Date: Thurs, November 28 2019
Author: Connor Smith
In a report controversial article, The Wall Street Journal reported that the world’s biggest hedge fund is waging that global stock markets will fall by March 2020. Bridgewater Associates’ founder Ray Dalio disputes this news.
One thing for sure: Bridgewater has spent around $1.5 billion for options contracts assembled over months by Goldman Sachs and Morgan Stanley that would reward the firm if the S&P 500 or the EURO STOXX 50 (or both) decline, The Journal reported, citing sources it didn’t name.
According to its website, Bridgewater handles in estimation $160 billion in assets, of which this bet represents less than 1% of that total. The organization also came in top in last year’s list of most profitable hedge funds. With reference to The Journal, the organization is practicing “put options” that are due for expiry in March.
The firm dismissed commentary on its specific positions, but reported in a statement to Barron’s that, “the way we manage money is to have many interrelated positions, often to hedge other positions, and these change often, so that it would be a mistake to look at any one position at any one time to try to deduce the motivation behind that position.”
After which, Dalio firmly wrote a response of his own accord on Linkedin, one that was raw and much stronger. “The Wall Street Journal wrote an article stating, ‘Bridgewater Bets Big on Market Drop.’ It’s wrong. I want to make clear that we don’t have any such net bet that the stock market will fall.”
However, Dalio had expressed pessimism in the market with a degree of cynicism. In a recent blog post, he wrote that trends such as zero-interest rates, low returns and growing economic inequality are unsustainable. In addition, he also told CNN Business that he feels a “great sag” is approaching for global markets.
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