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Ray Dalio's Principles of Investment

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Ray Dalio's Principles of Investment

 

""Be radically transparent..."

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Ray Dalio - New Yorker article about him here

Originally:

The Ray Dalio area on GEI
Started by PositiveDeviant, 31 Oct 2011
( 17 replies, 1,359 views to the end of Sept. 2013)

 

This is based on Ray Dalio's principles.

The purpose here is to create an area where discussions take place whilst keeping in mind Ray's principles. These are found on his Bridgewater Associates website.

What I've written about here are some elements of his principles document and since it is quite lengthy I've only chosen what I find to be the most meaningful parts of that, so it's not likely to be an accurate reflection of it, only my interpretation of the important points.

Who is Ray Dalio and what are his principles?

From Wikipedia;

"Ray Dalio (born in 1949 in Jackson Heights, Queens, New York, United States[1]) is an American businessman and founder of Bridgewater Associates.
The son of a jazz musician, Dalio began investing at age 12 when he bought shares of Northeast Airlines for $300 and tripled his money when the airlines went through a merger.[2]

Dalio received a BA from Long Island University and an MBA from Harvard Business School.

After completing his education, Dalio worked on the floor of the New York Stock Exchange and began investing in commodity futures.[2] He was a Director of Commodities at Dominick & Dominick LLC [3] In 1974, he spent a year trading futures as a Shearson Hayden Stone broker. [2] In 1975, he founded the investment management firm, Bridgewater Associates, and his investment advisory service began to attract pension funds worth millions of dollars. [2]

Dalio is a practitioner of the Transcendental Meditation technique and resides with his wife in Greenwich, CT.[4][5][2]According to The New Yorker he is the 55th richest businessman in the world, with a net worth of US$6 billion as of 2011.[6]
"




His most fundamental principle;

"Truth —more precisely, an accurate understanding of reality— is the essential foundation for producing good outcomes."

and others;

"I believe that evolution, which is the natural movement toward better adaptation, is the greatest single force in the universe, and that it is good."

"I believe that the desire to evolve, i.e., to get better, is probably humanity's most pervasive driving force."



For me, this one is the most interesting;



"I believe that the biggest problem that humanity faces is an ego sensitivity to finding out whether one is right or wrong and identifying what one's strengths and weaknesses are."

More here;

"Most of us are born with attributes that both help us and hurt us, depending on their applications, and the more extreme the attribute, the more extreme the potential good and bad outcomes these attributes are likely to produce. For example, highly creative, goal-­oriented people who are good at imagining the big picture often can easily get tripped up on the details of daily life, while highly pragmatic, task-­oriented people who are great with the details might not be creative. That is because the ways their minds work make it difficult for them to see both ways of thinking. In nature everything was made for a purpose, and so too were these different ways of thinking. They just have different purposes. It is extremely important to one's happiness and success to know oneself—most importantly to understand one's own values and abilities—and then to find the right fits. We all have things that we value that we want and we all have strengths and weaknesses that affect our paths for getting them. The most important quality that differentiates successful people from unsuccessful people is our capacity to learn and adapt to these things.

Unlike any other species, man is capable of reflecting on himself and the things around him to learn and adapt in order to improve. He has this capability because, in the evolution of species man's brain developed a part that no other species has—the prefrontal cortex. It is the part of the human brain that gives us the ability to reflect and conduct other cognitive thinking. Because of this, people who can objectively reflect on themselves and others —most importantly on their weaknesses are—can figure out how to get around these weaknesses, can evolve fastest and come closer to realizing their potentials than those who can't. However, typically defensive, emotional reactions—i.e., ego barriers—stand in the way of this progress. These reactions take place in the part of the brain called the amygdala. As a result of them, most people don't like reflecting on their weaknesses even though recognizing them is an essential step toward preventing them from causing them problems. Most people especially dislike others exploring their weaknesses because it makes them feel attacked, which produces fight or flight reactions;; however, having others help one find one's weaknesses is essential because it's very difficult to identify one's own. Most people don't like helping others explore their weaknesses, even though they are willing to talk about them behind their backs. For these reasons most people don't do a good job of understanding themselves and adapting in order to get what they want most out of life. In my opinion, that is the biggest single problem of mankind because it, more than anything else, impedes people's abilities to address all other problems and it is probably the greatest source of pain for most people. Some people get over the ego barrier and others don't. Which path they choose, more than anything else, determines how good their outcomes are. Aristotle defined tragedy as a bad outcome for a person because of a fatal flaw that he can't get around. So it is tragic when people let ego barriers lead them to experience bad outcomes. "



