The World’s Biggest Hedge Fund Caught Flat-Footed By The Coronavirus Market Sell-Off

Date: Wed, 18 March 2020

Author: Fred Imbert



The top hedge fund in the world [Bridgewater Associates], founded by Ray Dalio, had managed to manoeuvre a considerable number of market downturns with victories. However, the coronavirus-induced sell-off lately, is not within their grasp.


Reported by The Financial Times, Bridgewater’s flagship fund — the Pure Alpha Fund II — had taken a beating of about 20% for the year following the swift plummet from record-highs into a bear market from stocks. According to the report in March, the fund fell about 13% through Thursday’s close. In total, Bridgewater handles more than $160 billion in assets. 


Dalio told the Financial Times in a statement, “We did not know how to navigate the virus and chose not to because we didn’t think we had an edge in trading it. So, we stayed in our positions and in retrospect we should have cut all risk.”


Bridgewater incurred massive losses after Dalio told CNBC in late January investors should take cash out of their portfolio, noting: “Cash is trash … Get out of cash.” He also mentioned “everybody is missing out.” He added, however, investors should have some balance in their portfolio and advised investors buy gold as a hedge.”


Equities have fallen more than 20% ever since they attained record levels last month, formally putting an end to the longest bull run in history and kicking off a bear market. Microsoft is the only Dow Jones Industrial Average member with a gain year to date.


The other 29 stocks are down somewhat by 4% for 2020. As a matter of fact, 11 of the S&P 500 sectors are down at least by 12.5% from their 52-week highs. Energy dealt with the biggest nose-dive, closing Friday’s session down by 52.4% from its 52-week high.


Dalio stated in Financial Times, “We’re disappointed because we should have made money rather than lost money in this move the way we did in 2008.” The market’s steep sell-off showed up as quick as the coronavirus spread across globally, raising fears of a slow-moving economy and corporate profit growth.


Statistics from Johns Hopkins University depict that beyond 156,000 people have been infected with the coronavirus up to date. Global deaths are also topping 5,800. U.S., has exceeded 2,900 with confirmed cases for at least 57 deaths.


Keyword :, Sterling House Trust, SHT