Ray Dalio
@RayDalio • 2,545,063 subscribers
Official account of Ray Dalio, founder of Bridgewater Associates, author of #1 New York Times bestseller 'Principles,' professional mistake maker
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Over long periods of time, debts tend to rise faster than incomes, creating the long-term debt cycle. Even as people become more indebted, lenders freely extend credit because during economic booms, incomes rise, asset values soar, and the stock market thrives. People borrow more to buy financial assets, pushing prices higher and creating a bubble. So long as incomes keep rising, the debt burden stays manageable. But this cannot continue forever. Over decades, debt burdens slowly accumulate until debt repayments grow faster than incomes. This forces people to cut back on spending, causing incomes to fall and borrowing to dry up—eventually reversing the entire cycle. #RayDalio #Economy #LongTermDebtCycle #Finance
Ray Dalio97,050 views • 11 days ago
The holy grail of investing is knowing how to balance. When you can take equally good things where your expectation of return is equal, but because they are uncorrelated and move differently, they balance each other. That is how you can reduce your risk without reducing your returns. You have to understand that the market is a zero-sum game. The consensus is already reflected in the price, and trying to beat it is a difficult game. In fact, it is more difficult to compete and be successful in the markets than it is to compete in the Olympics. We must be humble about that. But achieving that balance so you can get a good return without losing a lot of money is everything. Most of my own money is invested in exactly that. #Investing #AssetAllocation #RiskManagement #Principles
Ray Dalio91,059 views • 14 days ago
Yes, we are past the point of no return. When debt service payments squeeze out spending, it is like plaque in the circulatory system squeezing out the flow of blood. It is the same kind of thing, and it can be measured. We are seeing that happen right now. There is also a supply and demand issue. A budget deficit means that debt has to be sold. We can see this happening in the bond market—bonds have been a bad investment, and there is pressure on interest rates and borrowing. This dynamic is happening, but people are treating it like it hasn't happened before. They don't understand that, just like plaque in the arteries, the debt builds up and they have that exposure.
Ray Dalio516,144 views • 2 months ago
Credit is the most important part of the economy—and probably the least understood. It's the biggest and most volatile part. When borrowers receive credit, they increase their spending. Because one person’s spending is another person’s income, increased spending drives the economy forward and creates a self-reinforcing pattern of economic growth. Understanding how credit works is key to understanding economic cycles. #RayDalio #Economy #Credit #Finance
Ray Dalio156,775 views • 28 days ago
When we are in meetings, we use a tool for what we call "dotting." It allows everyone to convey what they are seeing and how each person is behaving in real time. You can look at a screen and see, in color, how people are seeing each other. You see who thinks something is the most arrogant thing, or the stupidest thing, or that you aren't being considerate. When you see that visualization in real time, you are forced to ask yourself: How do I know that I’m seeing it the right way? How do I know that I’m not the wrong one? You realize you are just one of those dots in that line and in that grid. It causes you to go above yourself and provides perspective. Once you see how everyone else is seeing the situation, it raises a fundamental question: Together, how do we know what’s best? Just because an idea is in your head doesn’t mean it’s best. To make the right decisions, we have to look past our own individual assumptions and work together to find the truth.
Ray Dalio90,245 views • 17 days ago
Everything has happened before. Everything is repeated. But the mistake that had the biggest effect on me was in 1982. I had calculated that American banks had lent a lot of money to a bunch of countries that would not be able to pay it back. Mexico defaulted in August 1982, and while I was right about that part, I was completely wrong about the market. I thought the stock market was going to go down, but it went up because the Federal Reserve eased. I didn't just miss. I was publicly wrong and lost everything. I lost my company and all the people who worked for me—people who were like family. I was the only one left. I had to borrow $4,000 from my dad just to help pay my family bills. It was one of the most painful experiences I have ever had, but it was also one of the best. It completely changed my attitude about decision-making. It taught me to move from thinking "I'm right" to asking myself, "How do I know I'm right?" #RayDalio #Principles #Mindset #BusinessLessons
Ray Dalio132,339 views • 27 days ago
After spending time in Washington, DC discussing the budget deficit with senior people on both sides of the aisle, it’s clear to me that we are unlikely to change the debt trajectory we’re on and avoid the painful consequences. While virtually everyone agrees on the need to address our debt problem in a balanced way that includes tax increases and cuts to benefits, they also agree that they cannot speak up because politics have become absolutist. We must find a solution around absolutist pledges like, ”I will not raise taxes,” or “I will not reduce benefits,” when they are desperately needed.
Ray Dalio2,400,445 views • 1 year ago
While Bitcoin gets a lot of attention, it hasn’t played the safe-haven role many expected. In my view, there are a few reasons why. First, Bitcoin lacks privacy. Transactions can be monitored and potentially controlled, which is why central banks aren’t looking to hold it. Second, it also has a high correlation with tech stocks. When investors get squeezed in other areas of their portfolio, they sell their Bitcoin to cover it. Third, it’s a relatively small and controllable market, whereas gold stands alone. There is only one gold. Ultimately, gold is more widely held, deeply established, and still plays a central role in the global system.
