Ray Dalio, the billionaire founder of the world's biggest hedge fund, told CNBC on Tuesday that the current economic cycle is in the seventh inning, predicting it has about two years left to run.
To help keep the economy and stocks moving forward, the Federal Reserve should not increase interest rates faster than the market expects, said Dalio, co-chairman and co-chief investment officer of Bridgewater Associates.
For now, Dalio warns that investors should be "more defensive" in the stock market and "as time progresses" he sees the risks increasing.
The "upside looks limited" because a lot of cash on the sidelines has been put to work and the benefits of the corporate tax cuts are "behind us," he added.
On Monday, Dalio put out a new book, "A Template for Understanding Big Debt Crises," as a free PDF or for purchase as an e-book and printed edition. He hopes that examining what caused the 2008 crisis will help prevent futures ones.
The biggest takeaway from the 2008 downturn, according to Dalio, is that central banks need to pay closer attention to bubbles that often precede crises. Current debt levels in relation to income are not troubling, he added.
Appearing on "Squawk Box" during the 10th anniversary week of the crisis, Dalio said the next crisis won't be a big bang-type affair but one that leads to more severe social and political problems.
Ten years ago this week, Lehman Brothers collapsed touching off a crisis that sunk the economy and the stock market, and led to government bailouts of financial firms and automakers and an extraordinarily easy Fed monetary regime.
On CNBC Tuesday, Dalio also talked about President Donald Trump's tariffs on China, saying they're not "that big of a deal." China is likely more concerned about its relationship with the United States, he added.
Bridgewater Associates, with $150 billion in assets under management, was started by Dalio in his two-bedroom apartment in New York City in 1975. Along the way to becoming a titan of finance and philanthropy, Dalio almost went bust in the early 1980s. He has said that near failure was a wake-up call, which highlighted the need to surround himself with independent thinkers to stress test his theories.
Dailo, according to Forbes, has an estimated net worth of $18.1 billion.