Ray Dalio with David Rubenstein: Why Nations Succeed and Fail

so ray thank you very much for coming and uh for writing this book we're going to talk about this principle this evening i want to start though by asking you this you're running the largest hedge fund in the world you started it about 47 years ago or so something like that right the largest hedge fund more than 150 billion dollars how do you have time to write books when you are in running that hedge fund well i didn't write either of those books really what i did was this book was um in order to understand what was going on today i needed to do a study right and what i experienced in life many times before was that the surprises that happened to me were things that never happened in my lifetime but happened many times in history if you want i'll tell you the story but anyway and also the first book i wrote i wrote down the principles as i was making decisions so i find it very helpful when i'm making decisions to think about why i'm making those decisions and to write down the principles and they they're so i sort of log those things and then there's a compendium of that so that's how both of the books got written how long did it take you to write that book well the study took me about two and a half years but i mean i was i'm dealing with markets i was dealing with life and all of those things that during that tour i've got a fabulous team of researchers and i i'm lucky because i could speak to most people recently your ceo um decided to leave and he's going to run for the senate i said dave mccormick so are you going to take on that job as well your ceo no no thanks he's he's a bigger and more courageous man than i and you're not thinking of ever running problems no thank you okay i'm not brave enough to so um the essence of this book now we'll go through the details a little bit later but the essence of it if i can summarize this entire book in one question is that more or less the united states is on decline unless we do something to change that we're going to have uh social disruption we're going to have a currency that's not worth as much as we would like it to be worth we're going to have debt that's going to be hard to pay off and china's on the rise and it's a rising power is that the essence of it um the essence of it is that i'm going to explain a little bit more than more detail than yes or no okay there were three things that happened in my lifetime that are happening now that didn't happen in my lifetime before and that i needed to study and that was an enormous amount of creation of debt and the monetization of that in a financial piece the second is the internal conflict populism of the right and the left that and with wealth gaps and so on that i like to measure things that you'd have to go back to 1900 to see those degrees of conflict which i think are a threat to our system and a democracy and could produce a civil war type of situation and third the rise of a great power to challenge an existing great power and existing world order now those three things in their degrees individually but also collectively last time they happened was 1930 to 45 period and so when i what i needed to do was to understand those patterns and those things and i took it into it and so what i'm hoping to show is simply the mechanics of it in a lot of and then explain why it appears that we are in an important juncture now what we do at that juncture so yes it's measured and and there are the united states is in relative to decline in by measures which are measured and china has been rising and that's an issue but that doesn't create necessarily a destiny it creates a situation which i hope we can we'll go through that before we get into that i want to go through some of your background but also on this book um when you read the book as i have and i enjoyed it it took me a couple of sittings to get through because it's a lot of detail in here you have a lot of historians that help you because a lot of history in here history i didn't know you have historians i'm so lucky because i get to speak to so many people who are historians who are practitioners you know people in different countries henry kissinger graham allison you know just um scientists and so on and then historians so and then i have a fabulous research team so i go into this learning immersion and then and i iterate with it i show them what i've got they come back and that's the process okay so you have in here people who have said good things about the book including a number of treasury secretaries hank paulson tim geithner larry summers hard to get three treasury secretaries agree on anything but you did you also have very favorable comments about the book from henry kissinger and bill gates you know both of them yeah who's smarter well i think i think that they would say the each would say the other guy and i think i would say that um each in their own ways okay so boy you should go into politics or deposit okay so let me uh let's go through your background um you grew up in long island yep and your father was a jazz musician is that right and you didn't want to be a musician no i hated when he taught me i hated scales because of the steady work that you get as a jazz musician is that the problem or no i just him teaching me to do the scales was not something that worked out so well so were you uh as a young boy did you say i want to be a global macro investor when you're no no i it was in the 60s um and and i caddied and i did odd jobs you know but particularly the