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Even the world’s biggest hedge fund was caught flat-footed by the coronavirus market sell-off


Ray Dalio, Bridgewater Associates Founder, President & CIO.

Anjali Sundaram | CNBC

Bridgewater Associates, the largest hedge fund in the world founded by Ray Dalio, has navigated several market downturns with great success. The recent coronavirus-induced sell-off is not one of them, however.

The Financial Times reported Bridgewater’s flagship fund — the Pure Alpha Fund II — is down about 20% for the year following the swift plummet from all-time highs into a bear market from stocks. For March, the fund was down about 13% through Thursday’s close, according to the report. Overall, Bridgewater manages more than $160 billion in assets. 

“We did not know how to navigate the virus and chose not to because we didn’t think we had an edge in trading it. So, we stayed in our positions and in retrospect we should have cut all risk,” Dalio told the Financial Times in a statement.

Bridgewater’s massive losses come after Dalio told CNBC in late January investors should take cash out of their portfolio, noting: “Cash is trash … Get out of cash.”

He also said “everybody is missing out.” Dalio added, however, investors should have some balance in their portfolio and advised investors buy gold as a hedge.”

Equities have tumbled more than 20% since reaching their record highs just last month, officially ending the longest bull run in history and kicking off a bear market. Microsoft is the only Dow Jones Industrial Average member with a gain year to date; the other 29 stocks are down at least 4% for 2020.

All 11 of the S&P 500 sectors are down at least 12.5% from their 52-week highs. Energy has had the biggest plunge, closing Friday’s session down 52.4% from its 52-week high.

“We’re disappointed because we should have made money rather than lost money in this move the way we did in 2008,” Dalio told the FT.

The market’s steep sell-off came as the coronavirus quickly spread across the globe, ratcheting fears of slower economic and corporate profit growth.

So far, more than 156,000 people have been infected with the coronavirus, data from Johns Hopkins University shows, with global deaths topping 5,800. In the U.S., more than 2,900 cases have been confirmed with at least 57 deaths.

Click here to read the full Financial Times story.

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