So an important part in personal evolution is the realisation that our ego can often get in front of an objective conclusion. Our ego is a barrier towards finding the truth.



"Be radically transparent. Provide people with as much exposure as possible to what's going
on around them. Allowing people direct access lets them form their own views and greatly enhances accuracy and the pursuit of truth. Winston Churchill said, "There is no worse course in leadership than to hold out false hopes soon to be swept away." The candid question-­and-­answer process allows people to probe your thinking. You can then modify your thinking to get at the best possible answer, reinforcing your confidence that you're on the best possible path. "




This is about more in depth questioning taking place where the underlying factors and beliefs that lead to one's viewpoint or conclusion are looked at in more detail. Are they true?



So what is this topic on GEI all about then?

I think a lot of what Ray has to say makes a great deal of sense and it would be interesting to, first of all, discuss some of his principles and beliefs, including some of the ones that I may not have mentioned here that are part of his "Principles". Are they true? Do they make sense?

Perhaps after this initial process, discussions can take place here on specific topics (decided by those who want to post here) whilst keeping these principles in mind. The aim being to reach more accurate conclusions that are closer to the truth.


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Ray on weaknesses;

 

"I met a number of great people and learned that none of them were born great—they all made lots of mistakes and had lots weaknesses—and that great people become great by looking at their mistakes and weaknesses and figuring out how to get around them. So I learned that the people who make the most of the process of encountering reality, especially the painful obstacles, learn the most and get what they want faster than people who do not. I learned that they are the great ones—the ones I wanted to have around me.

In short, I learned that being totally truthful, especially about mistakes and weaknesses, led to a rapid rate of improvement and movement toward what I wanted. "

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... From the thread : What good are Traders ? ...

Here's someone I admire, and I like the way he looks at markets:

 

“Making money is a zero-sum game, so to be successful you have to be willing to stand apart from the crowd,” Dalio says. “And you have to be right.

 

The founder was right often enough during and after the worst financial crisis in decades starting in 2008, helping to cement his reputation as a leader in his industry. Three Bridgewater hedge funds placed among the 100 top-performing large funds in Bloomberg Markets’ annual ranking in February, including its flagship, Pure Alpha II. The No. 3 fund posted a 38 percent return for the 10-month period through October 2010.

 

segment_11957_460x345.jpg

INTERVIEW: http://www.charlierose.com/view/interview/11957

 

Dalio’s influence spreads beyond his elite industry. He and his colleagues regularly brief central bankers, as well as pensions and sovereign-wealth funds, on their outlook. The firm’s newsletter -- Bridgewater Daily Observations -- is required reading for macroeconomic thinkers for its prescient analysis.

 

Economic Power

In August 2007, as credit markets were tightening, the newsletter warned, “Hedge funds in general are unlikely to provide much diversification to help protect against poor performance of traditional markets.”

The next year, funds lost an average of 19 percent.

 

“You find insights that are different from what you were thinking,” says Hilda Ochoa-Brillembourg, founding president of Strategic Investment Group in Arlington, Virginia, which invests in hedge funds.

At its bucolic headquarters in Westport, Connecticut, Bridgewater devotes a great deal of resources to research. The firm’s 1,200 employees -- more than at many midsize investment banks -- help generate the data and analysis that inform bets on macroeconomic trends. In June, researchers tracked the percentage of world gross domestic product generated by Western Europe, the U.S., Africa, China and other markets to the 16th century to show long-term shifts in economic power.

