Billionaire Ray Dalio says retail investors should not make this big mistake

Matt Bird  |

Billionaire hedge fund manager Ray Dalio wants the average investor to learn from the errors of others.

In fact, the “biggest mistake” he sees investors make is thinking that markets that went up recently are “better bargains rather than expensive bargains.”

“Don’t make the mistake of buying those things that have gone up thinking they’re better rather than more expensive,” Dalio recently told CNBC’s Leslie Picker at the Greenwich Economic Forum in Connecticut.

He certainly knows the ins and outs of the stock market. His firm, Bridgewater Associates, is the largest hedge fund in the world, managing about $160 billion in assets.

The stock market is now enjoying the longest and best bull run in history, a 10-year boom that started in March 2009.

On Friday, the Dow Jones Industrial Average hit a new all-time high, reaching 28,000 for the first time. The S&P 500 and Nasdaq Composite reached new highs as well, climbing 0.8% to 3,120.46 and 0.7% to 8,540.83, respectively. Last week, the S&P posted its sixth straight weekly gain, its longest winning streak since 2017.

Dalio also has a second piece of advice for retail investors: Know how to diversify your portfolio well.

“Through diversification, you could reduce your risk without reducing your return,” he said.

The general rule of thumb has been the “60-40” rule, which means a portfolio should be made up of 60% stocks and 40% fixed-income assets. The stocks are riskier, yet higher-yielding than bonds, while fixed income is generally a safer, more secure investment.

However, you should assess your specific situation and how far or close to retirement you are when deciding how to diversify your portfolio.

Contributor (s): Matt Bird - Republished by Equities News in-house editorial desk

Source (s): Michelle Fox, CNBC

"Matt Bird" is the Network President of Equities News (Equities.com), Executive Producer and co-host of the Traders Network Show. 2019 Matt Bird was appointed to the advisory board and committee of Humanity 2.0, a Vatican City based non-profit focused on solving human impediments. Matt Bird also serves as chairman (Co-Founder) of Communication Marketing agency 1-800-PublicRelations (1800PR). In 2015 Matt Bird was ranked 3rd "Top 10 Most Influential Communications and Media Executives for Impact by the United Nation and PVBLIC - and was the acting director of communications for the U.N. SDG Media Zone. Matt Bird has lead ESG, social impact, sustainability and Public-Private Partnership initiatives for the United Nations, UN SDGs, UNCTAD, EU Parliament, NGOs and the U.S. Department of Commerce (International Trade Administration- trade.gov). Prior, Matt Bird was CEO of MUNCmedia, a (PaaS) news content distribution platform and network spanning 1400 publishers, reaching more than 110 million retail and institutional investors worldwide. In 2009 NASDAQ acquired the platform for integration into NASDAQ Financial Services group. The core technology and IP powers news targeting algorithms and content monitoring systems used by nearly all stock exchanges and newswires services today. On Sept, 21 2009 Matt Bird rang the NASDAQ Closing Bell in honor of his partnership the NASDAQ OMX and Globe Newswire for accomplishment to further the FinTech and financial communications industry. Matt Bird has severed as EVP and director rolls at BBDO, MarketWatch (formally ScreamingMedia), IGM. Mr. Bird current sits on numerous NGO, Public-Private partnership and reneging growth organization boards focus on economic development for social change.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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