Have you ever wondered what the greatest hedge fund mind of our generation would actually do with money right now if he still had to put it to work every single day?
I mean really wondered. Not the generic “diversify and stay calm” advice we all hear, but the exact, granular moves he’d make in this strange late-2025 market where AI hype meets ballooning government debt and everything feels just a little… off.
Well, we just got the closest thing to an answer.
Ray Dalio — the man who built Bridgewater into the largest hedge fund in history — recently sat down and spelled out precisely how he would position a portfolio today if he was still calling the shots. And honestly? Some of it surprised even me.
The Core Philosophy Hasn’t Changed (But The Application Has)
Before we dive into the specific moves, it’s worth remembering what makes Dalio different. This isn’t some momentum chaser or macro tourist. His entire career has been built on understanding economic machines — those repeating patterns that have played out across centuries of history.
The principles remain eternal. But the current environment? That’s uniquely weird.
We’ve got artificial intelligence transforming productivity at a speed that feels almost science fiction. We’ve got government debt levels that would have been considered insane just fifteen years ago. And we’ve got markets that have become dangerously concentrated in a handful of names.
So how do you navigate that?
The Big AI Bet (With A Crucial Twist)
Everyone’s talking about artificial intelligence. The question is where exactly the money gets made.
Most retail investors — and honestly, quite a few professionals — have been piling into the usual suspects. You know the names. The cloud giants. The companies building the picks and shovels of the AI gold rush.
Dalio’s take is different, and I think he’s onto something profound.
“The greatest impact is going to come from the users.”
Think about that for a second.
While the hyperscalers trade at nosebleed valuations, the companies actually using AI to transform their businesses — to cut costs dramatically, to reinvent their processes, to create new revenue streams — these companies often trade at much more reasonable multiples.
It’s the classic innovator’s dilemma playing out in real time. The companies building the technology infrastructure capture attention (and sky-high valuations), but the companies cleverly applying that technology often capture the actual profits.
I’ve been noticing this myself. You talk to operating executives at mid-sized companies — manufacturers, logistics firms, professional services companies — and they’re implementing AI tools that are genuinely transforming their cost structures. These aren’t the sexy stories, but they’re where the real economic impact happens.
The Concentration Conundrum
One of the things that keeps me up at night about current markets is concentration risk.
We’ve seen this movie before. Late 1990s. The Nifty Fifty in the 1970s. Japan in the late 1980s. Periods where a handful of companies dominate performance to an extreme degree.
Dalio sees it too. And his response is exactly what you’d expect from the king of risk parity:
“Diversification is very much important.”
Simple words. Profound implications.
When markets become this concentrated, the downside risks become asymmetric. A small handful of companies drive returns, which means a small handful of disappointments can wreck portfolios.
But true diversification in 2025 isn’t just owning more stocks. It’s thinking differently about what constitutes diversification in the first place.
The Money Problem Nobody Wants To Talk About
Here’s where Dalio gets really interesting.
Most investors are still thinking in terms of traditional asset allocation — stocks, bonds, maybe some real estate. Meanwhile, Dalio is thinking about the nature of money itself.
“We don’t have enough money.”
This isn’t hyperbole. Global budget deficits, massive debt loads, the mechanics of how governments finance themselves in a world of political constraints — all of this creates what Dalio calls “the issue of money.”
His conclusion is straightforward: be underweight debt, overweight what he calls “alternative money.”
And gold? Gold has been speaking loudly in 2025, hitting repeated all-time highs. Central banks buying. Investors seeking protection. The dollar under pressure.
When Dalio says he’d be positioned in gold “and so on,” he’s not being cute. He’s acknowledging that in environments where faith in fiat currency wavers, hard assets become crucial portfolio components.
The Electricity Supercycle
This was perhaps the most under-discussed part of his comments, but potentially the most actionable.
Artificial intelligence doesn’t run on hopes and dreams. It runs on electricity. Massive amounts of it.
Data centers that power AI training and inference are extraordinarily energy-intensive. And we’re just at the beginning of this buildout.
Dalio sees this clearly. The companies and infrastructure that will supply the electricity for the AI revolution represent a major investment theme.
This isn’t just about utilities (though utilities benefit). It’s about the entire supply chain — power generation, transmission, storage, efficiency technologies. Everything that makes the AI revolution physically possible.
Where In The World
Dalio’s framework for thinking about countries has always been elegant in its simplicity. Successful nations need three things:
- Good education that produces capable, civil citizens
- Well-functioning capital markets
- Rule of law that prevents major internal conflicts
When you apply this framework today, the picture becomes stark.
Many developed markets score poorly on debt sustainability. Some emerging markets score surprisingly well across all three dimensions.
Dalio specifically called out places with less debt as interesting. The implication was clear: countries that haven’t mortgaged their future have significant advantages in the coming decades.
India got a specific mention, which makes perfect sense. Young population. Improving institutions. Massive infrastructure buildout. And crucially, debt levels that haven’t reached the extreme territory of many developed nations.
Putting It All Together
So if we synthesize everything Dalio shared, here’s what a “Dalio portfolio” might look like in late 2025:
- Significant exposure to companies actually using AI to transform their businesses (not just building AI infrastructure)
- Material underweight in traditional bonds
- Meaningful allocation to gold and other hard assets
- Investments in the electricity/infrastructure buildout
- Overweight to emerging markets with strong fundamentals and lower debt burdens
- Diversification as a core principle, especially given market concentration risks
What’s fascinating is what’s missing.
No particular love for the mega-cap tech complex at current valuations. No enthusiasm for long-duration bonds. No assumption that developed markets will maintain their traditional advantages.
This isn’t bearish per se. It’s realistic. It’s what happens when someone who has studied economic history for fifty years looks at the current environment without rose-colored glasses.
The most interesting aspect, to me, is how different this positioning is from what most investors actually own. The average portfolio remains heavily concentrated in U.S. large-cap growth, heavily exposed to duration risk through bonds, and remarkably light on the very themes Dalio highlights.
That gap between what one of the greatest investors of all time would do, and what most people are actually doing… well, that’s where opportunity lives.
The question is whether investors have the courage to think differently when the crowd is running in the opposite direction.
History suggests most won’t. But those who do? They might just find themselves on the right side of the economic machine as it turns into its next phase.
Food for thought as we head into what promises to be a fascinating 2026.
