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Hedge fund titan Ray Dalio warns investors against trying to time the market as Omicron rocks stocks

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The 'king of hedge funds' Ray Dalio had a nightmarish 2020

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  • Hedge fund boss Ray Dalio warned against trying to time the market as Omicron causes volatility.

  • He said it's important to be invested in a balanced portfolio and cautioned against holding cash.

  • Dalio also said money printing doesn't raise living standards in the economy, but said productivity is key.

Legendary investor Ray Dalio has warned people against trying to time the market as uncertainty about the Omicron coronavirus variant shakes stocks.

Dalio told CNBC on Tuesday that the most important thing for investors is to be in a safe, well-balanced portfolio and to not try to be too smart.

"You will not market-time this. Because even if you were a great market timer, the things that are happening can change the world, so it changes what should be priced into the markets," he told CNBC's Andrew Ross Sorkin.

The discovery of a new coronavirus variant, which the World Health Organization has called Omicron, has triggered volatility in stocks after a placid period for the market.

The US benchmark S&P 500 index dropped 1.9% Tuesday, after Moderna's CEO said existing vaccines were unlikely to be as effective against the new virus strain.

Scientists are rushing to find out more about Omicron. In the meantime, investors have been left guessing about the possible economic impacts. Many analysts have recommended staying invested, and said that the fundamentals of the US stock market still look sound.

Jean Bovin, head of the BlackRock Investment Institute, said in a note this week: "We stay invested for now as a new virus strain and European COVID surge are hurting risk sentiment. Any delay of the powerful restart now means more later." 

Dalio, the founder and co-chief investment officer of Bridgewater Associates, the world's biggest hedge fund, was dismissive of those buying and selling around the volatility.

"To say, here's the stock market, and I'm going to time the movement into the market, I'm going to time the movement out of the market …. You're going to guess what the next variant move is?" he said.

The veteran investor did have some advice, however: stay away from cash. Dalio has long argued that "cash is trash," given its value is eroded by inflation.

He also weighed in on Federal Reserve policy, saying that simply printing more money to buy bonds isn't going to make the economy more productive.

"You can't raise living standards by raising the amount of money and credit in the system, because that's just more money chasing the same number of goods," he said.

Dalio told Insider this week that diversification is key for investors in volatile times. "You have to pay attention to inflation, and don't view being safe as being in cash," he said in an interview about his new book.

"Instead, you can have a liquid and diversified portfolio of assets."

Read more: Billionaire investor Ray Dalio warns that the US is coming to the brink of an empire-ending catastrophe. Here's why he's worried, and how he says you should invest your money.

Read the original article on Business Insider