Get Out Of Stocks Now is essentially what billionaire hedge fund manager Ray Dalio has been screaming at the top of his lungs. This is someone who over the course of his four decade plus career, founded one of the most successful hedge funds of all time and built himself a net worth of over 19 billion bucks before officially retiring earlier this month. And he's come out with some pretty damn big warnings and new predictions that you're going to want to know about. and I will put all the time stamps down below and do all the work for you in presenting them.

All you got to do is sit back with some coffee and maybe some antidepressants and we'll get to work. And this video is brought to you by the up to 15 free stocks that you can get if you sign up and deposit using MooMoo Down below. They are an excellent trading and investing platform and we think you'll like them a lot. If you would like, you could simply sign up, try them out, get your free stocks, and then sell them.

Okay, so the Dalio situation really starts on October 3rd October 3rd Galio has long been known for the quote cash is trash, yet he's done a little bit of a flipper through on this. He tweeted Out quote as John Maynard Keynes is credited with saying when the facts change I changed my mind, what do you do sir Along these lines, the facts have changed and I've changed my mind about cash as an asset I No longer think cash is trash at existing interest rates and with the FED shrinking the balance sheet, it is now about neutral. neither a very good or very bad deal. In other words, the short-term interest rate is now about right.

So two things: number one: the individual he is quoting Mr Keynes is ironically the person most responsible for the current economic system and really ills that we have right now where free markets are controlled by central banks and governments, both of which tend to get it wrong on both sides of the spectrum. But in a true free market, you'd have massive boom and bus fluctuations that are uncontrollable and frequent based on rotating supply and demand Trends and different economic disasters. So Mr unlimited money Keynes Had this idea that we could use targeted government intervention via spending measures and Central Bank intervention via interest rate setting and so on and so forth and lending borrowing protocol changes such as adjusting Reserve rates and we could use those tools to basically smooth out and put into our central control the economic cycles that otherwise would be completely left to the free market to control for Price stability and of course, support low unemployment, a healthy economy. In time periods where one of those were under threat, you could insert different tools to fix this instead of just allowing the market to do whatever it pleases.

But moreover, Keynesian Economists are often the ones arguing that we should take on deficit spending on things such as labor-intensive infrastructure projects to stimulate employment and stabilize wages during economic downturns as well. AKA If you're in a massive, massive rut, just borrow a ton of money and then spend it and then everything's gonna recover. However, of course, in recent decades, policy makers have taken his theories to the extremes where federal banks were essentially stimulating at a pace of free money and governments were borrowing and spending at a pace of many times. GDP creating huge bubbles and then huge periods of economic destruction instead of free market.

Cycles Where you would be on an ocean that goes like this. Instead, it smoothed out the ocean and then all of a sudden you get a massive tsunami and it would go back and forth. and then it would go back to smoothing out until you get the next massive tsunami. His theories create long stretches of stability and then massive, massive instability Because the truth is that while you can smooth over economic Cycles Well, the production and your supply and demand still eventually have to catch up, and in fact, every single cycle, his theories are taken to a more extreme level.

And in fact, in 2020, we used his theories to try to avoid an economic Collapse by pulling forward economic goods and services during a time period where most of the economy was shuttered and not producing new goods and services. Thus, we essentially skirted and padded a lot of the economic bludgeons that would have happened if we just allowed the economy to be shuttered naturally. And of course, it did speed up the recovery. It was a very, very fast recovery, but in in the aftermath, you have to start paying for that pushed forward Demand right.

And once you run out of the supply all of a sudden, you get massive inflation. So going back to Dalio, the irony of him quoting Keynes and Kane's opinion and acceptance of flipping when the data suggests it is necessary is that the thing that Dalio is flipping on is due to the results of the system that Keynes started the development of. For most of Dalio's four decade plus career, we've gotten more and more Keynesian lower and lower rates, more and more borrowing, and now he's saying we are going to be flipping the other way And thus his long quote. His long-term quote that cash is trash is now also flipping And then the question becomes, well, why exactly is Cash no longer trash according to Dalio, at least I Mean we know that Powell is wiping his literal rear end with the cash.

Well, if you read between the lines, he is not exactly saying that cash is good. he's saying that it simply isn't trash. He says it is now about neutral. neither a very good or a very bad deal.

