Ray Dalio warns 'cash is trash' as Warren Buffett sits on $128 billion

Brian Snyder/Reuters

• Ray Dalio proclaimed "cash is trash" and warned investors against ditching stocks for dollars in a CNBC interview on Tuesday.
• The Bridgewater Associates boss argued a weaker dollar and growing money supply would be eroded by the value of hard currency over the next few years.
• Dalio's advice contrasts with the stance of Warren Buffett, whose Berkshire Hathaway conglomerate was sitting on a record $128 billion in cash at last count.
• "I will never risk getting caught short of cash," the famed investor told shareholders last year.
• Visit Business Insider's homepage for more stories.

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Ray Dalio proclaimed "cash is trash" and warned investors against ditching stocks for dollars in a CNBC interview on the sidelines of the World Economic Forum in Davos, Switzerland on Tuesday.

The advice from the billionaire founder of Bridgewater Associates, the world's largest hedge fund, contrasts with the stance of Warren Buffett, whose Berkshire Hathaway conglomerate was sitting on $128 billion in cash at last count.

Dalio warned the value of hard currency would be eroded by a weaker dollar and growing money supply. He recommended investors build a globally diversified portfolio that includes at least some gold.

"The depreciation of the exchange rate and the printing of money over the next few years is going to be the biggest thing," he said. "Cash is not gonna be good."

Last week, Bridgewater Associate boss Gregg Jensen told the Financial Times that Gold could spike 30% to a record high of over $2,000 an ounce as central banks allow inflation and political fears mount.

Meanwhile, Dalio struck a similar chord at Davos two years ago, saying investors would "feel pretty stupid" if they hoarded cash while stocks soared. The three main US stock indexes - the Dow Jones Industrial Average, the S&P 500, and the Nasdaq - are currently trading close to record highs.

Buffett has balked at current market valuations and shied away from bidding wars for Tiffany's and Tech Data in recent months. As he continues to hunt for Berkshire's next "elephant-sized" acquisition, Berkshire's cash pile has ballooned to a record level.

"Prices are sky-high for businesses possessing decent long-term prospects," Buffett wrote in his letter to shareholders last year, tempering their expectations of a major takeover. He also underscored the value of dollars as a safety net, adding, "I will never risk getting caught short of cash."

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