Billionaire hedge fund manager Paul Tudor Jones says the US is now “fiscally constrained,” which may call for a specific investment strategy in the coming years.
In a new interview on Bloomberg Television, the Tudor Investment Corporation founder says that the US government is in a debt trap, and will need to run negative real rates – or set interest rates lower than the rate of inflation, in order to devalue its debt.
Jones says that the “playbook is clear” as far as what the government is going to need to do, giving an edge to investors looking to position themselves.
Besides stocks, he mentions Bitcoin (BTC) and gold as portfolio staples moving forward.
“We’re going to have negative real rates and that’s why you have to think about what is facing our policy makers in this debt trap as you construct your portfolio. So, what would an ideal portfolio be in something like that? Well, what has worked so far? What has worked so far has been some combination of stocks – which won’t do great, which would do terribly if they called us out on the bond market…
But it would be some combination of probably volatility-adjusted Bitcoin, gold, stocks. That’s probably your best portfolio to fight inflation.”
The investor also said he believes that President Trump will attempt to install a new Fed Chair who is “uber dovish” in order to get rates down and achieve the desired market environment.
At time of writing, both BTC and gold are just slightly below their all-time highs.
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Featured Image: Shutterstock/Tithi Luadthong/Boombastic
