Ray Dalio Says America’s Decline Will Upend Lives, Not Just Portfolios—The Billionaire Investor Paints A Dire Scenario In His New Book

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“no Empire lasts forever,” says Ray Dalio. A humble word for the man who created the world’s largest hedge fund with a net worth of over $150 billion. But the billionaire founder of Bridgewater Associates, 72, is about that empire. Not talking about what he created and stepped down from management as CEO in 2017. (Dalio remains co-president and co-CIO.) Instead, what worries Dalio is the empire he lives in: United States of america.

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“Right now, money and credit and how it’s behaving is affecting the financial markets, it’s affecting inflation,” Dalio said in an interview. Businesshala Since US inflation has reached the highest rate in 30 years.

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America’s domestic issue and decline as the world’s leading superpower are not just a matter of debate for Dalio. They outline the core thesis of his latest book, The Changing World Order: How and Why Nations Succeed and Fail, which arrives on November 30th. In it, he makes the case that the confluence of America’s growing debt and income inequalities, as well as low US influence, has put the country not only in economic hardship but at risk of war. In particular, he points to rising debt and near-zero interest rates, which have led to massive money-printing ($16 trillion in debt at negative interest rates this year, according to Dalio’s estimates), increasing The wealth gap and China have led to an increase in conflict and polarization. Increased ability to challenge American hegemony on the world stage.

Dalio believes there is a 30% chance that the US will enter a major “civil-war-type” conflict within the next five years. While other countries face similar challenges, the US appears particularly vulnerable. “It’s very important that we tackle this now,” he says. “Depending on how we’re treating each other and our financial situation, we could have a kind of civil war or an international war.” Not only this, America is not the only one facing this dire situation.

“It’s very important that we deal with this now. Depending on how we are treating each other and our financial situation, we could have some sort of civil war or an international war.”

Ray Dalio, founder of Bridgewater Associates

Dalio has built his business and net worth, which Businesshala Figuring out where the world is going and designing investment strategies to profit from it is estimated at around $20 billion. Former US Treasury Secretary Hank Paulson described him as “a great academic disguised as a big thinker and an investment manager”. In addition, Paulson says, Dalio’s assessment of macroeconomic risks and strategies is often accurate. He famously made money during the 1987 stock market crash and predicted the 2008 financial crisis, which enabled his fund to outperform even during that crash.

What is different now is not just the scope of the problem but Dalio’s ability to increase it. Instead of writing down its thoughts on the global business landscape for an audience of clients who have bought into its funds and stand to benefit from its investment strategy, Dalio is sharing them with the wider world. Thank you for his bestselling 2017 book principlesFor millions of readers attracted to his leadership philosophy of “radical transparency”, Dalio has become something of a celebrity and cult hero. As a result, Dalio’s new book may attract audiences far more than usual fans of his macroeconomic missives.

those readers can get changing world order To be both eye-opening—and potentially disappointing—this is an academic study versus an investment playbook. While Dalio inspired readers with his life story and leadership philosophy principles, His new book rings alarm bells about problems that have no clear-cut solution. If Dalio has a clear strategy for investing and hedging risk in this environment, he is not going to explain it here. After all, companies like Bridgewater exist only because of their wealth-making strategies in the midst of seismic global changes. Instead, Dalio’s methodology is generally to establish an economic framework (usually in the context of cycles or “economic machines”) and then provide key broad principles on how to best navigate the path forward. Anyone who has read Dalio’s writing on this rise of populism in 2017 or on their two-part missile Why capitalism needs reform Will get acquainted with this approach after two years. If they are hedge fund investors, they are used to reading pieces that describe how a manager views the investment landscape.

In this new book, Dalio provides an in-depth analysis and some new tools for measuring and navigating risks. Dalio says that because of how fast the economic climate has changed, he was forced to write a book. As co-chief investment officer at Bridgewater, he explains, “I need to make a decision now.” There is also a philanthropic instinct to educate people about what is around the corner. Dalio says: “I’m at a stage in my life where I’m going through the most important things I’ve learned, so I decided to keep it in the form of a book.”

Dalio created a “health index” in the book that rates nearly a dozen countries on 18 different factors ranging from debt burden and economic output to military strength and innovation. It is a tool that readers can use to assess risks themselves and strategize. He plans to build a website for people to assess objective data in real time, just like doctors do when evaluating patients.

Dalio is a student of history as much as science. As the title suggests, his assessment of the current threats to economic health comes from a study of the years of the rise and fall of great empires. The US is not the first country to experience rising debt levels and income inequality while facing declining power and influence globally. “The last time those three things happened was in the period 1930 to 1945,” Dalio says. “When they’re together, it’s a very telling story.”

For a boy born in Brooklyn during the post-war baby boom following America’s success in World War II, the threat of disastrous consequences isn’t just a compelling investment scenario. It is a call to action. Through his writings and conversations with leaders such as former US Secretary of State Henry Kissinger and JPMorgan Chase CEO Jamie Dimon, Dalio hopes that shrewd leaders and citizens can take action to prevent the worst outcome. After all, the issues have lingered over the years. “It’s high time we really look at these things and take warnings and deal with it,” he says.

As he has written about macroeconomic risk for decades, Dalio is careful to clarify that the exact scope and timing of the risks he sees is unclear. Like a hurricane, he explains in the book, knowing the conditions and signs of an economic storm makes it easier to prepare for and get out of harm’s way. “I’m not interested in making any more money,” he says. “I’m just trying to pursue things that are valuable to me and to help others.”

One piece of advice on the safest defense against what’s coming? “No cash!,” he said. In early 2020, Dalio caused a stir in Davos by saying “cash is garbage”“When people were exiting the markets amid concerns including the new coronavirus at that time. Dalio’s argument, as now, was to diversify across different asset classes, currencies and markets. Betting big on one or two things is rarely a winning strategy.

“I worry, a lot of bitcoin holders, they will be right that this is bitcoin and it is nothing else,” he says. “What you are seeing is in all assets, you are seeing it in real estate, stocks, gold, silver, bitcoin etc. From all of that [economic] The excitement has all increased,” he says. In his view, many investors place more weight on US assets at the expense of attractive options. “If I had to summarize it, I would choose countries [to invest in] Those who are earning more than what they are spending so that they have a good income statement and balance sheet.

“What you are seeing is in all assets, you are seeing it in real estate, stocks, gold, silver, bitcoin etc. From all of that [economic] Excitement they have all increased. ,

And if you want to know more, well buy the book. Dalio says this may be his second last, as he plans to write another book about economic and investment principles. Once I get past it, I’ll have nothing to say and I’ll shut up,” Dalio says. Maybe so, but that doesn’t mean he’ll quit his daily job anytime soon. “I love the game I play—the market.” While he wants to help improve the odds for continued growth in America, Dalio knows how to make money when you know what to play next.

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