by winston » Thu Feb 14, 2013 6:22 am
The world's biggest hedge fund is super-bullish on stocks and commodities now
Bridgewater Associates LP, the $140 billion hedge fund founded by Ray Dalio, is betting on global stocks and oil as it expects money to move into equities and other assets amid increased economic confidence.
Bridgewater, the world's biggest hedge fund, is bullish on stocks, oil, commodities, and some currencies as it expects cash to shift to riskier assets, co-chief investment officer Bob Prince said on a client conference call on Jan. 23.
"You want to be borrowing cash and hold almost anything against it," Prince said, according to a transcript of the call obtained by Bloomberg News.
Bridgewater likes oil because of the potential for falling stockpiles at wholesalers and economic growth in the U.S. and China, Prince said.
"If you get better growth in the U.S., better growth in China, inventories coming down some, and then the incremental supply coming down some -- we're seeing some shifts in the supply-demand balance in oil," Prince said, according to the transcript. "A bullish shift there for oil."
Bridgewater, which is also betting on the price of gold to increase, forecasts U.S. growth of about 2.5 percent, Prince said during the call without citing a time period, according to the transcript. Economists estimate an average increase of 2 percent in 2013 gross domestic product, according to a Bloomberg survey of 82 respondents.
"It's more of a movement of capital. The money moving out the risk curve and into risk assets won't take much growth to trigger that kind of shift."
Bridgewater is positive on currencies including the British pound, Korean won, Mexican peso and Russian ruble, according to a chart in the transcript showing the firm's current views, which Prince referred to during the call. The firm is bearish on the Japanese yen, Australian dollar, and Canadian dollar, the chart shows.
"We're now short the yen, largely related to the change in their balance of payment circumstances and, subsequent to that, the emphasis on a more aggressive monetary policy," Prince said.
"We are bullish on sterling, largely related to differences in capital flows and the impacts of monetary policy between the U.K., Europe, and United States."
Bridgewater is wagering on European bonds and betting against those in the U.S., Japan, U.K., and Australia, the firm's chart shows. It's bearish on emerging sovereign credit.
"You're likely to do reasonably well until you hit the tail end of that cycle, where you get the central banks pulling back on liquidity," Prince said.
"That can continue for some time until the Fed no longer continues to inject liquidity. That would end that cycle and push all yields up which would, of course, hurt asset returns."
Source: Bloomberg
It's all about "how much you made when you were right" & "how little you lost when you were wrong"