Ray Dalio: How should investors adjust their strategies in the changing US and global order under the leadership of the Trump administration?

After the dust settled on the US presidential election, Bridgewater Associates founder Ray Dalio felt relieved about the peaceful transfer of power and commented on Trump's series of appointments and the future situation. The article also mentioned TSMC, reminding investors to pay attention to policy changes to make better investment decisions.

Changes in domestic order in the United States

Trump plans to carry out a large-scale government reform to improve efficiency, including replacing key personnel, cutting costs, and introducing new technologies.

Government reform

The people Trump has chosen to work with him to achieve this goal include the 'Government Efficiency Department' led jointly by tech giant Elon Musk and entrepreneur Vivek Ramaswamy, as well as many others, some within the government and some as outside advisers, who are loyalists willing to do whatever it takes to win victory, loyal to the mission of overthrowing the so-called 'deep state' and replacing it with a new domestic order, hoping that this order can create the greatest economic strength and counter foreign enemies.

Note: Deep state refers to a group composed of government bureaucrats, civil servants, military-industrial complex, finance industry, conglomerates, and intelligence agencies who are not elected by the people. They protect their vested interests and actually control the country behind the scenes.

Once these people are in place, the same method of appointment may be used to clear out those in the government who are accused of being part of the 'deep state,' and this will extend to the military, the Department of Justice, the Federal Bureau of Investigation, Securities and Exchange Commission, the Federal Reserve, and other units. With the Republican Party obtaining an absolute majority, it is expected that most appointed positions will be under control.

Note: SEC Chairman Gary Gensler has announced his resignation on Trump's inauguration day.

Dalio believes that Trump and his chosen people will reform the government and the country like hostile acquirers attacking an inefficient company, making massive changes by altering personnel, cutting costs, and injecting new energy into it.

Economic policies will benefit Wall Street and technology companies

The new policy will benefit Wall Street and technology companies, reduce government restrictions on businesses, and promote the development of capital markets.

The country's economic reform is likely to be achieved through industry policies that increase productivity and efficiency, with certain key areas (including education and debt management, which Dalio believes are the most important) possibly being overlooked. As long as the collaboration between Trump and Musk continues, they will be the main designers and implementers of this new domestic order.

These policies are likely to benefit Wall Street, some technology companies, and most regulated and tax-averse businesses. These changes will be huge for financial transaction makers, banks, and asset management companies, as they will have more freedom, more currency, and more loans. These policies are very favorable for tech companies that support Trump, as they will be allowed to develop and operate in a basically unrestricted manner. These policies are also favorable for the legal industry. In addition, artificial intelligence will not be regulated, and tariffs will be used to increase tax revenue and protect domestic producers at the same time. If the Fed continues to cut interest rates (Dalio opposes this), this will also transfer large amounts of cash held in currency market funds and other deposits to other markets, which will stimulate the market and economy.

Key technologies are produced in the United States

To counter the threats from countries like China, the Trump administration will formulate policies to ensure the production of key technologies in the United States and strengthen domestic security measures. For example, ensuring that the United States has access to an acceptable quantity of all key technologies and manufacturing these technologies in the United States (e.g., by 2030, 20% of the most advanced chips will have to be produced in the United States) or in allied countries.

Changes in the international world order

The international world order will also change accordingly, with the United States pursuing a policy of 'America First' and clearly delineating allies from enemies. Dalio believes that the United States is now ending an era led by itself and entering a more self-interested era.

Pursuing America First, choosing allies and enemies based on strategic considerations

China will be seen as a major enemy because it is both the most powerful and the most ideologically opposed, and Russia, North Korea, and Iran are also enemies. All countries will face tremendous pressure and potential negative consequences if they don't stand with the United States. The conflicts between major powers will create opportunities for neutral non-aligned countries, most importantly in terms of commercial opportunities.

Dalio mentioned the importance of TSMC

Dalio believes that in order to achieve government goals and increase government influence, the free market and profit-driven system in the United States may be sacrificed. Along these lines, we should expect the government to exert more influence on the private market to achieve its goals. Therefore, we should remember that the cost efficiency and national security achieved through government cooperation with national champion companies are the top priorities, rather than just profit, as profit cannot achieve these goals. Dalio gives the example that these policy shifts may benefit the energy and mineral industries that support the field of artificial intelligence technology; and due to the inability of advanced American semiconductor industry to meet its demand, the United States must establish key relationships with foreign producers such as Taiwan Semiconductor Manufacturing Company to produce in the United States and minimize reliance on foreign competitors as much as possible.

The early stage is crucial, investors need to maintain follow

Dalio finally mentioned that in addition to the above, there are also major challenges such as immigration and expulsion actions, trade and tariff reforms, dropping tax rates, and major reforms to the healthcare system. The time to accomplish these difficult tasks is very limited, with the most critical being the first 100 days, followed by the first two years, so priorities must be set. Although it is currently unknown what the new government will prioritize and whether they will be able to successfully implement them, Dalio is certain that this will be an interesting and important moment, so investors must always stay informed in order to make better decisions.

This article Ray Dalio: Under the leadership of the Trump administration, the changes in the United States and the world order, how should investors adjust their strategies, first appeared in Chain News ABMedia.