What Ray Dalio Is Doing These Days? – Top 10 Stock Picks in 2023

In this article, we examined what Ray Dalio is doing these days and what he thinks about global markets. We also reviewed Dalio’s top 10 stock picks in 2023. You can skip our detailed discussion about Ray Dalio and jump directly to the Ray Dalio’s Top 5 Stock Picks.

After stepping down from official roles last year, Bridgewater Associates founder Ray Dalio is pursuing his passions and seeking to transfer his wisdom in various ways to help others succeed. He begins each day by closely monitoring the markets and spends 6 to 8 hours per day conducting research, which he refers to as “digging.” The legendary investor, who founded Bridgewater Associates in his two-room apartment and grew it into one of the largest investment management firms with approximately $195 billion in assets under management, also frequently appears on news channels and YouTube videos. He also remains active on active on Twitter and other social platforms to present his stance on economic, political, and other global challenges. 

Although he stepped down as co-chief investment officer last year and no longer participates in day-to-day matters to pursue his passions, he still has a significant influence on Bridgewater’s investing decisions. He is still on the operating board and serves as the investment committee’s mentor. His ability to predict future market movements due to his strong understanding of macroeconomics and global world order has helped his firm make money over the last five decades. He had predicted the 2008 financial crisis as early as 2006. As his firm was well prepared for the impending financial crisis, its flagship Pure Alpha strategy was up 8.7% after fees in 2008. Besides that event, Dalio’s firm has a history of making noteworthy moves. In 2022, his firm built over $10 billion in short positions in European stocks because of the effects of Russia’s invasion of Ukraine. Furthermore, in 2018, his firm opened $22 billion worth of short positions in Europe and made a $14 billion bet against European stocks in 2020. 

Most recently, following his visit to China in April 2023, the American billionaire published a LinkedIn post about China-US tensions. He advised the world’s two largest economies to maintain good political and trade relations because he believed even the prospects of war would be a drag on markets and global economic activity. However, he also warned that both countries are on the verge of war: 

What I mean when I say that the US and China are on the brink of war is that it appears that they are close to having a sanctions war and/or military war that neither side wants but many believe will probably happen because a) each side is very close to the other’s red lines, b) each side is using brinksmanship to push the other at the risk of crossing each other’s red lines, and c) politics will probably cause more aggressive brinksmanship over the next 18 months. I want to emphasize that by saying that they are on the brink, I don’t mean to say that they will necessarily go over the brink. I mean to say that they are very close to crossing red lines that, if crossed, will irrevocably push them over the brink into some type of war that damages these two countries and causes damage to the world order in severe and irrevocable ways—like Russia’s invasion of Ukraine did for Russia and the world, just much bigger. 

Dalio has also been vocal about his long-held fascination with China. He is also well-liked in China, where his investment firm operates a wealth management business, becoming the largest foreign hedge fund last year with nearly $3 billion in investments, more than doubling the previous year. Since its inception in 2018, Bridgewater’s main China fund has generated an annual return of 15.6% through October 2022. In one of his LinkedIn posts, he stated that the Chinese economy needs a big debt restructuring. However, he added that debt restructuring would be easier because the majority of its debt is in its own currency: 

So, how do those who reduce the debt burdens do it? It primarily depends on whether the debt is in one’s own currency or a foreign currency (if it’s in one’s own currency like China’s debt is, it’s easier to manage) and whether it is held by one’s own citizens or foreigners (if it’s held by one’s own citizens like China’s debt is, it’s easier to manage)—though it is never easy. Given these circumstances, it also depends on how the restructuring is done. A well-done restructuring happens in a balanced way. I call that a “beautiful deleveraging.” It balances deflationary defaults/restructurings with inflationary printing of money/debt monetization to spread out the burden. The mechanics of this process are explained in the first chapter of the book linked above, so I won’t try to squeeze them in here.

While Bridgewater appears to be doing well in competitive Chinese markets, the firm is continuing to reduce its exposure to Chinese stocks listed on the US stock exchange. Ray Dalio’s firm sold nearly a third of its stake in Chinese stocks during the second quarter. Futu Holdings Limited (NASDAQ:FUTU) and Zhihu Inc. (NYSE:ZH) are among the 13 companies that the firm has exited in the second quarter. Dalio’s Bridgewater held $480 million in 31 US-listed Chinese companies at the end of the June quarter. Meanwhile, the 13F filing also revealed that Dalio used exchange-traded funds such as the iShares MSCI China ETF and the iShares China Large-Cap ETF to diversify his exposure to China.  

