Observing Dalio and Fink’s Conference Viewpoints

viewpointThe DealBook conference held in New York City had financial and political luminaries on stage. Laurence D. Fink, the Chief Executive Officer of BlackRock Inc., during the conference stated that stocks may decline as much as 15% percent due to political risks in China, Japan, France and the United States. To top things off, Fink believes stocks can return more than 7% in the long-term under the assumption that the global economy grows at 4%. Fink believes that if investors are already 100% into equities, they should keep their money there. Fink is banking on a more resilient U.S. banking system, improving real estate market and America’s mega supply of natural gas.

Ray Dalio, the Founder of Bridgewater Associates LP, expressed a less positive view saying that equity returns will slow to 4% annually in the next decade. Dalio added some more bits of data, mentioning the Federal Reserve will not be able to raise interest rates for years. Dalio mentioned during an interview at the conference that most investors are not going to be able to produce alpha – saying alpha is a zero sum.

Institutional investors are concerned that quantitative easing (QE) policies are losing their effectiveness in reviving economic growth. Since interest rates hit zero percent, QE effectively replaced changing interest rates. The Federal Reserve’s purchasing financial assets has less of a material impact on the real economy.

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