caddying um and um and at that time the stock market was hot hotter than any time i've ever experienced since by the way you can get a haircut and everybody's talking about the stocks so i'd caddy and i'd talk about the stocks and i carried around um you know two bags i earned six dollars a bag twelve dollars i put the money together i put it into the stock market when i was uh twelve uh but the kids it wasn't such a precocious thing because everybody was sort of thinking about it and the first stock that i uh bought was the only company i ever heard of that was selling for less than five dollars a share and my investment strategy is that because it was um so cheap i can buy more if it went up i'd make more money all right and what happened is it was a company that uh was about to go bankrupt but another company uh acquired it it tripled in value and i said this game is easy and i like i got into it that was easy okay so did you spend time studying the stock market when you're in high school and were you a good high school student oh i was a terrible high school student but i was addicted to the markets right because yeah i mean i figured there's the wall street journal particularly wall street journal but they had all these thousands of names and all i had to do was pick one that went up or down so um i guess you weren't a good high school student you didn't go to harvard or yale or something like no no i barely got into cw post college on probation i hated high school okay but you did well there i did very well there so ultimately you got into harvard business school yeah and i loved our business and did you think that people there were smarter than you thought they'd be or not as smart as you thought they would be well i they were smart and they were interesting because they came from all over the world and and it was also fun you know the dorms and having fun together and all that so you enjoyed it oh it was great okay so when you quit harvard business on that quit you graduated from harvard business school i quit you graduated from harvard business school what did you do what was your job well i traded commodities all through earlier years because uh commodities had the lowest margin requirements so i figured if i was going to make money i could make the most money with those with the lowest margin make sure people understand when a margin means you're borrowing money from a broker yeah right so if you buy stocks you can borrow at the time but you can borrow what's 70 or 80 percent of that there's no no it was 55 in in those days yeah okay and what could you borrow for commodities though oh yeah 90 some odd percent yes so it's a good way to make money and a good way to lose money that's right okay but since you're planning to make money okay so you are you did that and you ultimately you get to work for somebody else um yeah so i did that and then um in the summer of between 1972 and 73 and i was in business school i got a job at merrill lynch at i went up to the director of commodities nobody traded commodities but merrill lynch had one and i went there and i asked him for a summer job and so he gave me a summer job working for him as kind of his assistant nobody ever out of harvard business school would ever go into commodities but i love them and then what happened is in in that subsequent year we had the oil shock okay and with the oil shock um the commodity markets went ballistic the stock market went down and i graduated school and dominic and dominic a wall street firm hired me to be director of commodities i never had a full-time job being director of com doing commodities but they hired me as director of commodities now you're the only person in the commodities department yes i was hired to i was hired to i was hired to set it up and they gave me this experience guy and before that could happen um what happened is their their retail brokerage house sort of collapsed maybe it was a reflection of their decision making and then i went to cbwl hayden stone which as you might remember was the beginning of the morphing from shearson hayden stone and i stayed there um for oh i don't know like a year and a half that was known as corned beef with lettuce right that was with the cbw cogan berlin while eleven coral beef with lettuce right okay so you were there for a while yeah and then did you get a fight with one of your bosses somewhere and punch them in the face yeah um i um it was it was new year's eve uh we had a big party we got drunk and um you know one thing led to another and and happens all the time and and i and i and i decked him okay um and um at the end of your job he went home he would drive home on the way home he totaled his car his wife uh chewed him out because they missed the thing um he didn't end up um firing me for that time he was it was another time another time okay all right is he working has he ever come for a job for bridgewater has he ever come to use for a job he's a good guy okay all right so uh then you start your own company right yeah and that went incredibly well at the beginning 1975. it was me a guy i played rugby with in my two-bedroom apartment okay and uh everything went well until it didn't go well that's right and did you then have to go borrow money from your father yeah so yes so what happened was you know um it was a very small company just uh you know a handful of people and i love to trade the markets and we did it for institutions and then he um and then in 1979 8081 i calculated that uh foreign that the american banks had led more money to