Ray Dalio is the founder and co-CIO of Bridgewater Associates, the world’s largest hedge fund. Dalio is also known for his book – Principles which talks about his principles in Life and Work, some of which such as ‘Radical Transparency’ we have attempted to implement at Marcellus. His Youtube video on ‘How the Economic Machine Works’ is a simplified tutorial of sorts with 29m views. His latest book on The Changing World Order has attained significance given the emerging geo-politics scene globally (Dalio has made a video for that as well). Here, Zachary Crockett of The Hustle interviews Dalio on various aspects including the current inflation, shifting global power, Bitcoin, investing lessons, traits of successful people, etc.
On the 3 biggest issues America is facing right now:
First, the creation of enormous amounts of debt and the printing of a lot of money. This results in inflation, which takes buying power away from people.
Second, internal conflicts. Political conflict between the left and the right, the haves and the have-nots, and people with different values.
And third, a great power conflict on a global stage. In 1945, the US had 80% of the world’s gold, and we [accounted for] 50% of the world’s economy. And we had a monopoly on military power. And now that gap has narrowed.
On China become the world’s dominant power:
It is inevitable that China will be a comparable power. It is likely that it will pass the US, but not certain. It’ll all depend on how much the United States takes care of itself.
China has a population four times that of the US. If its per-capita income was even half that of the US, it would be twice as large economically. I first started going to China in 1984. Since then, its per-capita income has increased by 26 times.
We can’t discount China, and we know that we’re in a different world than in the early years of me growing up when the United States was the dominant power.
We’re going to have a great power conflict. And there are no courts that you go to when you have disagreements; it’s a power conflict. What matters most is power. And so we better get stronger, or expect that we have to deal with that power conflict. Ideally in a way that does not produce a military war.
On Bitcoin:
I think bitcoin has been a tremendous accomplishment. But I don’t think central banks are going to hold it as a source of reserves.
It’s decentralized, but at the end of the day, governments can still monitor and control it. And the biggest problem with governments is that right now they have their own money problem and you can’t trust them. If bitcoin became too much of a good alternative, they’d get rid of it.
We talk a lot about bitcoin as an alternative, but its total value is relatively small [~$556B, as of publication]. I think too much is being made of it.
On the biggest investing mistake of his life:
Oh, it was one of the most painful experiences that happened to me. But also one of the best.
What I took away was a different way of thinking. It gave me a humility that balanced my audacity. It made me ask myself, “How do you know you’re right?” And I developed a principle: Pain + Reflection = Progress.
I learned how to diversify better. I learned how to be more open-minded and [try] to have my ideas stress-tested by other people who disagree with me.
On personality traits of successful people:
I’ve actually done personality testing* on acquaintances and friends, including Elon Musk, Bill Gates, and Reed Hastings.
A few things they have in common:
On the 3 biggest issues America is facing right now:
First, the creation of enormous amounts of debt and the printing of a lot of money. This results in inflation, which takes buying power away from people.
Second, internal conflicts. Political conflict between the left and the right, the haves and the have-nots, and people with different values.
And third, a great power conflict on a global stage. In 1945, the US had 80% of the world’s gold, and we [accounted for] 50% of the world’s economy. And we had a monopoly on military power. And now that gap has narrowed.
On China become the world’s dominant power:
It is inevitable that China will be a comparable power. It is likely that it will pass the US, but not certain. It’ll all depend on how much the United States takes care of itself.
China has a population four times that of the US. If its per-capita income was even half that of the US, it would be twice as large economically. I first started going to China in 1984. Since then, its per-capita income has increased by 26 times.
We can’t discount China, and we know that we’re in a different world than in the early years of me growing up when the United States was the dominant power.
We’re going to have a great power conflict. And there are no courts that you go to when you have disagreements; it’s a power conflict. What matters most is power. And so we better get stronger, or expect that we have to deal with that power conflict. Ideally in a way that does not produce a military war.
On Bitcoin:
I think bitcoin has been a tremendous accomplishment. But I don’t think central banks are going to hold it as a source of reserves.
It’s decentralized, but at the end of the day, governments can still monitor and control it. And the biggest problem with governments is that right now they have their own money problem and you can’t trust them. If bitcoin became too much of a good alternative, they’d get rid of it.
We talk a lot about bitcoin as an alternative, but its total value is relatively small [~$556B, as of publication]. I think too much is being made of it.
On the biggest investing mistake of his life:
Oh, it was one of the most painful experiences that happened to me. But also one of the best.
What I took away was a different way of thinking. It gave me a humility that balanced my audacity. It made me ask myself, “How do you know you’re right?” And I developed a principle: Pain + Reflection = Progress.
I learned how to diversify better. I learned how to be more open-minded and [try] to have my ideas stress-tested by other people who disagree with me.
On personality traits of successful people:
I’ve actually done personality testing* on acquaintances and friends, including Elon Musk, Bill Gates, and Reed Hastings.
A few things they have in common:
- They’re very, very, very curious, and independent thinkers.
- They’re “full range” — they’re able to go from the full range of the big picture down to the smallest detail.
- They’re both systematic and creative. Most people who are creative may not be so systematic, and most people are systematic may not be creative. They tend to be both.
- They tend to hold people accountable. They have high standards for other people. Some people would say they’re rude or abrupt.
Most people at the top of their profession made it there because they must be very smart and very capable. Of course, that enters into it. But it’s really how they deal with what they don’t know.
If you want to read our other published material, please visit https://marcellus.in/blog/
Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.
