The single most important principle an investor should currently be following is diversification, according to Ray Dalio, the billionaire founder and former CEO of Bridgewater Associates, one of the world’s largest hedge funds, with $162 billion in assets under management. He noted as well that the US can protect itself from uncertainties in a debt-ridden market by investing in gold.

“Diversification is very important, particularly at a time of current uncertainty, to be able to make tactical decisions that could help you beat the markets,” Dalio said.

“We emphasize diversity. Just on the basis of that, a well-diversified portfolio will have somewhere between 10-15% in gold in the portfolio. It is an alternative currency that is uncorrelated with other assets, because when you have a crisis, it tends to go up a lot and the others go down a lot,” he said.

The legendary investor was in Abu Dhabi, attending the launch event of Abu Dhabi Financial Week (ADFW) 2025.

Building on his decades-long relationship with the UAE, the 76-year-old opened a regional office for the Dalio Family Office last year in ADGM. In July, he sold his remaining stake in Bridgewater Associates, the hedge fund he founded 50 years ago.

According to the hedge fund guru, investors should rethink what constitutes a neutral portfolio. He cautions against being overly biased towards traditional debt and asset classes and emphasizes the importance of maintaining appropriate diversification.

“The world is abundant in debt. When you are holding money, you are holding a debt instrument. And one man’s debt is another man’s asset. So when you are holding it as an asset and a store of wealth, there is a problem,” Dalio said.

Amid rising geopolitical tensions, “it’s important to know whose money you’re holding,” he said. He pointed out that countries like China, Japan, and Russia placed their reserves in US assets, mostly bonds, which ultimately didn’t work out well for them. “For these reasons, people should consider what a neutral portfolio looks like and should not be so biased toward traditional debt and asset classes,” he added.

Dalio also talked about US tariffs observing that they may bring in revenue for the US, but the country is spending even more to service its debt, Dalio said.
He compared the credit and capital markets to the human circulatory system: “Credit works like nutrients. If it’s directed into investments and activities that generate income, the system stays healthy. But when it’s not, debt servicing builds up like plaque, squeezing out other spending. That’s what we’re seeing happen now.”

(Writing by Seban Scaria seban.scaria@lseg.com; editing by Daniel Luiz)