foreign countries than the countries were going to get paid back and um and i had its controversial world view that the world you know is going to be a big debt crisis and mexico defaulted in 1982. so very interesting 1982. and when they defaulted i got a lot of attention and i thought we were going to have a terrible economic set of circumstances and i could not have been more wrong it was exactly the opposite in august when they defaulted another country started to default it was the exact bottom in the stock market and so i had to let off everybody and i was down to me and i um you know i said to myself well am i going to have to put on a tie and go dr take the train in and go to wall street and so on i couldn't bring myself to do that um and i i was so broke that i had to borrow four thousand dollars for my dad to uh pay the bills and this was the best thing that ever happened to me i mean painful but it was one of the best things that ever happened to me because um it gave me the humility i needed to balance with my audacity and then i i needed to understand how can i have the upside without having the downside you know how and then i understood the portfolio construction and risk management and so on so forth so that was my bottom and that punch in the face that experience was one of the best things that happened did you pay your father back at some point the four thousand dollars plus he didn't want equity in bridgewater he didn't ask for that no i think he he was smarter than that so uh bridgewater where did you get the name bridgewater i was um when i went to school at harvard business school when we got out i um i had these friends who went this was this commodity time when there's this big shortage oil shock and so on and these fellows who i went to school with went to different countries and they wanted to import uh different items so for example iran wanted to import soy oil and i knew about commodities so i said okay why don't we have an association bridgewater associates that we and we call it bridgewater because of that and i happen to have the name so when the time came i used it it was set up already so uh for those who might be watching here now or later on um what actually is a hedge fund i mean i we hear the term but what is a hedge fund versus a mutual fund what does it make what's special about a hedge fund well um i think what goes on under the name the hedge fund is like a lot of different things that go under the category of mutual funds if you say mutual funds what is a mutual fund well they have all different things in common the main things is that it's not a publicly registered vehicle and it allows one to structure the portfolio to go long or short different it gives you a great leeway as to what you can do to also balance your risks and operate that way now like the business i've been in private equity hedge funds have one other thing in common which is they get a carried interest so-called in the profits yeah we get a percentage of the profits but not a carried interest okay percentage of the profits okay um it's the same thing well i mean no i i mean in a private equity you all have the piece of the equity that'll carry through what we have is mark to market and they okay and they pay us right same idea but different right now you're managing 150 billion plus yeah about them and why is it explain this to me i really don't know the answer hedge funds seem to come and go sometimes they're hot sometimes they're cold sometimes they go out of business you've been in business for almost uh half a century and you've got 150 billion what did you do that nobody else has been able to do well what we were able to do was to be able to structure portfolios in a way that were better in terms of the returns risks and correlations of our investors so to give you that an idea in other words um you could balance things in a way i could take different alphas different bets in different markets and i could carry that and put that in a fund called pure alpha then i could take different asset classes and put that in a fund which was called pure beta and then we could engineer it for the customers risk levels do you want it at 12 vol volatility 18 vol and then they would whatever benchmark they wanted we could put the alpha on top of so they could say i want the s p 500 plus a six percent ball operating that way i know it all sounds complicated but we could design and structure things to their liking that would produce an attractive rich risk in return that also was not correlated with their other investments let's suppose i knew you when you started and i said i want to be one of your inverse investors 40 some years ago or so almost 50 years ago and i said i don't care about the volatility just make me a good return and make me some money and don't take too big a risk what would i have earned if i'd been with you from year one up today would i be getting eight percent a year over 40 years okay 10 a year so you would have to specify your risk level because the risk here's what almost always goes wrong we've been doing let's say pure alpha since 1991 so it's 31 years and what goes wrong is the risk of ruin right and so you can't have a risk that is greater than you can have let's i'll call it a two standard deviation but you can't have a risk that's going to knock you down let's say 40 or 50 because if you lose 50 percent you have to make 100 back and so to engineer that um so in our particular case um you would have earned um since 1991 you would have earned 12 percent of a year