 

44.8 Percent Return

“No one pursues market-based truth more aggressively than Ray,” says Britt Harris, chief investment officer of the Teacher Retirement System of Texas.

 

/more: http://www.bloomberg.com/news/2011-09-07/dalio-returns-25-on-diversified-bets-as-markets-convulse-influential-50.html

 

 

"What good does trading bring?"

 

What I am doing is not much different that what you as an investor do. Like you, I want to buy at a low price and sell at a high price, and generate a profit. I simply do it over a different time horizon, and rather than "mining excesses" in fundamental valuations, I am mining shifts in psychology when markets shift from excessive pessimism, to excessive optimism - that's something that I believe can be read from charts, once you learn how.

 

"The Service" that I am providing is allowing those who are frightened and want out, to get out at a slightly higher price than if I was not there. And at the high: I am a seller allowing those who feel they should buy, a chance to buy at a lower-than-otherwise price. I provide that price advantage to those who I trade with, whether I am right about the market or not.

 

Is this really very different than the "service" that an investor might provide to the market? But by focusing on psychology-driven swings, I see more opportunities.

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Ray Dalio Explains Why Everyone's At Each Other's Throats Right Now

 

Social unrest at a time like this is a "classic" reaction to deleveraging, according to billionaire hedge fund manager Ray Dalio.

 

About one half of the countries in world, including the U.S. and other debtor nations, including Greece, Spain, and Italy, are in a cycle of "deleveraging" right now. The other half, including Brazil, India, and China, conversely, are leveraging up.

 

Dalio describes a debtor nation thusly:

 

They spent years overspending, financed by their government's borrowing

They are in the process of deleveraging debt

 

As a result, they are being forced to lower their debt relative to their income levels, constrain spending levels and make improvements in the job market

 

Some are worse off than others. Greece, Spain and Italy, for example, can’t print money to pay off their debts. To make up for slow credit growth, they will have decade-long depressions and debt defaults.

 

The U.S. is trading like a country in decline

 

It's not surprising that a debtor nation like ours is experiencing social unrest, explains Dalio in the Financial Times,

 

Read more: http://articles.businessinsider.com/2011-10-25/wall_street/30319383_1_deleveraging-debtor-ray-dalio#ixzz1cJO7WpaP

 

HOW DOES THE US GET OUT OF A DECLINE ??

 

we might try:

His most fundamental principle;

 

"Truth —more precisely, an accurate understanding of reality— is the essential foundation for producing good outcomes."

 

Truth... is something sadly lacking in Politicians.

They think they cannot get elected if they ask voters to face the harsh facts.

Maybe the opposite is true, and voters will demand a different standard

and insist that politicians face tough issues (as Ron Paul is doing)

 

“Like the issue of…’Is it better to have austerity or stimulus?’ Well, the basic problem there is that we’re not having a quality conversation on the subject.” –Ray Dalio, Bridgewater Associates, on the Charlie Rose program, October 20, 2011

 

Read more: http://articles.businessinsider.com/2011-10-27/markets/30327527_1_austerity-stimulus-food-stamp#ixzz1cJQ71zv1

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Ray Dalio's 11 Favorite Stock Picks

 

October 5, 2011 :

includes: AMAT, AXP, CSC, EEM, GE, MSFT, NTAP, NVLS, PH, SPY, VWO

 

Ray Dalio is the President and Chief Investment Officer of Bridgewater Associates. His long-term annual returns average 15% net. Even in the economic collapse of 2008, his funds earned approximately 9% returns. Dalio uses a strategy that focuses on the process behind the economics. In other words, he looked at the 2008 recession as the inevitable outcome of having incomes that were not enough to manage debt. Taking this a step further, he embraced 2009 and 2010 as years of bankruptcies and restructuring, and through this anticipation was able to profit from it.

 

Here are Ray Dalio’s 11 favorite stocks at the end of June 2011:

http://seekingalpha.com/article/297842-ray-dalio-s-11-favorite-stock-picks

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Ok, let's talk about what's driving the Yen then.

