- Ray Dalio, the founder and chairman of Bridgewater Associates – the world’s largest hedge fund – says investors must keep an eye on what a Jeremy Corbyn premiership would look like for the markets.
- Speaking to the Financial Times, Dalio said investors must now look beyond traditional market events like central bank meetings.
LONDON – Ray Dalio, the founder and chairman of Bridgewater Associates – the world’s largest hedge fund – said investors must keep an eye on what a Jeremy Corbyn premiership would look like for the markets in a new interview with the Financial Times.
Dalio said that the world’s investment landscape must change to reflect growing political unrest and uncertainty sweeping major economies, singling out Jeremy Corbyn in the UK as a particular point of interest.
“[These days] there’s not the same volatility of inflation, growth and interest rates. So political issues are more important than macro [economic] issues,” he told the FT’s Gillian Tett, adding that investors must look beyond traditional points of interest like central bank meetings and statements, and look instead to events like “the next election in France or in the UK, or how hospitable will Jeremy Corbyn be to capital?”
Dalio believes that this shifting landscape has fundamentally altered the way he looks at investing, saying that Bridgewater has created algorithms to track and forecast these notoriously unpredictable political developments.
“You can convert whatever you are thinking into an algorithm,” he said.
“We’ve created a conflict gauge looking at words [in the media] and things. We’ve done examinations of all political conflicts in the past and their impact on markets [for models].”
The potential for Prime Minister Corbyn has been the subject of much hand wringing in the UK’s financial markets, with Morgan Stanley in December warning that for the markets “domestic politics may be perceived as a bigger risk than Brexit,” highlighting the potential for a drastic shift in economic policy under a Labour government.
Should he get to power Corbyn is expected to carry out a major programme of nationalisations, as well as ramping up government spending on services and infrastructure, with the National Health Service a major focus.
Morgan Stanley’s comments sparked an angry response from Corbyn, who criticised Morgan Stanley for its role in the 2008 financial crisis, labelling it as one of the “speculators and gamblers who crashed our economy.”
“Their greed plunged the world into crisis and we’re still paying the price,” he said.
“Nurses, teachers, shopworkers, builders, just about everyone is finding it harder to get by, while Morgan Stanley’s CEO paid himself £21.5 million last year and UK banks paid out £15 billion in bonuses.”
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