Ray Dalio763,784 views • 5 months ago
Here’s the holy grail of investing: Find 15 good, uncorrelated return streams. If you look at the math of diversification, getting out to 15 uncorrelated streams allows you to reduce about 80% of your risk without reducing your return. That increases your return-to-risk ratio by a factor of five—giving you the upside without the downside. Credit: Sam Parr, Shaan Puri, and My First Million #RayDalio #Investing #Diversification #FinancialWisdom
Ray Dalio140,409 views • 1 month ago
Most people look at a resume to evaluate skills, but in my opinion, the priority should be the exact opposite. When evaluating someone, focus on three things in this order: values, abilities, skills. Skills are actually the least important because if someone has the right abilities, their skills can always adapt. Credit: Sam Parr, Shaan Puri, and My First Million #Principles #Leadership #Hiring
Ray Dalio87,177 views • 20 days ago
Productivity matters most in the long run, but credit matters most in the short run. This is because productivity growth doesn't fluctuate much, but debt does—allowing us to consume more than we produce when we acquire it, and forcing us to consume less when we have to pay it back.
Ray Dalio90,646 views • 21 days ago
The most common mistake smart investors make is not having a clear game plan. To build a solid strategy, write down your criteria for making a decision, then stress-test it against history. Every time you make a decision, go back and ask: “If I made that decision under these circumstances in the past, how would it have worked?” Knowing the track record of your decision-making criteria gives you a much deeper understanding of how things actually work. Credit: Sam Parr, Shaan Puri, and My First Million #Investing #Principles #RayDalio #FinancialWisdom
Ray Dalio92,436 views • 24 days ago
In order to be successful, you have to do five things. There’s a sequence to it. 1. Have (audacious) goals. 2. Identify and don't tolerate problems. 3. Diagnose the problems to get at their root causes. 4. Design a path to fix those things. 5. Push through to results. This is what I call looping. Go for your goals, identify your problems, get to the root cause, design a path, and push through. Life is basically just doing that over and over again. If you do that, you'll make the advances. #Principles #RayDalio #PersonalGrowth
Ray Dalio363,127 views • 3 months ago
You work your ass off to get a lot of money. But what is that money actually for? Money has no intrinsic value—it only matters if you have a clear purpose behind it. Will it get you better friends, a better marriage, or a better relationship with your kids? You better answer that question first. To me, real success isn’t about the money. Success is knowing your nature, finding the best path through that nature, and being able to look back and say, "That was the life I wanted to have." Credit: Sam Parr, Shaan Puri, and My First Million #RayDalio #DefinitionOfSuccess #MoneyAndPurpose #Mindset
Ray Dalio148,190 views • 1 month ago
This happens as long-term rates rise relative to short-term rates. Though they try to hold short rates down, long rates are climbing, a trend we are already seeing. We are also seeing a weakening dollar and movements in gold. As rates rise, it starts to affect the stock market. With bonds dropping and stocks rising, the prospective returns of stocks are now low compared to bonds, translating into broader stock market pressure. This classic dynamic creates a stagflationary environment that the Federal Reserve struggles to manage. With current stagflation, the Fed wrestles with whether to tighten or ease. In an economy with vast wealth disparity, the financial impact differs drastically depending on whether you own stocks, which carries huge political implications. #Stagflation #Macroeconomics #FederalReserve #StockMarket
Ray Dalio136,646 views • 1 month ago
In 1971, the US ran out of money and defaulted on its debts. Now, they didn’t say it that way. But by moving away from the gold standard, money as we understood it ended. I expected the stock market to plunge, but it went on to rise nearly 25%. That surprised me. But when I looked into it, I discovered the exact same thing happened in 1933 and it had the exact same effect. Here’s why.
Ray Dalio988,120 views • 11 months ago
It's now happening. The existing fiat monetary order, the domestic political order, and the international geopolitical order are all breaking down, so we are at the brink of wars. It all is happening because of the Big Cycle that is driven by the five big forces I've described repeatedly and laid out in detail in my book and Youtube video titled Principles for Dealing with The Changing World Order. You can find the video linked in the comments below.
Ray Dalio743,285 views • 8 months ago
As I’ve explained here before, at this stage in my life, my main goal is to pass along the principles and templates I've learned with the hope that they can help others as much as they've helped me. One thing that has been incredibly valuable to me is learning that just because something hasn’t happened before in my lifetime doesn’t mean it won’t happen. So I needed to look not only at what the markets have been doing lately but to also study big events—like debt crises, internal political conflicts, and international wars—throughout history. For example, it was by studying the Great Depression that I was able to navigate the 2008 financial crisis successfully. I would like to help others gain this perspective, which is why I have been sharing my principles in books, videos, on social media, and especially in the "Dalio Market Principles Online" course I built with great partners at Singapore's Wealth Management Institute (WMI). The course has been completed by thousands of online learners around the world and has gotten great reviews. If you’re interested in joining its next cohort which is starting soon, you can learn more here.
Ray Dalio91,121 views • 1 month ago
There are two things you need to do to be successful. You have to come up with the best decisions, and you have to have the courage to make them. The real problem for most people is that they think the best decisions are only in their heads. The most important thing I learned was to take those ideas, put them out there, and stress test them. Whatever success I’ve had in life has had more to do with my knowing how to deal with my not knowing than anything I know. That taught me how to take in what others have, and that has been a key thing. #RayDalio #Principles #DecisionMaking #SuccessMindset
Ray Dalio95,517 views • 1 month ago
My view is that buying and holding real estate is not an effective investment strategy in our current economic environment, for a few reasons. 1) Real estate is more interest rate sensitive than it is inflation sensitive, so given our current circumstances it is likely to go down in real terms 2) It is a fixed asset that is easy to tax, which limits its impacts on your ability to diversify 3) Real estate is nailed down, so investing in it makes it more difficult to move money from one place to another That’s my view, in a nutshell. I’m curious to hear if you agree. #GovernmentDebt #debt #principles
Ray Dalio1,034,250 views • 1 year ago