 

Japanese Yen futures (last 9 years)

ScreenShot2011-11-04at072308.png

 

A bull market for the last 4 years. Although there was much talk about buying the yen around the credit crisis, have many held it for the last 4 years, apart from Mrs Watanabe?

 

 

ScreenShot2011-11-04at072417.png

 

A population increasingly dominated by the elderly, with not much by way of youth to replace them. It looks rather bleak for the Japanese.

 

 

Who's holding the debt?

ScreenShot2011-11-04at074309.png

ScreenShot2011-11-04at074455.png

 

 

Let's get some background on the Japanese situation here.

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Bump.

 

Any idea on what on Ray Dalio sees for 2012?

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Bump.

 

Any idea on what on Ray Dalio sees for 2012?

Funny you should mention it:

 

http://www.zerohedge.com/news/there-no-joy-muddlethroughville-worlds-biggest-hedge-fund-bearish-2012-through-2028-and-long-go

 

That Ray Dalio, famed head of the world's largest (and not one hit wonder unlike certain others) hedge fund has long been quite bearishly inclined has been no secret. For anyone who missed Dalio's must see interview (and transcript) with Charlie Rose we urge you to read this: "Dalio: "There Are No More Tools In The Tool Kit." For everyone who is too lazy to watch the whole thing, or read the transcript, the WSJ reminds us once again that going into 2012 Dalio's Bridgewater, which may as well rename itself Bearwater, has not changed its tune. In fact the CT hedge fund continues to see what we noted back in September is the greatest threat to the modern financial system: a debt overhang so large, at roughly $21 trillion, that one of 3 things will have to happen: a global debt restructuring/repudiation; global hyperinflation to inflate away this debt, or a one-time financial tax on all individuals amounting to roughly 30% of all wealth. That's pretty much it, at least according to mathematics.

 

Also, don't tell spam-loving party animal econ professors, but the $122 billion hedge fund, is long gold.

Currently, the fund is positioned for higher gold prices

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Thanks for the link.

I liked this part:

"One of 3 things will have to happen:

+ a global debt restructuring/repudiation;

+ global hyperinflation to inflate away this debt, or

+ a one-time financial tax on all individuals amounting to roughly 30% of all wealth.

 

That's pretty much it, at least according to mathematics

 

That last one is a little-mentioned possibility. The rich whine about paying higher taxes on income, but a one-off wealth tax might be a great way to handle part of the deficit. It could also be done by forcing wealth people to buy zero coupon bonds, which would not pay any interest until taxes balance spending.

 

And of course, some combination of those, together with spending cuts might work.

 

No wonder the article is entitled:

"Bearish For 2012 Through 2028, And Is Long Gold"

 

"The Federal Reserve will need to do more quantitative easing—buying of government bonds—but Mr. Prince says the purchases will probably be sporadic.

 

Gold prices should resume a rally amid continued printing of money by the Fed and other central banks, Mr. Prince says. Those efforts effectively devalue those countries' currencies compared with gold."

 

...Across the Atlantic:

 

"You've got insolvent banks supporting insolvent sovereigns and insolvent sovereigns supporting insolvent banks," he says.

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+ a one-time financial tax on all individuals amounting to roughly 30% of all wealth.

 

That last one is a little-mentioned possibility. The rich whine about paying higher taxes on income, but a one-off wealth tax might be a great way to handle part of the deficit. It could also be done by forcing wealth people to buy zero coupon bonds, which would not pay any interest until taxes balance spending.

 

 

I can always lose my gold for a few years. Where did I put it? :) If I don't have it you can't tax it, surely..

 

Can you 'lose' your paper gold, Dr B.?

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I can always lose my gold for a few years. Where did I put it? :) If I don't have it you can't tax it, surely..

Can you 'lose' your paper gold, Dr B.?

If the money was well-spent (which is a big "if) - then many would pay the tax.

That would require some huge spending cuts, and a strong selling effort by the President.

