Advisors not buying Dalio's stagflation argument. Nor are they ignoring the threat.

Bridgewater Associates founder Ray Dalio believes the US economy is suffering from stagflation. Stagnant growth, high inflation. Right here, right now.

Some financial advisors disagree with the influential hedge-fund manager, however. Not seeing it, not yet. But they are still planning for it, just in case.

"We are certainly in a stagflationary period," Dalio told CNBC on Monday. "Because of the issues that are here, in terms of a more immediate inflation, farther from the target."

Edison Byzyka, chief investment officer at Credent Wealth Management, meanwhile, says the narrative for stagflation in 2026 is "simply not credible" given the current state of the macro backdrop. Although the recent geopolitical situation lends itself to a subjective conclusion for the potential of stagflation, in his view the economic data showcases a different perspective.

“The simple fact that the labor market, or even retail sales, have failed to indicate a backdrop of diminishing capacity on the part of businesses to hire or consumers to spend should not be overlooked. Couple this with the facts that ISM services continue to remain in strong expansionary levels and ISM manufacturing fails to remain below the critical level of 50, and the argument for stagflation becomes very difficult to support,” Byzyka said. 

He adds that this does not suggest that inflation will remain subdued and the economy may very well enter into a short period of higher-than-anticipated inflation amidst an economic engine that has not stalled. Simply looking at ISM prices paid is by far one of the most statistically relevant indicators of what's to come over the next 3 to 6 months, according to Byzyka. 

If a client is taking Dalio’s side and believes in the stagflation argument, Byzyka believes advisors should strongly consider alternative allocations to fixed income. Among them should include structured notes via income solutions.

“They allow an advisor to remove the interest rate risk of the portfolio, prop up the expected return profile, and even generate a stronger after-tax return profile,” Byzyka said. 

On the equity side, Byzyka says, “Active management is back with a vengeance.” 

Along similar lines, Sam Miller, executive vice president of investment strategy at Signature Estate & Investment Advisors, does not see stagflation as his base case for 2026, but he does admit the risk is higher than it was a few years ago.

“Growth is slowing from a strong starting point, while inflation has proven stickier than expected, particularly in services and energy‑related areas. Importantly, corporate earnings have remained resilient so far, even amid geopolitical stress and higher input costs,” Miller said.

In a stagflationary environment, Miller says the role of fixed income shifts from maximizing returns to managing risk and preserving purchasing power. Long‑duration bonds tend to struggle when inflation stays elevated, so shorter‑duration exposure becomes more important. Treasury Inflation‑Protected Securities can play a meaningful role, as they are designed to adjust with inflation. Selective credit exposure may still make sense, but with an emphasis on quality and balance‑sheet strength.

“Overall, flexibility and diversification matter more than chasing yield,” according to Miller.

Equity positioning, meanwhile, becomes more selective if growth slows and inflation stays firm, according to Miller. Rather than broad growth exposure, he recommends companies with pricing power, stable demand, and healthy cash flows.

“Earnings expectations have remained resilient across multiple sectors, not just energy, which argues against abandoning equities altogether. However, valuations matter, especially in long‑duration growth stocks that are sensitive to higher real rates. A tilt toward quality, dividends, and sectors that can defend margins can improve portfolio resilience,” Miller said.

Both strategists say real assets can also play important supporting roles in a stagflation‑risk scenario. Gold and commodities have historically offered diversification when inflation surprises to the upside, particularly when geopolitical risks push energy prices higher. Real estate with inflation‑linked rents or shorter lease structures may also help protect income, though leverage levels matter.

Stressed Miller: “These assets generally work best as complements rather than replacements for stocks and bonds. The goal is balance, adding inflation sensitivity without overconcentrating in any single outcome.”