US Is Likely In Its 'Weakest Fiscal Position' Since WWII: Billionaire Paul Tudor Jones Warns Of A 'Really Challenging Time' For Stock Market Investors. Here's What He Likes For Protection

The U.S. stock market showed considerable gains in 2023, but according to billionaire hedge fund manager Paul Tudor Jones, it's not going to be all sunshine and rainbows.

"It's a really challenging time to want to be an equity investor in U.S. stocks right now," he said in a recent interview with CNBC.

According to Jones, who runs Tudor Investment Corp., this is "the most threatening and challenging geopolitical environment" he has ever seen. At the same time, he believes that America is "probably in its weakest fiscal position since certainly World War II with debt-to-GDP at 122%."

He warns that as interest rates go up, the U.S. would get into a "vicious circle," causing its fiscal position to further deteriorate. He also says that in just a few years, the country's interest bill will exceed its defense spending.

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Jones knows how to navigate turbulent times. He gained considerable fame in the investment world after predicting the Black Monday stock market crash of 1987 and profiting handsomely from it.

And while Jones warns about challenging times for stock market investors, he sees opportunity in two alternative assets.

"I would love gold and Bitcoin together," he said. "I think they probably take on a larger percentage of your portfolio than historically they would because we're going to go through both a challenging political time here in the United States, and we're going to go through — we've obviously got a geopolitical situation."

Here's a closer look at the two assets.

Gold

Gold has served as a store of value for thousands of years.

Unlike fiat money, which can be produced in unlimited quantities, the precious metal has inherent scarcity, making it a hedge against inflation.

At the same time, gold historically has been recognized as a safe-haven asset, providing investors with a hedge against economic uncertainty and geopolitical risks. In times of political unrest, wars and other crises, the yellow metal has often been sought as a refuge, given its global recognition and value.

There are many ways for investors to gain access to gold. You can purchase gold bars and coins from your local bullion shop, buy shares of gold mining companies or invest in exchange-traded funds (ETFs) that specialize in the metal.

Bitcoin

Some say that Bitcoin is the new gold. One of the things that makes Bitcoin appealing is that its total supply is capped at 21 million coins. This stands in stark contrast with fiat currencies, which can be printed at will by central banks.

Another hallmark feature of Bitcoin is that it is decentralized, meaning it operates independently of central banks and traditional financial systems. It can also act as an alternative means of storing and transferring value in the event that one country's economy or currency is faltering — it is possible to send and receive Bitcoins anywhere in the world.

It's easy to buy and sell Bitcoin these days. But the cryptocurrency is volatile. While the price of Bitcoin has surged 63% year to date, it's still down more than 50% from its peak in November 2021.

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Photo: Courtesy of TED Conference on Flickr.