(Obama could never pull it off- no one would believe him. Romney might get away with a 10% one-off wealth tax, if combined with deep cuts - 20-30%? in government entitlements.)

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Bridgewater Takes Grim View of 2012

 

Robert Prince, co-chief investment officer at Bridgewater, and his managers at the world's biggest hedge fund firm are preparing for at least a decade of slow growth and high unemployment for the big developed economies. Mr. Prince describes those economies—the U.S. and Europe, in particular—as "zombies" and says they will remain that way until they work through their mountains of debt.

 

111030-zombie-economy-9a.grid-6x2.jpg

Ten years of a zombie economy?

 

"What you have is a picture of broken economic systems that are operating on life support," Mr. Prince says. "We're in a secular deleveraging that will probably take 15 to 20 years to work through and we're just four years in."

 

In Europe, "the debt crisis is [a] long ways from over," he says. The economic and financial morass will mean interest rates in the U.S. and Europe will essentially be locked at zero for years.

 

In this bleak environment, Mr. Prince says stocks remain vulnerable to "air pockets" from shocks, such as bad news out of Europe. But for longer-term investors looking out over the next decade, he says, equities may be a good buy. There is even money to be made in U.S. Treasurys, despite interest rates near record lows, and gold is likely to resume its climb as central banks print money to bolster their economies. Mr. Prince says.

 

The views of Bridgewater are keenly watched by other investors, given the firm's elevated status in the competitive world of hedge-fund investing.

. . .

In 2011, it profited from owning gold, but cut back on that position during the third quarter. It correctly pivoted from being bearish on U.S. Treasurys early in the year to positioning for a rally. It also benefited from rallies in core European bond markets and avoided ugly losses sustained by other macro funds that had bet the euro would fall against the dollar. Instead, it rightly bet that the euro would fall against the Japanese yen.

. . .

In the U.S., leveraged investors who can borrow money at rates near zero could find a good deal in Treasurys, Mr. Prince says.

 

Mr. Prince points to the example of Japanese government bonds. An investor who was leveraged three-to-one and bought Japan's bonds at a 2.5% yield in the mid 1990s would have earned a compound average annual return of 12% a year for 15 years, he says.

 

Meanwhile, gold prices should resume a rally amid continued printing of money by the Fed and other central banks, Mr. Prince says. Those efforts effectively devalue those countries' currencies compared with gold.

 

Mr. Prince also thinks stocks are attractive from a long-term perspective, especially compared with bonds or cash. Broadly, discounted earnings-growth rates, which reflect the expectations about future earnings implied by current prices, are negative, he says.

 

A moribund economic outlook "is pretty priced in right now," he says. "If we have a long, drawn out deleveraging process without substantial air pockets, chances are equities are a pretty good bet, ironically."

 

/more: http://online.wsj.com/article/SB10001424052970204368104577136531481564726.html

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MORE from the guy who sees the Global economy as a machine

 

http://www.ftense.com/2012/03/economist-interview-ray-dalio.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+ftense%2FsymR+%28The+Future+Tense%29

 

His HF's performance shows he understands that machine rather well

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MORE from the guy who sees the Global economy as a machine

 

http://www.ftense.com/2012/03/economist-interview-ray-dalio.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+ftense%2FsymR+%28The+Future+Tense%29

 

His HF's performance shows he understands that machine rather well

 

Fascinating to see how a great investors mind works.

 

He says we are going through a long term deleveraging, and that the average of banks assets to equity is 15-1, higher in Europe. Anyone know what the long term average is? and where the figures are reported. Then we could possibly see how far we are into the process and when the banks are likely to start lending again.

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... the average of banks assets to equity is 15-1, higher in Europe. Anyone know what the long term average is? and where the figures are reported. Then we could possibly see how far we are into the process and when the banks are likely to start lending again.

Many Years ago when I started in banking, it was 8-10 times

 

 

Ray long term stats are getting better:

 

http://www.youtube.com/watch?v=60YFyR8L01w

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A FEW ANECDOTES are slipping out

 

While sifting through Mr. Dalio’s plaudits, we stumbled across a tidbit that, while less flashy than an Economist profile, might reveal more about the man himself : tales of life inside Bridgewater as told by Mr. Dalio’s former personal assistant.