you would have earned money 85 percent of the years any losing years five losing years but all small losses uh the biggest loss we had was because on covet of 2020 we lost 12 percent and that return would have been uncorrelated with the other investment so it would have been a good diversity people who invest in your fund today are they that's pure alpha are they big institutions they're institutions individuals if i call up your bridgewater telephone number and say i want to invest you can't do that no we don't do that okay all right okay so that's the pure alpha fund so alpha means that you could take that and if you say i want to put that on top of the s p 500 you can get that blah blah blah and then there is um then what is your asset class which we call the all-weather fund and that's a strategic asset so those are the two styles of investing and we tailor it for those clients for their risk and what they like now you wrote a book a few years ago called principles that sold millions of copies usually books in the business world don't sell millions of copies and millions of them were sold in in china as well um what is it that was in that book that was so exciting to people uh i uh um you have a sense of what i did what i did when i this this is kind of like how i think in what i do uh when and i recommend this to everybody um when i would make decisions i would not just make the decisions i would think about what are the criteria that i would use to make the decisions and i'd write them down those are the principles and then in our culture which is this idea of meritocracy we would say are those criteria good or bad and then we would try to put them into algorithms and equations and so in i would do that almost like a diary kind of thing and i would see the same things happening over and over again and the next time it happened i would go to the principal and we could together go to our principles and so it accumulated that over a period of time and they were practical they're not theoretical principles and and people seem to find them valuable now it is said that you use these principles in your firm and you operate the firm according to the principles right more or less but it's very constant self-examination employees have to be self-examined by their peers you're self-examined by your peers right or other people in the firm it's hard to get people to want to do this and whether it be examined so intently over the years and it's not easy it's so logical but that doesn't mean everybody wants to do it um it's um so in one sentence it's an idea meritocracy you know the best ideas win out from wherever they come from in which the goals are meaningful work and meaningful relationships that we're in it together uh through radical truthfulness and radical transparency so if we disagree that's a good thing that's no reason to have anger and to have the art of thoughtful disagreement and examine how do you scientifically find out what's true how do you test things and so on and that's been essential to our success so you know you're very intense you're obviously into the numbers but you're also big into transcendental meditation right yeah that's helped me a lot it's been probably the biggest whatever success i've had maybe more attributable to transcendental how did you get into transcendental meditation the beatles help you or something yeah yep um it was exactly that in in 1968 the beatles went to india and they meditated and then i heard about it and then in 1969 in new york you could um you can bring some flowers and you could be that and you could learn how to meditate and and wow um i recommend it's the best thing gift i can do it every day or every almost ever almost yeah i try to do it every day i try to do it about twice a day and if i could take a second to describe it um what it is um is it frees your mind of thought and it takes you from a conscious state into your subconscious and your subconscious is where creativity comes from and equanimity and and all of that like if you're calm and great ideas come to you and when you have that equanimity then you as you're approaching everything things are just the way they are and you have to deal with them and it's a little like being you know in the ninja movies it's a little bit like being the ninja and everything seems slower and you can handle it better and so and you align your subconscious which is where the motions and also inspirations come from with your conscious mind and when they're aligned and you have that equanimity it's a great thing you're going to write a book on transcendental meditation no okay so let's talk about this book okay there are the essence of it again summarizing a little more detail than i did before there are your viewers there are three big cycles in history is that fair yeah i i i came with the three things that are happening today and then i found that there are really five but the three three big ones yeah all right so let's go through the first cycle the first cycle is when an economy comes together gets wealthy people are building up the economy and eventually they build it up so much they borrow more money maybe they should and they dilute their currency is that fair yeah i could do it in a quicker way quicker than that well excuse me better than that better okay now um there is um there's a new water there's a there's usually some fight uh between the left and the right or it could be foreign countries and whatever new water and then when that begins it's sort of a great equalizer and capitalism is