The excerpt below is from a recent article published here on Forbes.
When Ray Dalio talks, people listen.
The billionaire founder of Bridgewater, the world's largest hedge fund, recently grabbed headlines when he told CNBC he thinks the U.S. economy is in the seventh inning. Dalio warned that he sees risks increasing "as time progresses" and that investors should be "more defensive" in the stock market. If he’s correct, and the current economic cycle is in its latter innings, that will obviously have significant consequences for future market returns.
On a related note, earlier this year, shortly after we issued our own #EuropeSlowing call, it was reported that Bridgewater had more than quadrupled its bet against European Union companies. As we wrote at the time,
"Contrary to our positive outlook in the U.S., our model is prospectively signaling a concomitant deceleration in both economic growth and inflation across the Eurozone economy. This view is very counter to consensus that remains extremely complacent on the long side of the euro and European equities."
As the market scoreboard shows, shorting Europe (and ignoring consensus which was still bullish on Europe and the flawed “synchronized global growth” story) has paid off rather handsomely.
So, where are we in the U.S. economic cycle?
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