Ray Dalio knows China well and likes it a lot. Perhaps this is why he’s been so persistently and consistently wrong about how bad things were going to get between what are probably his two favorite countries. And, he ruefully admitted yesterday, “the war with China is spreading.” But, he added in a video chat with Bridgewater senior portfolio strategist Jim Haskel, it won’t spread too far.
“I don’t think we’re going to go to classic war — I do think there is going to be a restructuring of the world order in terms of changes in supply chains, changes in who is making what technologies, important changes in some of those things,” Dalio said.
Given the track record, this is not reassuring at all. But, sure, let’s humor the Wizard of Westport. Assuming that Donald Trump and Xi Jinping don’t begin lobbing thermonuclear weapons at each other in the near future, which side should a person take? As you can imagine, there’s a fantastically Dalio-esque answer to the question.
“Would you have not wanted to invest with the Dutch in the Dutch empire? Would you have not wanted to invest in the industrial revolution and the British empire? Would you not want to invest in the United States and the United States empire? I think it’s comparable,” Dalio said….
“I believe China is a competitor of the United States or Chinese businesses are competitors of American businesses or other business around the world,” he said, “and that therefore you want to be, if you’re diversified, having bets on both horses in the race….”
With China increasingly opening its markets to foreign investors, Dalio cautioned that “it is better to be early than it is to be late.”
He also dismissed the notion that China is any more risky than the U.S., Europe or emerging markets since each has its own sources of risk.
And if Dalio is wrong about the whole “classic war” thing? Well, if you don’t have a gold-lined bunker on the Connecticut coast, it doesn’t matter.
If there’s no big war, I’m bullish on China and if there’s a big war, I’m bearish on both the U.S. and China.
We eagerly await Peter Thiel’s op-ed calling out Dalio’s treachery and duplicity before the bombs wipe out the West Coast.