a fantastic enabler because what it does is it gives people who may not have anything who have good ideas capital so they get the resources to pursue that and that's a fabulous thing and then as it rises over a period of time you'll see debt to income ratios rise and so on because everybody gets more funded because debt is buying power and everybody wants more buying power and then also you see it naturally just distributes wealth unequally and it distributes opportunity unequally so um as that wealth gaps rise and widen and then also because it's opportu parents can who have wealthy parents can educate their children in an unfair let's say an unequal way relative to others and so but it over it gets overly indebted and then because there's because all this buying power which comes in the form of debt is somebody else's assets then what happens is um then you lower interest rates you try to stimulate it so for example since 1980 every cyclical peak and every cyclical trough and interest rates was lower than the one before it so that they can stimulate more debt and then when you get to zero interest rates that doesn't work so they have to print money and they buy money to keep get that pile going up and that creates the cycle okay so there's part of that cycle which is a capital markets or uh and by the way this exists almost everywhere and then with that and then you see the monetization of debt and so on and with that there are also conflicts conflicts that are the wealth conflicts and related to that the political left and the political right and then that creates the dynamic that we're talking about now you're citing your book uh two examples where this has happened before one is in the netherlands where the dutch economy ultimately they had the only reserve currency at least in western europe the gilder and they did some of what you now say we're doing is that right yep the same patterns over and over again they had in the beginning big education they won a war then they became very competitive they went out in the world taking their goods and they built ships that were the best ships around the world so they can go anywhere in the world they brought their arms with them and they made a fortune and with that they brought their currency and as they bring their currency because it's a world currency a reserve currency others want to own it and because others want to own it because that's buying power it's the common wampum and then because of that then they lend it to the dutch so in other words americans get lent money because others want to hold dollars and then that allows us that's the exorbitant privilege to get more and more in debt and then what happens is they lose their competitiveness the british bill came along and copied from the dutch and found oh they could make ships better and cheaper and then they became the competitors and then as the competitors are operating they take market share away quite similar to lots of technology companies and what's going on now and then what happens is then they get more in debt and then they have the other cycle that's operating and then you have the challenges of that so they had the dutch they typified by the dutch tulabo craze where people were spending a lot of guilders buying tulip bulbs right so that imploded and the british came in and they built a big economy and then they kind of went south a bit they had the same exact pattern and then we came along the united states became the biggest economy in the world around 1870 and since world war ii we've been the dominant economy so now we have a lot of debt you'd say yeah uh 29 trillion good about that so how are we going to pay off that debt by the way well inflation is the only way in the end it's always print the money you know it's always print the money because you see the one man's debts are another man's assets and so if you're holding a bond and you receive a you don't get compensated for inflation let's say people think cash is a low investment low-risk investment well they're earning no interest and when you have a seven percent or a five percent inflation you lose five percent of your buying power or if you're owning a bond you have the same thing and so what happens is not only is there the debt that is coming from the new debt created to run the deficits but they're become sellers of that debt because the owner as an asset it's not a good asset and then there's so much selling and what that means is that you either have to interest rates have got to go up or and then that grinds things down to a close or what they do is they have to print money and so the history of all of these cycles is that the coffers are empty because you can't continue to spend more than you earn and give it to somebody expect them to like it and then you devalue it and that becomes the cycle and so you see the classic cycle of the ingredient is um the cycle i'm talking about in terms of supply demand and let's you point this out because one you want people to know that we're borrowing too much money and we're devaluing the currency just so the policy makers will maybe do something no it's not that easy um why do you want to tell people this i i i only want people to to to look at it with me together to see do we agree on the mechanics and do we agree on history so that there's awareness for individuals because i think individuals what do they do with their money and how are they going to do i just want to pass it along i'm a stage in my life i just want to pass that along and decide that but i think