/delayed ES00 -0.86% /zigman2/quotes/210219788/delayed NQ00 -0.78% were pointing higher on the second day of the fourth quarter. The yield on the 10-year Treasury /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +2.76% fell to 3.57%. Bitcoin /zigman2/quotes/31322028/realtime BTCUSD +0.29% was back above $20,000.
The U.S. economics calendar includes a number of Fed speakers, including Philip Jefferson’s first speech as a governor. Job openings and factory orders data from August are due for release at 10 a.m. Eastern.
Is that a pivot? The Reserve Bank of Australia made a smaller-than-expected 25 basis point hike, hurting the Aussie dollar /zigman2/quotes/210560947/realtime/sampled AUDUSD +0.3989% , with financial markets now forecasting the terminal rate to slip to 3.6% from 4.3% on Monday.
The likely successor to Warren Buffett, Greg Abel, made his biggest investment in Berkshire Hathaway /zigman2/quotes/200060694/composite BRK.B +0.13% with a $68 million purchase. Abel this summer had sold to the company his $870 million stake in a utility division he used to lead.
South Korea’s Naver /zigman2/quotes/208724142/delayed KR:035420 +5.12% agreed to pay $1.6 billion, or $17.90 per share in cash, for online fashion reseller Poshmark /zigman2/quotes/223776918/composite POSH 0.00% . Poshmark went public in 2021 at $42.
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