Ray Dalio, who runs hedge fund behemoth Bridgewater Associates, spoke about economics and meditation at the DealBook Conference.
Dalio, who is one of the most successful hedge fund managers ever, said that he would not invest in Bitcoins right now.
He added that he would have to understand it better. He said there’s a “a lot of merit” behind it.
“That’s a whole conversation,” Dalio said.
Dalio, who recently published a great presentation called “How The Economic Machine Works,” began the conversation saying that he’s worried about future failures.
So that’s where he started.
The average retailer investor gets scared so they have a pattern of sell. A pension would rebalance, he said.
Andrew Ross Sorkin asked him where he thinks we are now. He asked if the Fed printing money makes sense.
“It’s working with consistently decreasing effect. It will work with even less effect.”
Sorkin asked him what happens as a result.
“I’d like to emphasise the machine… What I’m saying is the Federal Reserve…They normally lower interest rates…Now the Federal Reserve can only produce the purchase of financial assets. That creates a wealth effect…As we create a wealth effect, it’s concentrated in the hands of those who have those financial assets…As a result the spending in the stores, it has a diminishing effect…”
He explained that the Federal Reserve has done a “masterful job” providing liquidity post financial crisis.
Dalio went on the say that he stocks returning 4% annually over the next decade. He doesn’t see the Fed raising rates for a number of years.
“Going forward, most investors are not going to be able to produce alpha…We have 1,500 people…So that alpha is a very difficult game. I would say most investors would create a balanced portfolio against it.”
Sorkin asked Dalio about his practice of meditation. He said it’s the biggest part of success in his life.
Dalio said he meditates twice a day for 20 minutes each time..
“It’s such a great investment,” Dalio explained adding that it creates “equanimity.”
The conversation opened up to audience questions. One audience member asked him if we would open Bridgewater Associates today.
The answer is yes.
Dalio said the most important decision you would make when picking a job is finding a culture where you would flourish and be yourself.
The last question someone from the audience asked Dalio was about his view of the French economy. The hedge fund manager has been bearish in the past, and he maintains that view.
France, Dalio said, is in a difficult spot with its debt. It faces a rise in debt service payments. Those payments will then need to be rolled over, but it will be tough. There will be a funding gap and wider credit spreads, making this whole process even harder.
This puts France “on par with Southern Europe.”