Which if he feels the need to come and flip on this Mass of opinion he's long held, he's making an argument from relativity, right? Cash is no longer trash, but it's not great either. However, he seems to suggest that it's better than the Alternatives. It is relatively better than almost anything else you could hold capital in, like for example, stocks, which he recently suggested would fall another 20 onto the over 20 plus percent they've already fallen I Believe Here, he's not so much making a big endorsement of cash so much as he is saying that all other asset classes are substantially worse in this current environment. And when people talk about cash, they're not just talking about cash, but they're also talking about cash equivalents.

Things that you can put cash in for things that are very, very similar to cash, but also provide a return like, for example, T-bills T-bills You give your money to the treasury for a short amount of time and the yields on those are going up pretty quickly. Recent Tebow auctions offer yields up to and sometimes over four percent right now, which by the way, it's usually free of state income taxes. which means High tax. States like mine technically see a higher return than they otherwise would.

A four percent return turn could really be like a 4.5 percent return or a five percent return based on your income tax rate. And after the next Fomc meetings, these rates will go higher. So it's like if you want to hear out Dalio where in the stock market can you get a guaranteed four or five percent return right now? Nowhere And then you could say well, yeah, Charlie Okay, fine, four or five percent. But inflation is at eight percent, so you're still underperforming inflation.

Okay, but think about this for a second. Remember, the S P 500 is down 20 percent year-to-date so a positive risk-free return of four percent in T Bills versus a negative 20 return in the S P 500 which one has underperformed inflation more obviously the S P 500. If you're in the S P 500, you're not just down 20 percent. but the 80 percent that is left is worth 10 percent less than it was a year ago.

So you've had a massive bludgeon to the overall nominal number. and when you look at how it adjusts for inflation, you've also gotten a bludgeon there. And if you believe the FED will continue hiking rates which I do, and you believe that inflation will eventually come down below eight, seven, six, or even five percent, Well, that means that very very soon T Bills are going to be outperforming inflation. Which means they're going to be some of the only areas in the overall economy and the overall Financial system where you can get a positive return and it's going to be risk-free Charlie U.S Government Debt.

There's so much of it. Government debt is not risk-free Stop saying it's risk-free Well, it's actually the only asset that you can say is risk-free And it's because the US Government does guarantee it. And if you don't trust the US government, well, your Usds and any U.S company and really anything that's in the U.S financial system isn't going to be worth anything anyways. So that's a whole nother.

Rabbit Hole to go down. So I Think What Dalio is trying to say here is not so much that oh, cash or a four percent t-bill yield is great. But it's not trash. It's not trash compared to what you're going to be getting if other assets continue on their current trajectory.

So at the Greenwich Economic Forum Dalio just said quote. the Fed and government together gave enormous amounts of debt and credit and credit. a Lurch forward A giant Lurch forward and created a bubble. Now they're putting on the brakes.

So now we're going to create a giant Arch backward. So this is something that we talked about a little bit earlier and these are in his words, but this is a pretty damn simple concept if you think about it. If you are in an environment where the economy is shut down and you attempt to Lurch forward with extreme government intervention and spending and borrowing, eventually, you'll have to pay for that by doing the exact opposite of it to cancel it out. All of the pain that you skipped in the previous cycle needs to be felt and needs to be dealt with Either pay for that by lurching backward by destroying your economy for a time period or you'll allow inflation to get out of control which will eventually destroy the economy anyways because all of the supply that we pushed forward so that we can have fake demand, purchase it all back in 2020 and really in early 2021 as well.

Well, all of that now. Well, now it's time to pay for that and other inflationary pressures like Russia's war in Ukraine Just add even more complications to the picture and more things we'll have to pay for down the road. Okay, so Dahlia was asked what do you fear will be reading about financial markets in the next five years He told MarketWatch I fear that in the financial markets in the next five years we will be reading about the negative or poor real returns in much the same way as we had in the 1970s. So this answer Builds on what he has already said elsewhere and that we already covered, we lurched forward demand so much that we now have to Lurch backwards in order to repay for that and at the same time because of some heightened Commodities You're going to continue seeing like we saw in the 1970s some pretty bad returns when you adjust for inflation and when you consider that, he also thinks the cash is no longer trash.

but he continues to think that inflation is going to be bad. Well, that, really tells you his thought process on how bad the overall situation is going to be in the next five years. But the other thing is like, hey, if cash is becoming more competitive, if the risk-free return is becoming more competitive, well then all of a sudden that drags so much cash out of the stock market. which means less available capital for businesses to grow and less and less Alpha that the market is going to generate over other other periods of time.

