• Ray Dalio says we're in the "early stages of a world war" and it won't end anytime soon.
• He pointed to several ongoing clashes, military as well as economic and geopolitical.
• He listed potential conflicts and said at least one is likely to happen in the next five years.

People are so focused on the US and Israel's battle with Iran that they're overlooking the wider war being waged, Ray Dalio says.

"Virtually nobody is talking about the fact that we are in the early stages of a world war that isn't going to end anytime soon," the billionaire founder of Bridgewater Associates said in a LinkedIn post on Tuesday.

The author of "The Changing World Order" and "How Countries Go Broke" ticked off numerous conflicts, including those in Ukraine, Gaza, and Iran. He also pointed to clashes between countries over trade, capital, technology, economy, and geopolitical power.

"Together, these conflicts make up a very classic world war that is analogous to past 'world wars,'" he said.

Dalio compared the state of the world to its standing in 1913-14 and 1938-39, periods that marked the onset of World War I and II, respectively.

He flagged the risk of Russia's war expanding beyond Ukraine, and military conflicts breaking out against North Korea, in the South China Sea, and between the US and China over Taiwan.

"Looking across all these potential conflicts, the odds of at least one of them happening over the next five years appears to me to be greater than 50%," Dalio said.

He cautioned that markets are pricing in a return to "normal" once the Iran conflict ends, whereas he doesn't see that happening.

Big picture

Dalio, writing before the US reached a two-week ceasefire with Iran late Tuesday, emphasized that while it's only a piece of the wider puzzle, the Iran conflict matters. He said the fight for control over the Strait of Hormuz would have "enormous repercussions around the world."

He ticked off important issues such as Iran's military capabilities, the number of American boots on the ground, the cost of gasoline, and the war's impact on the US midterm elections in November.

But he also said that rival superpowers are watching closely how the US fares in Iran, including how much money and military might it expends, and how well it defends its allies. Those outcomes will "enormously influence how the world order changes," he said.

Dalio said that many of his preferred indicators are signaling the "monetary order, some domestic political orders, and the geopolitical world order are breaking down."

He made the case that the world is moving from a rules-based world order led by the US and its allies, to a "might-is-right world order" without a single dominant power, "which means that we can expect more fighting."

Dalio also warned that the US may not be as mighty as it seems. While it "appears to be the most powerful country in the world, it is also the most overextended major power and the weakest at withstanding pain over a long period of time," he said.

The hedge-fund billionaire has been warning of a world war for a while. In October 2023, he said the chances that the Israel-Hamas conflict could morph into a "more uncontained hot world war that includes the major powers have risen from 35% to about 50% over the last two years."