Ray Dalio flags fiat devaluation as 2025’s real story as gold and foreign stocks crush U.S. equities, pushing capital away from American markets.
Summary
Billionaire investor Ray Dalio has identified the devaluation of fiat currency as the most significant investment story currently overlooked by many market participants, according to statements from the Bridgewater Associates founder.
Ray Dalio offers 2026 predictions
Dalio stated that the primary investment narrative involves the declining value of fiat currencies and the underperformance of U.S. stocks relative to gold and foreign equities, contrasting with widespread market focus on U.S. stocks and artificial intelligence investments for 2025.
Gold returned 65% in dollar terms last year, outperforming the S&P 500 index, which returned 18% in dollars, by 47 percentage points, according to the investment manager. Measured in gold terms, the S&P 500 declined by 28%, Dalio noted.
The underperformance of U.S. stocks relative to international markets and gold resulted principally from fiscal and monetary stimulation, productivity gains, and significant shifts in asset allocations away from U.S. markets, according to Dalio’s analysis.
Non-U.S. stocks outperformed U.S. equities by double-digit percentage points as substantial capital flows exited American markets, Dalio reported. European stocks outperformed U.S. stocks by 23%, Chinese stocks by 21%, U.K. stocks by 19%, and Japanese stocks by 10%, according to the figures provided.
Dalio indicated that currency depreciation creates an optical effect where assets measured in weakening currencies appear to appreciate more than their actual performance suggests.
The asset manager stated that investors achieved superior returns in non-U.S. stocks compared to U.S. equities, as well as in non-U.S. bonds relative to U.S. bonds and cash holdings. Dalio suggested these trends may lead to continued rebalancing and diversification away from U.S. assets.
