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Bridgewater Associates, the world’s largest hedge fund, on Wednesday published a 61-page research paper on populism, which it considers the most important issue in the world today.
“Populism has surged in recent years and is currently at its highest level since the late 1930s,” founder and chairman Ray Dalio and his coauthors wrote in the note.
The authors say they consider today’s strain of the ideology to be “much less extreme” than it was before the start of World War II in 1939. But at the World Economic Forum in Davos, Switzerland, in January, Dalio said populism’s tendency to turn into extremism scared him.
“This is the first year that populism is the most important issue globally,” he said.
Wednesday’s client note looks at the history of populist movements in the United States, Europe, Russia, Japan, and South America, drawing insights from each.
In a LinkedIn post linking to the full report, Dalio said:
“Given the extent of it now, over the next year populism will certainly play a greater role in shaping economic policies. In fact, we believe that populism’s role in shaping economic conditions will probably be more powerful than classic monetary and fiscal policies (as well as a big influence on fiscal policies).
“It will also be important in driving international relations. Exactly how important we can’t yet say. We will learn a lot more over the next year or so as those populists now in office will signal how classically populist they will be and a number of elections will determine how many more populists enter office.”
Bridgewater is the world’s biggest hedge fund firm and managed about $103 billion in hedge funds as of mid-2016, according to the HFI Billion Dollar Club ranking.
The firm has generated close to $50 billion in net gains since its inception, according to London-based LCH Investments. Dalio personally earned $1.4 billion last year, making him one of the top-earning hedge fund managers. Bridgewater’s main fund, Pure Alpha, returned 2.4% in 2016, losing to the S&P 500, which gained 9.5%.
Bridgewater sends research notes every day to clients. On the day of the 2016 US election, Bridgewater told its investors that stock markets worldwide would tank if Donald Trump won, Business Insider reported. Stock markets have since rallied to historic highs.