Our Methodology

As Ray Dalio continues to mentor the investment committee and his philosophy dominates investment moves, paying attention to Bridgewater’s stock portfolio can help investors choose the right stocks. The following information is based on Bridgewater’s second-quarter 13F filing. We track hedge funds like Bridgewater Associates because Insider Monkey research has shown that their consensus stock picks can deliver exceptional returns.

What Ray Dalio Is Doing These Days? – Top 10 Stock Picks in 2023

10. Alphabet Inc. (NASDAQ:GOOG)

Value of Bridgewater Associates’ 13F Position: $234 million

 

Number of Hedge Fund Shareholders: 366

Alphabet Inc. (NASDAQ:GOOG) has been one of Ray Dalio’s favorite stock holdings over the last decade, but the firm has significantly increased its position in the tech giant during the 2022 bear market when its shares were trading at a significantly lower price. Dalio’s strategy of buying on the dip worked because Alphabet Inc. (NASDAQ:GOOG) shares have risen by a whopping 50% year to date. The recovery in ad revenue, combined with a focus on AI technology, has increased investor confidence in Alphabet Inc. (NASDAQ:GOOG). During the company’s second-quarter conference call, Alphabet Inc. (NASDAQ:GOOG) CEO Sundar Pichai emphasized the importance of artificial intelligence, stating that the company is working to incorporate AI into its products.

In the first half investor letter, Pershing Square Holdings, an investment holding company, explained the reasons for creating a position in Alphabet Inc. (NASDAQ:GOOG). Here is what the firm stated about Alphabet Inc. (NASDAQ:GOOG):

“Earlier this year, we initiated a position in Alphabet Inc. (NASDAQ:GOOG), the parent company of Google. We believe that Google is one of the world’s greatest businesses with deep barriers to entry and massive network effects underpinning its core search business. After having closely followed the company for many years, we had the opportunity to acquire a stake in Google at a highly attractive valuation as misplaced concerns over its competitive positioning in AI overshadowed the high-quality nature of its business and its strong growth prospects.

Google is the dominant leader in the fast-growing digital advertising market. Google has 85%+ market share in search and, along with YouTube, approximately 50% share of the digital advertising market. With higher and improving returns on investment, we expect digital ads to continue to take market share from traditional ad formats like TV and print, and increasingly drive the total advertising market growth above its historical trend. For example, in retail, rising e-commerce penetration is catalyzing the migration of offline promotion and trade spend dollars into digital ads. With Search and YouTube as two of the highest return and most resilient ad formats, Google is well positioned to benefit from the structural growth in digital ad share across many categories.

Similarly, in its Cloud business, Google is a top three player in an oligopolistic market that is in the early stages of a multi[1]year shift of IT workloads from on-premise to cloud and hybrid cloud solutions. These powerful secular tailwinds have enabled Google to grow overall revenues at a high-teens compound annual growth rate over the last five years which should continue to support near- double-digit top-line growth in the coming years…” (Click here to read the full text)

9. Visa Inc. (NYSE:V)

Value of Bridgewater Associates’ 13F Position: $241 million

 

Number of Hedge Fund Shareholders: 175

Like Alphabet Inc. (NASDAQ:GOOG), Ray Dalio’s Bridgewater’s strategy of increasing its stake in Visa Inc. (NYSE:V) during last year’s bear market has so far rewarded his firm. Visa Inc. (NYSE:V) stock is up more than 24% year to date. Dalio’s hedge fund maintained its confidence in Visa Inc. (NYSE:V) by holding nearly one million shares at the end of the June quarter, up 3% from the previous quarter. The latest financial results and outlook from the company indicate that there is still room for growth. Revenue of Visa Inc. (NYSE:V) increased by 7% year over year in the June quarter, while earnings per share of $2.16 topped the estimate of $2.12. The second quarter earnings were also up from $2.09 in the previous quarter and $1.98 in the same period last year.   

In the second quarter investor letter, Baron Funds, an investment management company, identified Visa Inc. (NYSE:V) as a high-conviction idea in their fund. Here is what the fund stated about Visa Inc. (NYSE:V):

“We modestly trimmed Visa Inc. (NYSE:V), Mastercard Incorporated, and Accenture plc to manage the position sizes and raise capital to fund purchases elsewhere. These stocks remain full-sized positions and high-conviction ideas in the Fund.

