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Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, has a stark warning for investors in the American market.
The U.S. may be heading towards a “debt-induced heart-attack” due to years spent servicing an ever-increasing national debt, Dalio wrote in an X post in early September.
And this isn’t the first time Dalio has raised a red flag.
“For those who care about the value of their money, the risks for U.S. government debt are greater than the rating agencies are conveying,” he wrote in another post on X in May.
As of Sept. 12, the U.S. gross national debt stands at US$37.45 trillion — the highest in the world. And with President Donald Trump’s newly approved One Big Beautiful Bill Act — which is estimated to add another US$3.4 trillion in federal deficits over the next decade, based on a July 2025 Congressional Budget Office estimate — Dalio anticipates the “heart-attack” could occur within the next three to five years.
This is hardly surprising considering how the U.S. economy has been thrown into turmoil by Trump’s policies, according to some experts.
Desmond Lachman, a senior fellow at the American Enterprise Institute, a public policy think tank based in D.C., said in June that Trump’s risky policies will result in an economic crisis in the United States. This includes not only tariffs, but also the administration increasing pressure on the Chair of the Federal Reserve, Jerome Powell, to cut interest rates.
“The late MIT economist [Rudi] Dornbusch said that economic crises take a lot longer to occur than you might have thought possible,” Lachman wrote. “However, when they do occur, they occur at a much faster rate than you might have thought probable.
“Maybe then Trump might dial back his aggressive import tariff and budget-busting tax cut policies. However, I fear that like in Greek tragedies, that is unlikely to occur before it is too late.”
Though the legality of Trump’s tariff policies is currently contested in U.S. courts, the outlook seems grim on both fronts.
If the U.S. Supreme Court decides that the tariffs are legal, it could put pressure on the astronomical federal deficits. On the other hand, if the Supreme Court upholds the lower court’s decision, the Trump administration could be on the hook to repay over US$200 billion in tariff proceeds to American businesses, which could have an adverse impact on the U.S. economy in the short term.
With these gloomy predictions coming from experts on the U.S. market, what should Canadian investors do to ensure their portfolios aren’t overly exposed to the volatility and risk of U.S. investments? And what about international markets?
Diversification outside the NYSE
The U.S. Dollar Index fell 10.8% in the first half of 2025 — marking its worst performance since 1973 when Richard Nixon was president.
Meanwhile, inflation has steadily chipped away at the dollar’s purchasing power. According to the Federal Reserve Bank of Minneapolis inflation calculator, US$100 in 2025 buys what just US$12.56 could in 1971 — the year the U.S. moved off the gold standard.
While many Canadian investors stick close to home when it comes to stock market investments, it may be time to consider international exchanges.
While overseas markets aren’t immune to the overall uncertainty, their valuations aren’t as high, according to Bill Winters, CEO of Standard Chartered.
"The UK and France are in similar situations but markets have been providing more severe constraints than the U.S.," Winters said at a launch event in September for Abu Dhabi Finance Week.
In the Canadian market, sectors like technology or health care are underrepresented on the TSX, but these can prove to be valuable investments and good choices for diversification. For Canadian investors who hold U.S. stocks, hedged ETFs and mutual funds that use financial instruments to reduce currency fluctuations are a good choice if you want to maintain some exposure to American stocks, per the TSI network.
You can invest in Canadian and international markets with CIBC Investor’s Edge. With low commission fees of $6.95 per trade and no annual fees for the first year, you can grow your net worth by investing in various markets without worrying about costs cutting into potential returns.
Those who make over 150 trades in a quarter fall in the active trader category — and can enjoy a discounted commission rate of $4.95 per trade for stocks and ETFs.
CIBC charges no commissions for stock and ETF trades if you’re under the age of 25 and have a Smart Start Checking Account.
You can also open tax-advantaged accounts like RRSPs, TFSAs and or a FHSA with CIBC Investor’s Edge. If you have a combined balance of over $10,000 across registered and non-registered accounts, you can enjoy zero annual fees. Plus, your FHSA comes with no annual charges.
Invest in a “very effective diversifier”
Gold performance has been steadily increasing since Trump took office, and is up over 19% in the last six months. Its performance is due to the uncertainty in the stock market, as the metal is widely regarded as the ultimate safe haven during economic turmoil or geopolitical uncertainty.
Dalio himself has repeatedly emphasized gold’s importance in a resilient portfolio.
"A well-diversified portfolio would have somewhere between 10% and 15% in the portfolio of gold," said Dalio, during the same launch event Winters spoke at.
Buying gold, whether bullion or shares in the commodity, can help investors to weather the ups and downs of the market — both for U.S. and Canadian investments.
“When bad times come, gold is a very effective diversifier,” Dalio told CNBC earlier this year.
You can buy gold e-certificates with CIBC Investor’s Edge — allowing you to invest in precious metals without having to worry about storing and protecting physical gold bars.
Plus, you can get expert insights from industry titans on when to buy, hold and sell stocks and other securities, which can be instrumental in growing your net worth.
— with files from Aditi Ganguly
Sources
1. American Enterprise Institute: A US Economic Crisis Foretold by Desmond Lachman (June 10, 2025)
2. National Bank: Investing internationally to diversify your portfolio by Vanguard Investments Canada Inc. (April 19, 2024)
3. TSI Network: Currency Considerations for Canadian Investors in U.S. Stocks: A Comprehensive Guide by Pat McKeough (June 25,2025)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.