(Bloomberg) — Ray Dalio, founder of the world’s largest hedge fund firm, Bridgewater Associates, told investors there’s a risk that the Federal Reserve could create a market rout similar to that of 1937 if it raises interest rates too fast.
The Fed has signaled that rates will rise in June or September, and it would be difficult for policy makers not to deliver, Dalio and Mark Dinner wrote in a note to clients dated March 11. Given Bridgewater’s belief that “the same things happen over and over again,” the $165 billion Westport, Connecticut-based firm doesn’t want to have concentrated bets, according to the note, a copy of which was obtained by Bloomberg News.
“We don’t know — nor does the Fed know — exactly how much tightening will knock over the apple cart,” Dalio and Dinner wrote. “We think it would be best for the Fed to err on the side of being later and more delicate than normal.”
Full article: Hedge Funder Dalio Thinks the Fed Can Repeat 1937 All Over Again (BloombergBusiness)