The world’s biggest hedge fund isn’t sure yet what to make of Donald Trump’s election to the US presidency.
That’s the big takeaway from an investor note that Ray Dalio sent on Thursday, two days after Election Day.
“There is much more that we don’t know than we do know,” Dalio wrote in a client letter viewed by Business Insider. “Our guess is that the markets will increasingly focus on what he is likely to do and less on how sensible he sounds.”
Dalio added that Trump’s win meant there are “a significantly wider range of possible policies” to consider — adding a wrench into market predictions. “It would be a mistake to use the rhetoric of a campaign as much of a guide to what policies are likely,” Dalio added. “We have entered an extremely ambiguous and interesting period of time.”
The $150 billion firm is closely following several areas that would be impacted by Trump, including regulatory reform and the Federal Reserve. Chair Janet Yellen’s term expires in February 2018, alongside a few other seats that will open next year.
“The stakes here are high,” Dalio wrote, noting that the selections will influence the Fed’s stance on quantitative easing and monetary policy more generally.
On Tuesday, before the election results rolled in, Bridgewater told clients it expected markets to plummet should Trump win. Stocks did fall sharply, but they recovered just as fast and the the Dow Jones Industrial Average broke all time highs earlier Thursday. Tech stocks, were crashing.
To be sure, Bridgewater didn’t specify a time frame in its Tuesday predictions, and the firm’s latest letter does not update those predictions.
Bridgewater’s external PR firm Prosek Partners didn’t immediately respond to a request for comment.