Billionaire and founder of the world’s largest hedge fund, Bridgewater Associates, Ray Dalio published an extensive review of 2025, in which he not only assessed the market events of the past year but also outlined key structural shifts in the global economy and finance. His conclusions go far deeper than a standard market commentary and effectively describe a change in the investment paradigm.
According to Dalio, many investors remember 2025 as a triumph of the US stock market and, above all, large technology companies linked to artificial intelligence. This sector is often referred to as the main investment story of the year. However, the billionaire believes that such an interpretation is misleading. The real picture, in his view, looks far less optimistic for the dollar and US assets.
Dalio emphasizes that the high returns of the US market in dollar terms were driven not so much by real growth in asset values as by the weakening of the currency itself. In 2025, the dollar lost 0.3% against the yen, 4% against the yuan, 12% against the euro, 13% against the Swiss franc, and as much as 39% against gold. At the same time, weaker currencies fell even more, while stronger ones, on the contrary, appreciated. This, according to Dalio, is a key factor that many investors underestimate.
He calls gold the best investment of the year. Its return in dollar terms amounted to about 65%, while the S&P 500 index showed growth of roughly 18%. But even here, Dalio notes, the reference point matters. If an investor measures their wealth in gold, investments in the S&P 500 actually delivered a negative return – around minus 28%. This distorted perception of returns, in his view, became one of the main traps of 2025.
“When one’s own currency depreciates, it creates the illusion of growth in indicators measured in that currency. If you look at returns through the lens of a weak currency, they appear much higher than they really are,” Dalio noted.
He also pointed out that currency depreciation inevitably leads to a redistribution of wealth. This affects not only equity markets but also debt instruments. The real return on bonds declines even if nominal yields formally rise. As a result, bondholders lose purchasing power, which increases interest in real and defensive assets.
Dalio also drew attention to changes in global investment flows. According to him, US equities lagged global markets in 2025 despite steady price growth. Investors are increasingly diversifying outside the United States, reallocating capital to European, Asian, and other markets. In his view, this reflects deeper structural shifts in the global financial system.
“Significant changes have occurred in capital flows, values, and, as a result, in the distribution of wealth outside the United States. These processes are likely to continue and will lead to further diversification,” he emphasized.
Another warning signal, according to Dalio, is high P/E multiples in the US market combined with low credit spreads. This configuration, he says, points to overvalued assets and lays the groundwork for lower future returns. In other words, investors are paying too high a price for expected growth that may not materialize.
In monetary policy, the billionaire expects a change of course. In his view, the new Chair of the Federal Reserve is highly likely to cut interest rates. This could lead to rising asset prices and the formation of new bubbles. However, Dalio doubts that easing will be as extensive as the market expects. He warns that excessive expectations could end in disappointment.
Speaking about the policies of the administration of US President Donald Trump, Dalio highlighted several key points. Overall, the course remains oriented toward capitalism and the protection of American interests. However, such an approach, in his opinion, scares off foreign investors. On the one hand, it supports asset returns in dollar terms; on the other, it weakens the market by reducing the inflow of external capital.
In addition, current policy, according to Dalio, has intensified social inequality. About 10% of the wealthiest Americans have barely felt inflationary pressure, as rising stock prices offset rising costs. The rest of the population has faced worsening affordability of housing, credit, and basic goods. concluded.
“The problem of the cost of money, or the problem of affordability, is highly likely to become the main political issue of next year. This could lead to Republicans losing control of the House of Representatives, an extremely difficult 2027, and very tense elections in 2028, where the confrontation between the right and the left will be especially sharp,” Dalio
In closing, he noted a fundamental shift in global politics: a transition from multilateralism to unilateral decisions. This process is accompanied by rising protectionism, deglobalization, and the weakening of international institutions. As a result, according to Dalio, demand for hedging assets and capital protection instruments will only grow, as uncertainty and fragmentation become the new normal of the global economy.
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