Billionaire Ray Dalio says that the biggest investment story of the moment is under many people’s radar.
Dalio, who founded the asset management firm Bridgewater Associates, says the real investment story last year is the devaluing of fiat currency and the underperformance of US stocks relative to gold and foreign equities.
“Though the facts and returns are indisputable, I see things differently from most others. While most people see US stocks and particularly US AI stocks to be the best investments and hence the biggest investment story of 2025, it is indisputably true that the biggest returns (and hence the biggest story) came from:
- What happened to the value of money (most importantly the dollar, other fiat currencies and gold).
- US stocks significantly underperforming both non-US stock markets and gold (which was the best performing major market) principally as a result of fiscal and monetary stimulations, productivity gains and big shifts in asset allocations away from US markets.”
Dalio highlights how gold massively outperformed the S&P 500 last year.
“The best major investment of the year was long gold (returning 65% in dollar terms), which outperformed the S&P index (which returned 18% in dollars) by 47%. Or, said differently, the S&P fell by 28% in gold-money terms…
When one’s own currency goes down, it makes it look like the things measured in it went up. In other words, looking at the investment returns through the lens of a weak currency makes them look stronger than they really are.”
He also says that non-US stocks outperformed US stocks by double percentage points last year as a large volume of wealth exited the American markets.
“While US stocks were strong in dollar terms, they were much less strong in the currencies that were strong, and they significantly underperformed other countries’ equities. Clearly, investors would have much rather been in non-US stocks than in US stocks, just as they would have preferred to be in non-US bonds than in US bonds and US cash. More specifically, European stocks outperformed US stocks by 23%, Chinese stocks outperformed by 21%, UK stocks outperformed by 19%, and Japanese stocks outperformed by 10%…
In other words, there were big shifts in flows, values, and, in turn, wealth away from the US, and what is happening will probably lead to more rebalancing and diversifying.”
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