Here are some of Ray Dalio’s recent thoughts on Bitcoin:
“Bitcoin has proven itself…”
“It’s got merit.”
“It should be part of any portfolio.”
How does someone like Ray Dalio go from “it’s bad” to “it should be a part of any portfolio“?
Can we profit from this and if yes – how?
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Recently, I came across some statements by Bridgewater’s founder Ray Dalio, concerning Bitcoin. Apparently, he’s changed his mind about the viability of Bitcoin and now sees it as a “valuable addition to any portfolio”. And, so, I decided to sit down and write a blog about this. Not just about Bitcoin and his change of heart, but about these types of situations in general.
Ray Dalio is someone who is well-known for having a negative opinion of Bitcoin. Just four years ago, he expressed the belief that “Bitcoin is a bubble”. Now, however, he’s stating that “Bitcoin has proven itself … as money with imputed value”
He goes on to say that he likes “the diversification of this kind of asset. It should be part of any portfolio. It’s got merit.”
Now, I’m obviously not telling you that “you should go and invest in Bitcoin right now”. That’s something that you need to decide on your own, preferably after putting plenty of time into research. But it’s really interesting because massive shifts don’t happen all that often, and when they do, it’s usually a great opportunity to make a lot of money.
“If institutions are open to investing into the asset, then maybe there is some merit to it after all.”
When you have a group of people, who are so divided on an asset, and would go as far as saying things like “I will never invest in it” and “I don’t believe it has a future”, and then these same people make a 180 degrees turn, you’re looking at a massive shift.
And, it’s not just Ray Dalio who changed his mind. A lot of investors are starting to see Bitcoin in a new light. You could even say that Bitcoin is getting to that sweet spot that Tesla was at a couple of years ago. Yes, people are still somewhat skeptical, but money is steadily flowing in, and it could very well reach the tipping point soon.
Why is Bitcoin so popular all of a sudden?
When the big players suddenly decide to have a change of heart, the first question that we should be asking is “why?”.
Maybe they’re all seeing something that everyone else is missing? Or, maybe, they’re looking at it from that same long-term investing mindset that we talk about here, on this channel.
Long-term investors like safety and stability. And, up until a few years ago, Bitcoin was largely treated as a gamble. The entire asset class was frowned upon by a huge portion of the investment community, both because it was new (and lacking historical data), and, because it wasn’t widely adopted.
All of this is changing rapidly, in no small part thanks to the moves of the major players. I keep going on and on about how “smart investors should not base their decisions on what others are doing”, but most people are going to do just that. The actions of these big players can have a massive impact and potentially end up altering the entire landscape.
It’s more than reasonable to expect that people are going to start buying Bitcoin simply because others are also buying Bitcoin. The institutions and big names, the fund managers, and so on.
This also happens with some publicly traded businesses. Take Tesla, for example.
In 2019, Tesla was experiencing a similar division. You had these super passionate, dedicated investors, who were all about Tesla. They were huge believers in the company’s future and were praising Musk’s choices left and right. Then, you also had the naysayers. The other group of investors, who were really skeptical and absolutely certain that Tesla will fail. I started to invest in tesla in 2018 and, one of my friends was so against that, then last year she was so unhappy that she did invest in Tesla like me. 🙂
Eventually, the general opinion shifted, and most tech investors today are big believers in Tesla. Of course, all of the institutional money that went into the stock also helped. But once everything was said and done, Tesla took off in a massive way.
However, one important thing to note here is that the window to profit from these kinds of shifts is very narrow. It all happens very quickly Because as soon as people notice what’s going on, they all try to jump on board and the price just skyrockets overnight.
This means that the best way to really profit from the whole situation is to get in as early as possible. Again, you should never do this, unless you really believe in the particular stock or, in this case – asset class. But, if you sit down, put in the effort, do the research and you do decide that this is something that you want to get into, you might want to keep a close eye on the time window.
Now, comes the big question:
“Does all of this guarantee that Bitcoin is a good investment right now?”
Well, you’ll just have to figure out the answer to this one for yourself.
Personally, I do believe in the future of Bitcoin and I have been making incremental moves into this asset class. It will probably stick around for a while, and with so much money flowing into it, I don’t see it losing value anytime soon. If you enjoyed this blog, please give it a like and share it with your friends. I really appreciate your support and it helps a ton.
Thank you for reading, and until next time!
Recommended for further reading:
- The Financial Times Guide to Investing:The Definitive Companion to Investment and the Financial Markets: The Definitive Companion to Investment and the Financial Markets
- Stock Market Investing For Beginners: The Investment Guide
- The Barefoot Investor: The Only Money Guide You’ll Ever Need
- Stock Market Investing For Beginners: The Investment Guide – How to benefit from the crisis, invest in stocks and generate long-term passive income incl. ETF and Stock Picking Checklist
- The Stock Market Investing Guide #2020: From Beginner to Intelligent Investor within 30 Days – How to Save Money, Generate Passive Income and Reach Financial Freedom