[Deleted]

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
Spinola
Posts: 328
Joined: Fri Nov 16, 2018 12:32 pm

Re: Ray Dalio’s latest fearmongering round

Post by Spinola »

azanon wrote: Tue Jan 08, 2019 3:52 pm I'm an obvious fan of Dalio, as a cursory search of my posts would prove. But that being said, for one to expect an open-arms reception to some of Dalio's ideas at Boglehead forums, is probably naive at best. The "many roads to Dublin" boast, if there ever was one, was most likely a reference to acceptance of multiple strategies, all of which though would be at least reasonably consistent with Boglehead philosophy.
Just to clarify, I now realize I actually was confusing Mr. Dalio with Tony Robbins.. so my apologies to any fans of Mr. Dalio. I have nothing negative to say about him.. Now all the Tony Robbins fans can hate on me.. :|
"If more of us valued food and cheer and song above hoarded gold, it would be a merrier world." | Thorin Oakenshield
User avatar
TomatoTomahto
Posts: 17158
Joined: Mon Apr 11, 2011 1:48 pm

Re: Ray Dalio’s latest fearmongering round

Post by TomatoTomahto »

Spinola wrote: Sun Jan 13, 2019 10:32 pm
azanon wrote: Tue Jan 08, 2019 3:52 pm I'm an obvious fan of Dalio, as a cursory search of my posts would prove. But that being said, for one to expect an open-arms reception to some of Dalio's ideas at Boglehead forums, is probably naive at best. The "many roads to Dublin" boast, if there ever was one, was most likely a reference to acceptance of multiple strategies, all of which though would be at least reasonably consistent with Boglehead philosophy.
Just to clarify, I now realize I actually was confusing Mr. Dalio with Tony Robbins.. so my apologies to any fans of Mr. Dalio. I have nothing negative to say about him.. Now all the Tony Robbins fans can hate on me.. :|
Haha. Tony Robbins is taller, Ray Dalio is smarter. :D Made from similar cloth, IMO, but I don’t follow either.
I get the FI part but not the RE part of FIRE.
Topic Author
hdas
Posts: 1395
Joined: Thu Jun 11, 2015 8:24 am

[Deleted]

Post by hdas »

[Deleted]
Last edited by hdas on Tue Jan 28, 2020 5:47 pm, edited 3 times in total.
....
azanon
Posts: 3142
Joined: Mon Nov 07, 2011 9:34 am

Re: Ray Dalio’s latest fearmongering round

Post by azanon »

It'll end up being a convenient prediction that will probably time well with the release of his expected next book: "Investing and Economic Principles," which will probably be out by the end of the year or, 2020.
3-20Characters
Posts: 717
Joined: Tue Jun 19, 2018 2:20 pm

Re: Ray Dalio’s latest fearmongering round

Post by 3-20Characters »

Prediction: the future’s uncertain and the end is always near.
User avatar
Toons
Posts: 14467
Joined: Fri Nov 21, 2008 9:20 am
Location: Hills of Tennessee

Re: Ray Dalio’s latest fearmongering round

Post by Toons »

Yawn





:mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Topic Author
hdas
Posts: 1395
Joined: Thu Jun 11, 2015 8:24 am

[Deleted]

Post by hdas »

[Deleted]
Last edited by hdas on Tue Jan 28, 2020 5:47 pm, edited 1 time in total.
....
User avatar
Forester
Posts: 2400
Joined: Sat Jan 19, 2019 1:50 pm
Location: UK

Re: Ray Dalio’s latest fearmongering round

Post by Forester »

Isn't Dalio's risk parity strategy heavy in bonds? Or is that a dumb simplified version for the average Joe?
Amateur Self-Taught Senior Macro Strategist
robertmcd
Posts: 554
Joined: Tue Aug 09, 2016 9:06 am

