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“ ‘The greatest mistake of all investors is to think that what has done well lately is a better investment rather than more expensive. And what has done worse lately is the worst investment — get me out of it! — rather than it’s cheap.’ ”
That’s Ray Dalio, the billionaire behind Bridgewater Associates, talking about where investors tend to go wrong in the stock market.
“Unless you know how to deal with the differences of those, which most people don’t, they’re going to be in trouble,” he said in a Ted Talk appearance earlier this month.
In the clip, which was highlighted on the “Investor Talk” YouTube channel over the weekend, Dalio also revisited his much-covered “cash is trash” argument.
“Do not think that cash is a safe investment,” he explained in the interview. “Cash is a seductive investment because it doesn’t have as much volatility, but it taxes you in your buying power about 2% a year. So cash is almost always the worst investment.”
Instead, he said, investors should think unconventionally.
“Do you have a little bit of gold… in case this monetary system breaks down and money is redefined,” he said. “Diversify well, be humble, don’t market time and be conscious of the dangers of cash.”
Watch the full clip:
Cash clearly wasn’t the best place to be in Monday’s session, with the Dow DJIA, +1.61% , S&P SPX, +1.60% and Nasdaq COMP, +1.21% all logging solid gains.