also if you understand it for a society it's not easy because there are very big issues very we're we are bad and our infrastructure is bad our educational gaps are enormous um i have personal contact with my wife working in the poor school districts in connecticut connect let me give you the example um in connecticut which is one of the richest states in the country 22 percent of the high school students are disengaged or disconnected disengaged means that they're missing um they're missing absentee rate is greater than 25 percent and they're failing classes that's disengaged disconnected means that they don't go to school they don't know where they are twenty two percent one out of five is there if i'm in uh and if i live in greenwich connecticut average school district is twenty four thousand dollars a year uh it's in bridgeport it's about fourteen thousand dollars a year these types of issues uh and then infrastructure and so on they are issues so i'm not saying that the issues don't exist it's a very easy thing to say not to pay the money but if you look at the cycles you have to come up with the money and and when a society as a whole is spending a lot more than it's earning and not and to not be aware of that either for the purpose of the society or for the purpose of individuals thinking how do they take care of themselves i wanted to pass it along so what you want to do is presumably let people know this is occurring so maybe they could take action by letting their congressmen or governors know something about this or not well i think there are two two things what you can do to make a better society and okay uh what you can do to make a better society in your contribution but also how you can individually take care of yourself in a situation that might be difficult okay so uh let's finish on the third part of the cycle the third part of the cycle is somebody's rising up and right now you would say china is rising up is that correct there's just numbers and you look at it and okay so if i want to do something about it i want to live in a time when china is not rising up so much and we're better off in the u.s economy what should i do should i lobby my members of congress not to print so much money what should i do about it if anything um well again it's or the cycles are science you can't do that if i think if if we go back and we look at history there are three main things that you can do okay uh first uh as a society individually and then collectively how do you earn more money than you spend and how do you build a balance sheet that has more assets than liabilities that's a healthy and so keeping that in mind the second is internal conflict or cooperation can you have internal cooperation because you realize what the consequences are so i think that in the 2024 elections there is a reasonable chance that neither party will accept losing the elections and that is something that means that democracy or a type of civil war of sorts could develop in a way this is realistic i'm not being exaggerated by that and when one looks at those types of things there is a worry that one should have about the divisiveness and what it means for each other and the same is true internationally so basically if you anybody who's gone into wars this through history um the people who are the most convinced that that's the thing to do all regretted going into wars because of what wars are like so the things that i would hope to convey is first of all what are the arcs is that right or wrong and the arcs measured not opinionated just look at those measurements so that you could see that and then as we think about it like i i i have a principle if you worry you don't have to worry and if you don't worry you need to worry and what i mean by that is if you worry and you start to think with what this direction could be and what it's like then um maybe you deal with the things that prevent those worries where if you don't worry maybe you get into trouble without worrying or with the confidence one of the arcs is also people who've never been through a war you know our memories are with us not necessarily our parents memories and that and because of those conflicts and so on they take for granted the fact that we couldn't have a conflict those types of conflicts so those are the things there are things we can do the world has now more resources than it has ever had and there are things that can be done now you are an early proponent of china being a growing economic power and you've spent a lot of time in china what do you think china thinks of us right now as an economic power they think we're declining or they think we are our big rival for them economically for a long time in the future i think um i think americans um people in other countries and um chinese and so on uh would all uh worry i think you're of an age and i'm of an age to know exactly the same age five days apart by the way right um of an age to know that this is not the way it was in earlier years and uh and to worry about some of the things that i'm mentioning okay let me ask you this the average person watching right now probably doesn't have 150 billion dollars to manage the investment of so what can the average person do to invest reasonably well well you know um like i didn't have any money and i remember the cycle and what what it was is i would start to think um how much money do i have to how many weeks months and then years can i take care of myself and my family and i would calculate that i would be at okay 52 years if no income was going