Re: Ray Dalio’s latest fearmongering round

Post by robertmcd »

hdas wrote: Wed Jul 17, 2019 10:59 am Long article. TLDR >> Buy Gold :greedy

I think that it is highly likely that sometime in the next few years, 1) central banks will run out of stimulant to boost the markets and the economy when the economy is weak, and 2) there will be an enormous amount of debt and non-debt liabilities (e.g., pension and healthcare) that will increasingly be coming due and won’t be able to be funded with assets. Said differently, I think that the paradigm that we are in will most likely end when a) real interest rate returns are pushed so low that investors holding the debt won’t want to hold it and will start to move to something they think is better and b) simultaneously, the large need for money to fund liabilities will contribute to the “big squeeze.” At that point, there won’t be enough money to meet the needs for it, so there will have to be some combination of large deficits that are monetized, currency depreciations, and large tax increases, and these circumstances will likely increase the conflicts between the capitalist haves and the socialist have-nots. Most likely, during this time, holders of debt will receive very low or negative nominal and real returns in currencies that are weakening, which will de facto be a wealth tax.
Wait so you are telling me we are not gonna be able to grow our way into paying for 220 trillion in unfunded liabilities by issuing $3 worth of debt for every $1 of "GDP" growth? The writing is on the wall, and its currency debasement thru debt monetization or bust. Already been going on for decades.
User avatar
Elric
Posts: 731
Joined: Fri Dec 07, 2018 11:23 pm
Location: Virginia
Contact:

Re: Ray Dalio’s latest fearmongering round

Post by Elric »

Big Dog wrote: Fri Sep 14, 2018 9:14 am Ok, I get that he might of been referring Medicare/Medicaid & SS (since he mentioned 'pensions'). But if that is what he meant, why did he not single those out specifically? It just seems to me that is a glaring omission. Perhaps the editor summarized? If so, that is a poor edit job since it really obfuscates the meaning.
Aren't there also Federal pension benefit guarantee programs? And I believe studies that show these are likely underfunded. And, as pension funds fail, likely to be increasing pressure for larger Federal guarantees.
"No man is free who must work for a living." (Illya Kuryakin)
User avatar
willthrill81
Posts: 32250
Joined: Thu Jan 26, 2017 2:17 pm
Location: USA
Contact:

Re: Ray Dalio’s latest fearmongering round

Post by willthrill81 »

Said differently, I think that the paradigm that we are in will most likely end when a) real interest rate returns are pushed so low that investors holding the debt won’t want to hold it and will start to move to something they think is better...
And what pray tell would that be? U.S. Treasuries are already yielding more than most other developed nations. Real interest rates were negative a few years back, yet that didn't stop people from buying more Treasuries.
The Sensible Steward
staustin
Posts: 456
Joined: Mon Mar 14, 2011 9:36 am

Re: Ray Dalio’s latest fearmongering round

Post by staustin »

robertmcd wrote: Wed Jul 17, 2019 11:20 am
hdas wrote: Wed Jul 17, 2019 10:59 am Long article. TLDR >> Buy Gold :greedy

I think that it is highly likely that sometime in the next few years, 1) central banks will run out of stimulant to boost the markets and the economy when the economy is weak, and 2) there will be an enormous amount of debt and non-debt liabilities (e.g., pension and healthcare) that will increasingly be coming due and won’t be able to be funded with assets. Said differently, I think that the paradigm that we are in will most likely end when a) real interest rate returns are pushed so low that investors holding the debt won’t want to hold it and will start to move to something they think is better and b) simultaneously, the large need for money to fund liabilities will contribute to the “big squeeze.” At that point, there won’t be enough money to meet the needs for it, so there will have to be some combination of large deficits that are monetized, currency depreciations, and large tax increases, and these circumstances will likely increase the conflicts between the capitalist haves and the socialist have-nots. Most likely, during this time, holders of debt will receive very low or negative nominal and real returns in currencies that are weakening, which will de facto be a wealth tax.
Wait so you are telling me we are not gonna be able to grow our way into paying for 220 trillion in unfunded liabilities by issuing $3 worth of debt for every $1 of "GDP" growth? The writing is on the wall, and its currency debasement thru debt monetization or bust. Already been going on for decades.
The writing is on the wall, and its currency debasement thru debt monetization or bust... thus, the reason you begin to see proponents of Modern Monetary Theory.
User avatar
willthrill81
Posts: 32250
Joined: Thu Jan 26, 2017 2:17 pm
Location: USA
Contact:

Re: Ray Dalio’s latest fearmongering round

Post by willthrill81 »

staustin wrote: Wed Jul 17, 2019 11:46 amThe writing is on the wall, and its currency debasement thru debt monetization or bust... thus, the reason you begin to see proponents of Modern Monetary Theory.
No, MMT is gaining adherents because it's the best predictor that we currently have.
The Sensible Steward
Sakura
Posts: 25
Joined: Tue Jun 18, 2019 10:55 am

Re: Ray Dalio’s latest fearmongering round

Post by Sakura »

Ah yes, MMT or more aptly the Magic Money Tree.