So then when asked, where will the market opportunities be over the next five years, he went and talked about certain areas in Asia but then commented on the need to diversify portfolios. quote portfolios are too concentrated in equity-like assets. they go up and down together. I Think we're going to see a bright spot coming in terms of better portfolio construction, to create better balanced portfolios, to have less volatility, and to move through that, we're going to see more attention paid to inflation-adjusted returns than nominal returns.

So a move away from equity-like assets, a new focus on inflation-adjusted returns and less volatility. What is he talking about? What does it sound like he's talking about what kind of assets? Well, it sounds like he's talking more and more about precious. Commodities Maybe Gold bonds? Dalias Famous all-weather portfolio he's recommended for years has looked like this: 30 stocks, 40 long-term bonds, 15 intermediate bonds, seven point, five percent gold, and 7.5 Commodities. His recent statements and predictions suggest cutting back on on the already low allocation to stocks and allocating more money to gold and commodities maybe to cash and cash equivalents like T-bills and maybe more to intermediate bonds, which should see higher and higher yields in the coming years if the FED continues on the current trajectory.

Now, what I will note is that this all-weather portfolio, if you know anything about history, has been a complete disaster for the last 10 years. This is not really what he follows himself. This is not what his fund has followed rather, but this is what he recommends people follow. And it's performed very, very poorly because bonds have performed so poorly, because bonds have performed so poorly, and a lot of Commodities have performed very poorly aside from the last year or two.

But if he's right and we are in a new era, perhaps that Dynamic shifts. But here are my concluding thoughts. So maybe it is wishful thinking, Maybe it's my own bias towards stocks, and maybe it's my strong belief that policy makers lack any real responsibility over the long run. But if you read a lot of bearish opinions whether they are from Dalio or whether they are from even Michael Burry or somebody like that that's known for bearish opinions, well, you'll start noticing them.

A lot of these opinions are based on this idea that this new generation of policy makers all of A sudden are committed to writing every wrongdoing that we've had over the last few decades and are willing to put the economy and the global economy really into a long-term period of austerity measures that destroy the economy, cause massive, massive unemployment, cause massive, massive lagging growth, and really contraction over many, many years, And they're willing to do all of these things to erase all of the policy wrongdoings that we've done over the last four decades. Problem with this analysis is a Lot of Bears. A Lot of bearish analysts. and I mean long-term bearish people.

It makes a lot of sense to be short-term bearish, but a lot of long-term bearish analysts are obsessed with this idea that policy makers are going to handle things responsibly all of a sudden because things are breaking again. The thing is that policymakers know how to handle this, and this is how they will handle it by kicking the can down the road and leading to the next era of inflation and growth and bubbling. Fact of the matter is that Kane ZN policies are what got us into this mass. and once your economy is addicted to Keynesian policies of pumping and pumping and pumping.

and then having to dump and dump and dump. And then pumping and pumping and pumping again. well, it's very, very difficult to get back off that without insane, insane economic catastrophe and really a total reset of everything that's going on. Not that anybody didn't warn of a total reset, but that's a whole other boat.

Policy makers have developed this completely genius strategy where they go and they kick the can down the road. It takes five to ten years to land, and then when it lands, they have to exert a lot of effort to do another kick. But then you've got another five to ten years ahead of you and they keep doing this again and again. Yes, eventually you can no longer Kick the Can down the road.

Yes, eventually something is going to break, but who knows when that will be. And this time around. I Have my bets that after we go through this next round of a pretty aggressive recession in economic collapse, you're going to see yet another period of mass scale intervention and bullish Keynesian policies coming right back. which means new rounds of assets pop been all across the board in a reversal reversal to what we saw during the last decade.

Anyways, that caps off the video. Make sure to get your up to 15 race dogs with MooMoo down below and have a great rest of your day. hit that ravaging like button and subscribe and we'll see in the next one.