to come in and then i would start to think um and then if i'm holding a portfolio in something maybe i could lose half so i better cut that number in half and then i start to think of what are my uses of the money what do i need to do and i would think about how do i immunize that and you start and you build like that and you know how to save and and saving you know things like don't put it into cash deposits that get eroded by inflation and taxes and so on and you start to develop it and the thing that you can do the most important thing you could do is not be in cash and and those deposits particularly now when there's such negative real rates and to have a well-diversified portfolio and that well-diversified portfolio and that's a whole subject of what does that mean and how to do it but it's a well-diversified portfolio of not just asset classes but of uh countries of um uh you know of of different thing currencies diversify but let me ask you an average person who isn't you know a billionaire should they expect to get a rate of return overall on their money of five percent a year is that a good target six percent eight percent what do you think is a reasonable target for somebody doesn't want to take undue risks well nowadays the structure of the markets and where everything is priced um if um and done the normal way we'll give you probably a return in the vicinity of with a lot of risk around it uh maybe in the vicinity of four percent okay three three and three percent three four percent okay something that might not equal inflation probably it'd be very close and then you have to pay taxes on it um because there are so many financial assets but you one thing you can they'll send you more money so uh warren's not printed warren buffett famously has said that in the end uh you're better off to go into a stock index fund than an a hedge fund and he's made bets about that obviously he's not an investor in your fund because he would have done well but do you think an average investor who doesn't really know the markets should they just go into stock funds or bond funds is that the safest thing for most in any one thing you have to understand like uh from 1966 to 1980 the stock market had a negative real return went down 54 to lady two okay and you could lose a lot of buying power any one thing just please understand this any one thing is is a risky thing over probably a relevant time frame for the individual and that's why knowing how to balance a portfolio knowing how to achieve that balance the thing that's magical about it is you can retur reduce your risk without reducing your return as we talked today uh the stock market in the last couple weeks has been correcting if that's the right verb and a lot of the errors out of the so-called bubble are should people be selling everything and getting out of the market now because the markets are going down or is this the time to buy um first of all i'm i'm not here to give a lot of advice but i'll give you the following thoughts um we won't tell anybody just give us a summary okay just just on our own um um what's what's happened is the they produced a lot of debt and gave out a lot of money and so everybody's got money and it's also very easy to borrow money to buy things and as a result if you create much more buying power then you create goods and services you've got a lot much more inflation and the federal reserve has been behind the curve slower to tighten monetary policy and as a result we're now starting to see the rise in interest rates to be able to deal with that as that happens all assets compete with each other so now that free money is still going to be cheap money but it's going to be um a bit higher so interest rates let's say bond yields have gone up about one percent now you take that and you adjust everything is the present value of future cash flows but it means that that interest rate goes up a percent that means all the other assets have to adjust we're in a process of making that kind of adjustment that means the days that we've had before the easy days where they dump money on you and you don't have much inflation and you don't have much time and this those are passed and now we're in a different kind of part of the cycle okay so uh you said earlier that you're in the stage of life where you're basically giving away money you're an original signer of the giving pledge and you've decided to give away a lot of money what areas are interesting to you in philanthropy well we do it as a a pretty much a family activity you know we have different um um my wife in my case um you know there are a number of things um i grew up in a in a modest background and i so i like and i like finance so i like microfinance i support grameen america for example and those that produce microfinance my wife and i are dealing with kids who can't get through education we're trying to support that in those various ways i'm have a passion about ocean exploration 72 percent of the world's surfaces ocean and it's not been explored and so i support various ways um the creation of um ocean exploration um mental illness um is a very important subject to us um you know there are and then on our family each has their own particular things so um we went um in covid uh we uh particularly we set up a clinic with new york presbyterian hospital for um health justice which peaches out to a population it's a little it's a little bit of when you're not investing and you're not uh transcendental meditating and you're not writing books and doing philanthropy what