He’s gone. Initial takeaway: he seems nice, humble (a poster boy for the Principles), and to enjoy talking about the economy.
Also – he doesn’t have strong views about what *should* happen, just what will, like how the government won’t spend more, and how in the future, policy will tighten. But for now, we’re in the historical “sweet spot” before that happens, where it’s good for equities.
8:59: 2013 will be a year where there’s much more tightening of policy.
8:58: Only a minute left! NOO!!!
8:57: Question: Are you interested in things that are exposed to states?
Dalio on munis: I would not be interested in those debts, but I’m not a muni expert.
8:56: ON GOLD: Gold was money in the old days — the value of money was that you could turn it in and get gold.
I think gold has to be part of your portfolio.
8:55: China will cause structural changes that will create big risks. I would diversify into EM.
8:55: ON U.S. DEBT: There’s no getting around the fact that we can’t continue to raise our debts.
Now the question is – how do we spread it out?
Do I wish our society didn’t get in this much debt? Of course I do.
8:54: Question: should we accept this inflation that’s going to happen?
Dalio: I don’t change policy, I just understand how the economic machine works. And it’s always the case that if you have too much debt and you pay it off.
He says we were on the cusp of a big problem between the rich and the poor. (Because financial turmoil always creates social unrest. IE Banker-bashing.)
8:53: On policy tightening: Later in 2012, you’re going to see a global tightening. But this year, it’ll be good for equities.
8:52: On Inflation: We’re competing with countries for commodities so in 2012, we’re going to see more inflation pressures.
8:51: The most disorderly problem is the imbalance. As far as the printing of money and being able to achieve the right balance – that’s very doable.
8:50: Boom countries like China will have trouble slowing growth. In the US, we’re able to spread it problem over several years.
8:49: ON U.S. DEBT: We’re going to have to raise our debts and that means we’re going to have slower growth.
8:48: When you come out of cycles, you have a lot of slack, you have a lot of unemployment, it’s what we call the sweet spot of the cycle — it’s when you want to own equities.
8:47: Purchasing financial assets helps financial asset prices and puts money back into the economy
8:45: On spending: we go through a leveraging cycle.. we are going through a de-leveraging cycle.
8:43: The key thing is diversification…
Everything he says about the economy is very simple. That’s why institutional investors like him, apparently – because they can actually understand what he’s saying.
They also like that he inundates them with information rather than only talking to them twice a year like other big hedge fund managers.
8:42: US equities are cheap and the flows to them are beneficial, he says.
8:41: By 2012, he says, it will be impossible to have currencies linked. Emerging economies are going to see inflation and there’s going to be a big change.
Ok, now we’re seeing why everyone says he’s long-winded.
8:40: Wow he just totally stumbled his words too. Is he ok? He was explaining that there’s going to be a decrease in how many people want to lend to the U.S.
8:39: Is he shaking or was that just me?
8:38: We like looking at mistakes. The biggest impediment to improving is being scared of making mistakes because of our ego.
“We have a radically transparent culture” (he’s talking about how they video tape everything)
8:37: He says he’s going to explain everything. Awesome! Even how he achieves transcendental meditation??
8:35: He says he’s on because there’s a “misunderstanding” of his management style and its affecting his hiring, so he wants to offer himself up to explain that. Wow! Check out below for more details on why everyone thinks his style is so weird.
8:35: He’s on!!! He’s in LA. He looks really thin. Apparently he’s been on an intensive diet recently.
8:33: He was supposed to be on at 8:30. No sign yet.
America’s most fascinating hedge fund manager, Ray Dalio, will be on CNBC this morning. We’ll be live-blogging it throughout.
In the meantime, catch up on your Dalio gossip.
The first thing you should know is that he runs the largest hedge fund in the world — it has $87 billion AUM. And despite its huge size, which many usually see as an impediment to strong returns, it performed very well last year, returning over 44%.
The other reason his strong returns are so surprising is that his management style is weird with a capital w.
He runs the shop by his “Principles,” 245 rules (66 footnotes) which he outlines in the Bridgewater handbook.
A few examples:
- Probe your colleagues to figure out what’s wrong with them or the way they’re doing something, preferably in front of someone else. Click here to read rule 160 >
- Video tape everything. Click here to read rule 14 >
- behaviour modification takes reinforcement for 18 months. Click here to read rule 101 >