Cash is Trash - Buy Real Estate and Gold?

Ray Dalio - the founder of Bridgewater Capital say that with stocks down over 20% and bonds falling as well, the market is difficult, but cash is trash. Why? Inflation for one.

Holding onto cash means a guaranteed loss of buying power. $1 today will be worth .90 in a year with 10% inflation. Keeping money in cash means you lose 10% - so while investing in the market is difficult the 10% loss in cash through inflation is lost. A 20% loss in the stock market can be just as easily erased as the market recovers. It hasn't recovered yet, but unless now is totally different, there is no period in history where you've lost money and not recovered it.

CNBC featured this chart showing all major stock market downturns and time to recovery.

Ray says in times like these you want things that are 'real' to people and stocks and bonds aren't as real as 'real' estate (heck it is right in the name) and gold. He feels we are in a sweet spot similar to the '60's-'80's' where prices of houses will increase 4X over the next 20 years. Gold went up over 1000% during this same time period.

His recommendation - it's a good time to consider gold and real estate.

How do drawdowns in real estate compare to the CNBC chart?

We've had only 1 period in modern real estate history where real estate had a 'bear market' decline of 20% and that was only in play for those that bought a house in February of 2007.

Here is the chart as an image...

Coaching Tip - Houses are less liquid and for that reason we are less likely to time buying and selling, but the overall trend for real estate has been very solid - we could easily see a pullback here but that would impact me more as a property speculator (investor) not so much as a person buying a house to live in. We have only had one 'bear market' in real estate.