Another fintech industry trend we’re seeing is a pickup in M&A activity, most notably in the payments sector. The year started with Nuvei’s $1.3 billion acquisition of Paya announced in January. In April, Network International received an initial takeover offer from a group of private equity firms, which was then topped by Brookfield Asset Management whose $2.8 billion offer was accepted by the Board in June. Following reports earlier this year of a bidding war between Visa Inc. and Mastercard Incorporated to acquire cloud-based issuer processor and core banking software provider Pismo, Visa announced its intention to acquire the Brazilian company for $1 billion in late June.”

8. Starbucks Corporation (NASDAQ:SBUX)

Value of Bridgewater Associates’ 13F Position: $269 million

 

Number of Hedge Fund Shareholders: 60

Bridgewater’s strategy of buying stocks at low prices has worked in the case of Starbucks Corporation (NASDAQ:SBUX), as it has for Visa Inc. (NYSE:V) and Alphabet Inc. (NASDAQ:GOOG). Throughout late 2020 and early 2021, Ray Dalio’s fund steadily increased its position in Starbucks Corporation (NASDAQ:SBUX). Although the firm sold some stake in Starbucks Corporation (NASDAQ:SBUX) in late 2022, it again raised its position in the coffeehouse company by 10% in the June quarter to 2.72 million shares. In addition to share price appreciation, Starbucks Corporation’s (NASDAQ:SBUX) healthy dividend yield of 2.20% makes it an attractive stock to hold for the long term. 

However, some investment management firms are pessimistic about Starbucks Corporation (NASDAQ:SBUX) performance ahead. The London Company, an investment management company, stated in its second-quarter investor letter that uncertain market conditions could negatively impact the performance of Starbucks Corporation (NASDAQ:SBUX). Here is what the firm said about Starbucks Corporation (NASDAQ:SBUX):

“Starbucks Corporation (NASDAQ:SBUX) – Sentiment on SBUX turned more negative in this uncertain macro environment with the impending return of student loan payments in the U.S. SBUX reported very strong results for the Jan-March quarter, but exercised caution by not raising guidance. SBUX is beginning to realize tailwinds from the re-opening of the Chinese economy, adding a buffer to growth and margins for the remainder of the year.”

7. Walmart Inc. (NYSE:WMT)

Value of Bridgewater Associates’ 13F Position: $402 million

 

Number of Hedge Fund Shareholders: 83

Ray Dalio’s hedge fund has been selling its stake in Walmart Inc. (NYSE:WMT) over the last few quarters in order to capitalize on the share price gains it has generated over the last three years. The firm reduced its stake in Walmart Inc. (NYSE:WMT) from approximately 4.7 million shares in the second quarter of 2022 to approximately 2.56 million shares at the end of the June quarter of 2023. Despite this, Walmart Inc. (NYSE:WMT) is Ray Dalio’s seventh largest stock holding, with a total value of $402 million. The fund appears to have benefited from its stake in Walmart Inc. (NYSE:WMT) because shares of the company have risen sharply since it established its position in Q3 2020. Walmart Inc. (NYSE:WMT), like Starbucks Corporation (NASDAQ:SBUX), pays out healthy dividends. It is a dividend aristocrat with a 49-year dividend growth history. 

Walmart Inc. (NYSE:WMT) was in the 81 hedge funds in the second quarter, according to data tracked by Insider Monkey. Ray Dalio’s Bridgewater is among the largest hedge fund investors in Walmart Inc. (NYSE:WMT).

6. McDonald’s Corporation (NYSE:MCD)

Value of Bridgewater Associates’ 13F Position: $423 million

 

Number of Hedge Fund Shareholders: 69

McDonald’s Corporation (NYSE:MCD) has been a major stockholding of Ray Dalio’s Bridgewater Associates over the last three years. In the third quarter of 2020, the firm began building a stake in McDonald’s Corporation (NYSE:MCD), and by early 2022, its stake had grown to 2.1 million shares. However, since then, Dalio’s firm has been lowering its stake in McDonald’s Corporation (NYSE:MCD) to capitalize on the recent share price rally and allocate money to other opportunities. Despite this, the firm still held 1.4 million shares of McDonald’s Corporation (NYSE:MCD) valued at $423 million as of the end of the June quarter, making it the portfolio’s sixth largest holding. Like  Walmart Inc. (NYSE:WMT) and Starbucks Corporation (NASDAQ:SBUX), McDonald’s Corporation (NYSE:MCD) is also among the best dividend payers. It has raised dividends in the past 21 consecutive years.  

McDonald’s Corporation (NYSE:MCD) was in 68 hedge fund portfolios as of the end of the second quarter. Ken Griffin’s Citadel Investment Group is among the largest shareholders in McDonald’s Corporation (NYSE:MCD).