 

..

Kathleen O’Grady, now a self-described “authenticity coach” based in Raleigh, N.C., wrote on her blog last July that she had spent about six months in 2004 working as an executive and personal assistant to Mr. Dalio (while also assisting Bridgewater’s co-chief investment officer, Bob Prince, and Mr. Dalio’s son Matt).

 

“I learned more about self leadership in that six months than most people learn in a lifetime,” Ms. O’Grady wrote of her time at Bridgewater.

 

Ms. O’Grady, reached by telephone on Tuesday, compared working for Mr. Dalio to “The Devil Wears Prada,” a novel and film about an assistant to a demanding fashion magazine editor, in the sense that “I never knew what I was going to be handed next.”

 

Inspired by an article in The New Yorker about her old boss, Ms. O’Grady shared some of the stories she collected while working for the enigmatic billionaire.

. . .

Working for Mr. Dalio could be scary, according to Ms. O’Grady. On one occasion, she accompanied firm employees on a team-building retreat at Mr. Dalio’s home in Vermont. Prodded to participate, she wound up firing shotguns and shooting paintballs with the rest of the group.

 

“I came home from the trip in pain, but with a renewed sense of limitlessness,” she wrote.

 

While at Bridgewater, Ms. O’Grady did her best to adapt to the firm’s well-known office culture, which is based on Mr. Dalio’s doctrine of “radical transparency.” (The philosophy, spelled out in a dense manifesto titled “Principles,” prohibits gossip and encourages employees to air their grievances in public.

 

/more: http://dealbook.nytimes.com/2012/03/13/ray-dalios-former-assistant-tells-all/

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Ray Dalio talks about deleveraging and a lot of other things

 

http://www.alsosprac...her-things.html

 

 

 

Ray Dalio, founder and co-chief investment officer of Bridgewater Associates, L.P., discusses global economics.

 

This meeting is part of the Corporate Program's CEO Speaker Series, which provides a forum for leading global CEOs to share their priorities and insights before a high-level audience of CFR members.

 

PRESIDER: Maria Bartiromo

 

Wherein Ray explains to Maria what a bubble is - A bubble that she help to create

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FYI: Ray Dalio's Economic Principles

 

ray-dalio.gi.top.jpg

 

Website : http://www.economicprinciples.org/

 

Video also available at http://www.youtube.com/watch?v=PHe0bXAIuk0

 

Download associated book (PDF format) here: http://bwater.com/Uploads/FileManager/research/how-the-economic-machine-works/ray_dalio__how_the_economic_machine_works__leveragings_and_deleveragings.pdf

 

 

I. HOW THE ECONOMIC MACHINE WORKS
A Transactions-Based Approach 1
Productivity Growth 6
Long-Term Debt Cycle 11
Short-Term Debt Cycle 19
II. DEBT CYCLES
LEVERAGINGS & DELEVERAGINGS
An In-Depth Look at Deleveragings 25
U.S. Deleveraging, 1930s 61
Weimar Republic Deleveraging, 1920s 115
III. PRODUCTIVITY
WHY COUNTRIES SUCCEED & FAIL OVER THE LONG TERM
The Last 500 Years and the Cycles
Behind Template 162
The Formula for Economic Success 178

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Great thread idea - I posted another link - on DrB's Diary:

 

 

Thanks to L, for this link and comment

 

Ray Dalio has a good video explanation of long term and short term debt cycles. The beginning and ending of his video are politically motivated and not entirely based in logic, but if you focus on the middle part of his video I think it is spot on.

http://www.youtube.com/watch?v=PHe0bXAIuk0

Its easy to make money on the levering part of the long term debt cycle. Let's see how anyone performs on the downswing portion - that'll put to test all of our "brilliant" investment strategies and see who, if any of us, survive it (and in what condition compared to how we live today). I think it's worth noting that Ben Graham, the father of value investing, got wiped out by the Great Depression too - his value investing was not so valuable in the face of the natural deleveraging crash of the long term debt cycle. That Graham re-made his money is perhaps only a function of his reinvestment into financial assets at the bottom of the new oscillation of the long term debt cycle. It is also notable that Buffett has lived his entire life in the upswing of the long term debt cycle - if he's alive long enough to see the impending deleveraging crash then we'll see how much purchasing power Berkshire has compared to today.

