The stock market could be on the verge of a 'lost decade,' Ray Dalio's Bridgewater warns

• Ray Dalio's Bridgewater Associates said in a note on Tuesday that the stock market could be on the verge of a "lost decade" for investors, Bloomberg reported on Thursday.
• A "lost decade" for stocks would reverse a years-long trend of strong growth for corporate earnings as globalization has already peaked, Bridgewater said.
• The firm said the COVID-19 pandemic would harm companies. "Left with lower levels of profits and cash shortfalls, companies are likely to come out on the other side of the coronavirus more indebted," the note said, according to Bloomberg.
• Bridgewater, the largest hedge fund in the world, recently suffered a 15% slump in assets amid the COVID-19-induced market sell-off.
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The stock market could be on the verge of a "lost decade" for investors, as globalization "has already peaked," Ray Dalio's Bridgewater Associates said in a note on Tuesday, Bloomberg reported on Thursday.

Bridgewater, the largest hedge fund in the world, said it thought the years-long trend of strong corporate earnings could see a multiyear reversal exacerbated by the COVID-19 pandemic.

"Globalization, perhaps the largest driver of developed world profitability over the past few decades, has already peaked," the firm said, according to Bloomberg. "Now the U.S.-China conflict and global pandemic are further accelerating moves by multinationals to reshore and duplicate supply chains, with a focus on reliability as opposed to just cost optimization."

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The note pointed to developments from two companies, Intel and Taiwan Semiconductor, to back up Bridgewater's thinking on globalization, Bloomberg said. Both firms have recently said they intend to build their next production facilities in the US despite the higher costs.

"Even if overall profits recover, some companies will die or their shares will devalue along the way," the analysts said, according to Bloomberg. "Left with lower levels of profits and cash shortfalls, companies are likely to come out on the other side of the coronavirus more indebted."

Bridgewater recently suffered a 15% slump in assets amid the COVID-19-induced market sell-off.

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