Ray Dalio may have opened his hedge fund firm in 1975, but he actually started trading stocks well before that.
Dalio, the founder of Westport, Conn.-based Bridgewater Associates, purchased his first stock - 300 shares of Northeastern Airlines – at age 12, and hasn’t stopped trading 60 years later.
With $150 billion in assets under management, Bridgewater is the largest hedge fund trading firm in the world and Dalio gets the lion’s share of credit for that.
Like his peer Warren Buffett, Dalio has changed the investment landscape with an innovative trading philosophy that leans heavily on creating a diversified investment portfolio and getting a firm grip on long-term stock market cycles.
Dalio’s business philosophy has resonated, as well. Bridgewater is well known for its “radical transparency” culture that emphasizes an "idea meritocracy" where the best ideas carry the day.
Ray Dalio is also the #1 New York Times bestselling author of "Principles: Life and Work," "Principles for Dealing with the Changing World Order," and "Principles for Navigating Big Debt Crises."
Now that he’s given up the reins at Bridgewater as chief investment officer, Dalio is committed to his expanding philanthropic efforts and spreading his message of investing from a macroeconomic perspective across the fruited plains.
Let’s see what Ray Dalio has to say about transformational investing and economies, with a closer look at his top quotes of 2022.
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Ray Dalio’s Best Quotes of 2022
On leaving Bridgewater Associates. Dalio seemed to be in high spirits when he officially stepped down as chief investment officer at Bridgewater on Oct. 4, 2022, with a series of tweets commemorating the occasion.
“Today is a very special day for me and Bridgewater Associates because I transitioned my control of Bridgewater to the next generation and I feel great about the people and ‘machine’ now in control. This transition moment is the culmination of a 47-year journey.”
“From my starting Bridgewater w/ 2 people helping me in my 2-bedroom apartment to a multi-generation institution w/ 1,300 people that I’m helping. I can now visualize it doing great things for generations w/ out me. That’s as good as it gets.”
On the Federal Reserve’s “very harmful” interest rate policy. In a December interview with Business Today, Dalio noted the Federal Reserve’s series of interest rate hikes throughout 2022 and into 2023 would be “very harmful” to the U.S. economy and the stock market.
Citing the very real possibility that the Fed’s rate policy could lead to inflation only falling to 4% or 5%, Dalio said the Fed may have raised interest rates near 6%.
"The Federal Reserve will put the short-term rate up towards that level, which is very harmful, very damaging to the economy," Dalio said. “What the Federal Reserve is trying to do is balance things out by having an interest rate that's high enough for the creditor but not so high for the debtor.”
“What you're going to see is a slowing of the pace of the rise but still approaching over 5%, probably in the vicinity of 5.5%,” he added. “This will still have an effect on all markets, particularly stocks."
On historical “forces”. In a November interview with Barron’s, Dalio cites a few “big actors” that are driving history-making geopolitical and economic trends right now
“There are several big forces driving what is happening now in ways that haven’t happened in our lifetime but happened many times in history,” Dalio said. “One is the big debt levels and debt increases that central banks have been supporting by buying a lot of debt with money they are printing.”
“A second is large internal conflicts within countries — the largest since 1930-45. They are due to the largest wealth and value differences since that period. The conflicts most threatening to our system are those between populists of the right and the left. This conflict will have big implications for taxes, how the wealth pie is divided, and how well our system works.”
A third force is conflicts among countries as the world order shifts from being unipolar to bipolar, Dalio noted.
“Throughout history, when the most powerful countries have roughly comparable power, typically there are international conflicts over wealth, power, and ideologies,” he said. “We’re seeing that now between Russia and NATO, China and the U.S., and other countries. That’s changing the world order in important ways that we haven’t seen since 1930-45."
"It's leading to governments prioritizing self-sufficiency and military spending over producing efficiently, which is causing supply-chain problems that are lifting inflation. It also raises the risks of military war.”
On which foreign countries Dalio favors as an investment landing spot. In the same interview, Dalio points to countries outside the U.S. that could be attractive to investors.
“There are emerging countries with strong finances and internal order that are likely to be able to be neutral in the great-powers conflicts and have exciting investment opportunities," Dalio said.
"Those countries include Singapore as a hub to invest in the Association of Southeast Asian Nations region, and in countries such as Indonesia and Vietnam," he added. "Additionally, India will have the highest growth rate of all countries over the next 10 years, and there are opportunities in parts of the Middle East and North Africa, although capital markets in these places are still early in their development.”
Dalio also said it’s also “important to have some money invested in China”, which is very favorably priced right now.
“I’m attracted to export businesses in northern Mexico because their labor costs are now low relative to China’s, and they are benefiting from China being perceived as a dangerous place to produce in and from which to export to the U.S.,” Dalio noted.
On reducing investment risk. In a podcast interview with motivational speaker Tony Robbins, Dalio emphasized the benefits of spreading investment risk. The more, the merrier, he advised.
“If you have uncorrelated assets, and you easily can because when the economic policies, when economic conditions shift it shifts returns from one type of asset to another kind of asset,” Dalio said.
When you have uncorrelated or low-correlated assets you can dramatically reduce your risk without reducing your return.
“For example, the holy grail of investing could be five, it could be ten, it could be fifteen, but you will cut your risk in half,” he said. “Or, if you get down to 10 or 15 different assets you’ll cut risk by 80% without reducing your returns.”
“In general, it’s more important to know how to diversify well than it is to know how to pick the best assets,” Dalio added.
On being compared to Apple Computer legend Steve Jobs. In the Business Today interview, Dalio doesn’t mind at all when people compare him to the late Steve Jobs.
“I was an admirer of Steve,” Dalio said. “He was an independent thinker who came up with great and different ways of doing things that contributed a lot to what our world is like today. Wow! To be compared to Steve Jobs is an honor that I really don’t deserve, but I’m happy to get.”