I too used to be fully 100% in the Graham-Dodd / Buffett value-investing clan. But since 2008 I've educated myself on the monetary system, Austrian economics and the effects of debt cycles and I see that it so much more supremely represents what has happened in the financial markets than any value-investing-theory ever could. Value-investing runs on the ripples of the tsunami that is the long term debt cycle. Let's see what happens when the tsunami comes crashing down - will those value investing ripples actually protect anyone's purchasing power.

=== UNQUOTE ===

/ LC-1: http://hongkong.asiaxpat.com/forums/hong-kong-property/threads/152088/the-state-of-the-hong-kong-property-market-(10)/

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How the MACHINE WORKS

 

 

+ Productivity

+ Short Term debt cycle

+ Long Term debt cycle

 

Merging Two threads

 

110725_r20931_p233.jpg

Ray Dalio - New Yorker article about him here

 

The Ray Dalio area on GEI
Started by PositiveDeviant, 31 Oct 2011 / 17 replies, 1,359 views
==
FYI: Ray Dalio's Economic Principles
Started by THEBIGMAN, 26 Sep 2013 / 2 replies, 42 views

 

===========

 

Is the Deleveraging about to get Nasty again?:

 

SPY ... update : 3-mos

 

ry8w.png

 

This rally could be done, as Tony C now believes

 

SPY / The last 6 months : 10-days / VIX-10d

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"Any two people can agree to create credit out of Thin Air"

"A credit-worthy borrower has two things:
Collateral, and the Income to repay."

"Human Nature creates cycle."

YOU BORROW from your future self!

Credit is different from Money.
You create credit when you borrow

In the USA
=======
Credit : $50 Trillon
Money : $ 3 Trillion

Credit can be good or bad.
Good : when it increases productivity
Bad - : when it does not increase productivity

 

 

What Happens in a Deleveraging ?

===
1. Governments,companies, and people spend less (causing income cuts)
2. Debts must be reduced, and people write off debts (assets disappear, tax payments drop)
3. Wealth has the flow from the Haves to the Have-nots (people are desperate)
4. Central banks can print (and that's inflationary and stimulative)
/ makes up for the disappearance of credit /
The printing by the CB puts up the prices of Financial assets, but that only helps those who have financial assets
= It is Imbalance help / only helping the wealthy
( In a "beautiful deleveraging"):
The RIGHT BALANCE maintains growth and social stability
INCOME needs to grow faster than DEBT grows
RULES:
+ Don't have Debt rising faster than Incomes
+ Don't have Incomes rising faster than Productivity
+ Do all you can to Raise Productivity !

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I've been looking into trying trancendental meditation. I've just been reading online about it, apparently Ray Dalio is into it.

 

From the GQ guide to trancendental meditation;

 

"But the name that jumped out most when I started looking at TM's fans was Ray Dalio, founder and chairman of Bridgewater, the world's largest hedge fund. Dalio is a superhero of the financial world. And what the 63-year-old has to say about TMwhich he started doing forty years ago, in collegeis not ambiguous: "I think meditation has been the single biggest reason for whatever success I've had." This from the thirty-third-richest man in America."

 

Now THAT is interesting.

 

http://www.gq.com/life/health/201309/gq-transcendental-meditation-guide

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Ray Dalio: "If You Don't Own Gold, You Know Neither History Nor Economics"

Submitted by Tyler Durden on 05/14/2015 - 17:0020150514_dalio.jpg

"If you dont own gold... there is no sensible reason other than you dont know history or you dont know the economics of it"

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