CNBC: World's Largest Hedge Fund Reportedly Bets Over $1 Billion on a Big Stock Market Sell-off Soon

November 22, 2019

Article by Thomas Franck in CNBC financial

The largest hedge fund in the world has reportedly staked more than $1 billion that global equity markets will fall over the next three months.

The wager placed by Bridgewater Associates would pay off for the firm if either the S&P 500 or the Euro Stoxx 50 (or both) decline, people familiar with the matter told the Wall Street Journal.

The Journal added that the Bridgewater bet is comprised of put options — assembled over months by Goldman Sachs and Morgan Stanley — that give investors the right (but not the obligation) to sell stocks at a predetermined price by a given date.

The firm paid about $1.5 billion for the contracts, about 1% of Bridgewater’s $150 billion in total assets under management, the report said.

Though the firm wouldn’t confirm the motivation behind the bearish bet, many investment strategists and investors alike have grown wary in recent weeks as all three U.S. equity indexes clinched new all-time highs.

For his part, Bridgewater founder Ray Dalio has been less than rosy in his projections for future relations between Washington and Beijing.

“There is a trade war, there is a technology war, there is a geopolitical war, and there could be capital wars. And how that’s approached, is going to determine what our futures are like,” Dalio said from New York last Friday.

I honestly don’t know how it will be approached. We want to be optimistic,” he added.

To read this article in CNBC in its entirety, click here.

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