In a detailed social media analysis, billionaire investor and Bridgewater Associates founder Ray Dalio has outlined the defining global market trends of 2025. With over five decades of experience, Dalio, who serves as CIO mentor and board member at the world's largest hedge fund, provided a stark assessment of currency shifts, asset performance, and the political-economic interplay that shaped the year.
Currency Wars and Gold's Dominance
The US dollar experienced a significant decline in value against major global currencies and assets throughout 2025. According to Dalio's analysis, the dollar fell by 0.3% against the Japanese Yen, 4% against the Chinese Renminbi, 12% against the Euro, and 13% against the Swiss Franc. The most dramatic drop was a 39% fall against gold, which Dalio highlighted as the world's second-largest reserve currency and the only major non-fiat currency.
"All fiat currencies fell," Dalio stated on X. "The biggest story and the biggest market moves of the year were the result of the weakest fiat currencies falling the most, while the strongest, hardest currencies strengthened the most." This environment made holding a long position in gold the best major investment of 2025, delivering a staggering 65% return to investors.
Global Stock Performance and Investment Lens
The currency weakness created a distorted picture of investment returns. Dalio explained that when a nation's currency depreciates, assets measured in that currency appear to rise. The S&P 500, for instance, gave dollar-based investors an 18% return. However, for investors using other currencies, the returns were different: 17% for Yen-based investors, 13% for Renminbi-based, 4% for Euro-based, and just 3% for Swiss Franc-based investors. For gold-based investors, the S&P 500 actually lost 28%.
US stocks broadly underperformed their international counterparts. Eurozone stocks outperformed US stocks by 23%, Chinese stocks by 21%, UK stocks by 19%, and Japanese stocks by 10%. "Clearly, investors would have much rather been in non-US stocks than in US stocks," Dalio noted, attributing this shift to flows and wealth moving away from the United States.
Looking Ahead: 2026 Productivity and Political Risks
For the coming year, Dalio expects productivity in the United States to improve, though uncertainty remains about how much will translate to corporate profits and stock prices. He anticipates the Federal Reserve under its new chair will be biased towards lowering interest rates, which could support asset prices but also inflate bubbles.
Politics, however, looms as a major risk factor. Dalio cited the Trump administration's domestic and foreign policies, along with widening income and wealth gaps, as forces intertwining markets and political order. The "value of money" or affordability issue will likely be the top political issue, potentially leading to a Republican loss in the House and a turbulent path to the 2028 election.
Ray Dalio, an MBA graduate from Harvard Business School, founded Bridgewater Associates in 1975. His insights continue to carry significant weight for global investors navigating complex macroeconomic landscapes.
