Ray Dalio warns of big disruption, shares advice for new investors

American billionaire Ray Dalio believes new investors should have a diversified portfolio as economic and geopolitical headwinds persist.

“I would like to have diversification, because what I don’t know will be much more important than what I know,” said Dalio, founder of one of the world’s largest hedge funds, Bridgewater Associates.

“Diversification can reduce your risks without reducing them sharply, if you know how to do it well,” he said at the Milken Institute Asia Summit in Singapore last week.

“Pay attention to the implications of the big disruptions that are going to take place because the world will be radically different in five years. And it will become radically different from year to year,” he explained.

The evolution of artificial intelligence has also attracted the attention of hedge fund managers, but Dalio said he recommends investors invest in companies that adopt this new technology, rather than those that create them.

“It’s like going through a time warp. We’re going to be in a different world. And the disruptors will be disrupted,” Dalio said. “I don’t need to choose those who create new technologies. I really need to choose those who use new technologies in the best possible way.”

Addressing the audience at the Singapore summit, Dalio said the city-state is a “very special place, in what will be a very exciting region.”

“The global landscape is changing, the world order is changing…And with Singapore as a hub, it’s a great place to be.”

When asked about the growing number of family offices established in Singapore, Dalio shared the top three considerations to make when choosing a country to invest in.

A country must have a good income statement and a good balance sheet, an environment of civility where “people work together to achieve good things,” he said. The side the country takes when an international conflict breaks out is also an important factor to consider, he added.

He pointed out that the biggest mistake investors make is “believing that markets that perform well are good investments rather than more expensive ones.”