are you doing you have any outside number number one is my grandkids okay my kids my my family of course um and uh the one of the greatest blessings in in life um that one ever can possibly have is one how many grandchildren you have i have four now what do they call you papa not mr dalio or something like that all right so um i wouldn't be surprised that this is the first question that i've been asked to read you how do you foresee crypto impacting the world order um i i um crypto uh is um an alternative currency and then there's a digital technology and then there's something like bitcoin which could be viewed as a let's call it a digital gold um i i think it's interesting i have a tiny percentage of my portfolio on it to to diversify uh but i wouldn't call it um and it's by by the way a amazing accomplishment to have programmed it to have it 11 years that it has not been hacked and that is used but it is a very vulnerable incident because they can track who is operating at it it can be tracked it'll be outlawed probably by different governments and in terms of its size it has issues so i think too much attention has been spent on um crypto or somebody might be a gold bug or somebody might be i don't know they hold gems or whatever they do but i think that we're now in an era where we're going to have different types of money we're going to question money is a medium of exchange but it's also a store hold of wealth and we're going to be questioning what are the right storehold of wealth in in the value and you're going to see around the world not only the digital versions of that take place in many forms you're going to see other forms of of that competition i think in the years had if you were starting out today this question is what would you do to build wealth if you wanted to build wealth same same thing there's there's well i'll tell you there's you know there's work for it and then there's think about what is your game what do you love so i would say first of all make your passion and your work the same thing and pay attention to the money part if you you know if you have a passion a game that you love and um and so you don't work and that you and and it gives you an adequate amount of money so that you get what you want you know out of life then that's a good thing whatever it is what's the single greatest tool you have used um every single day that has contributed to your success meditation that's it suppose you hadn't done that you wouldn't i probably i don't know okay so how would a u.s response to a russian invasion in ukraine affect markets well it's increasingly um making um investors think of what is a war market economy like how do markets perform in wars because they're not used to wars okay um i don't think it's going to be um a big big war but i don't know you know i don't know about such things but it is good to know how do different monies work in that so i think more attention will be paid to those types of things and there's there's a description of all the past wars and all the markets movements in those wars in the book so i would direct people to that what is your 2022 gold forecast i can't i really can't say okay you can't say i would say it can become a more interesting year because well i'm i i could maybe describe 22 and 23 and 24 for you if you want but it's more interesting there's no one market that i would make a forecast so as you look at your daily day um you're investing your writing you're thinking what gives you the greatest pleasure other than your grandchildren is there something that you'd like to do the most is it trans nettle meditation is it looking at the markets do you look at the screens all the day to see where the markets are going or you don't do that uh learning learning and practicing you know uh i'm i i'm excited to be able to speak with interesting people like yourself and uh on on this eclectic world and then to then kind of bet on it based on what i do that's exciting you said other than my grandkids now your mother died when she was you were relatively young is that right your father did he lived to see your success uh he was he was 91 and success is not he went to he saw that i was successful and successful i think means um self-sufficient could take care of the family and and do and a contributor to our society i think he could make that he didn't say if only you played a music musical instrument he didn't say that no you know since since i grew up he said never be a musician so your advice to young people who say i want to have a career like in a life like ray dalio what would it be what are the one or two things read a lot be nice to people uh study hard what would you tell young people no you're no know your nature no um know where your pool are we all have different natures our minds work something differently know yourself um like personality profile tests i put out a test called principal you it's free for anybody who wants it and it helps people understand themselves and where is your nature and what is your path given that nature i don't people should never live after somebody but you should know your nature and pursue your nature i think ray i enjoyed reading this book and i've enjoyed our conversation this is the changing world order why nation succeed and fail ray dalio ray thank you very much for coming here today thank you david

Channel: The 92nd Street Y, New York

Views: 82,001

Keywords: 92Y, 92nd Street Y, Ray Dalio, David Rubenstein

Id: podVC8DkKEQ

Length: 48min 59sec (2939 seconds)

Published: Wed Feb 09 2022