Bridgewater Associates is a Ray Dalio founded US investment firm. Via an analysts’ note:
Analysts at the firm are warning of a lost decade ahead for equity investors.
- U.S. corporate profit margins could reverse the strong growth seen in recent years.
- these margins have provided a substantial portion of the excess return of equities over cash
- reversal is more than merely the current cyclical downturn in earnings
- “Globalization, perhaps the largest driver of developed world profitability over the past few decades, has already peaked”
- “U.S.-China conflict and global pandemic are further accelerating moves by multinationals to reshore and duplicate supply chains, with a focus on reliability as opposed to just cost optimization.”
Also warn on rising corporate debt due to the efforts made on the coronavirus pandemic.