Funny how countries that issue their own currency have defaulted before such as Russia and brazil. And since deficits don't matter for the magic money tree acolytes then we should print enough to buy the entire world's production of goods and services.

Anyway, so are we ready to ditch our 3 fund portfolios for some great leveraged gold funds as market oracle Dalio suggests?
User avatar
willthrill81
Posts: 32250
Joined: Thu Jan 26, 2017 2:17 pm
Location: USA
Contact:

Re: Ray Dalio’s latest fearmongering round

Post by willthrill81 »

Sakura wrote: Wed Jul 17, 2019 12:54 pm Ah yes, MMT or more aptly the Magic Money Tree.

Funny how countries that issue their own currency have defaulted before such as Russia and brazil. And since deficits don't matter for the magic money tree acolytes then we should print enough to buy the entire world's production of goods and services.
MMT does not say that "deficits don't matter." That's a common misunderstanding. One of the central tenets is as shown below.
MMT states that a government that can create its own money, such as the United States...is limited in its money creation and purchases by inflation, which accelerates once the economic resources (i.e., labor and capital) of the economy are utilized at full employment
https://en.wikipedia.org/wiki/Modern_Monetary_Theory
The Sensible Steward
garlandwhizzer
Posts: 3565
Joined: Fri Aug 06, 2010 3:42 pm

Re: Ray Dalio’s latest fearmongering round

Post by garlandwhizzer »

All these incredibly low interest rates, in some cases negative interest rates, on 10 year bonds in DM sovereign bond markets! All the many hundreds of billions in DM QE that has been poured into the economy! In theory and in the historical past low interest rates even without QE have robustly stimulated the economy in time. GDP growth has taken off when borrowing was cheap and before too long the economy overheated and inflation took off. That has not happened in the 10 years following the financial crisis. In spite of these historically low interest rates that have never happened before, in spite of many hundreds of billions of QE, most DMs have either stagnant or no GDP growth. Maximal monetary stimulation cannot produced even a modest 2% level of inflation. The US fares best of DMs. We have used both the fiscal stimulus (a trillion dollar annual deficit last year) in addition to massive QE, zero interest rate policy until recently, and we still struggle to produce modest GDP growth. Monetary policy stimulus has been like beating a dead mule to get it going. Even when fiscal stimulus is added GDP growth is modest and fragile in the US.

Massive QE and zero or negative interest rate policy for a decade has never been tried before. We are on new ground and history does not clearly tell us how it will all unwind in the future. MMT argues that there is no problem with this. Don't worry, be happy. I don't know whether that theory will work out long term or is just a convenient excuse/justification for continuing what we're doing. I suspect that at some point, even the printing presses that produce currency won't bail us out completely. The underlying problem that drives all this is persistent secular economic stagnation in all DMs, all of which may be facing increasing problems with total debt, unfavorable demographics and slowing rates of worker productivity growth relative to the long term past.

We live in interesting times, I believe a properly balanced, widely diversified stock and bond portfolio is, as always, the best approach to this uncertainty.

Garland Whizzer
Sakura
Posts: 25
Joined: Tue Jun 18, 2019 10:55 am

Re: Ray Dalio’s latest fearmongering round

Post by Sakura »

garlandwhizzer wrote: Wed Jul 17, 2019 1:39 pm All these incredibly low interest rates, in some cases negative interest rates, on 10 year bonds in DM sovereign bond markets! All the many hundreds of billions in DM QE that has been poured into the economy! In theory and in the historical past low interest rates even without QE have robustly stimulated the economy in time. GDP growth has taken off when borrowing was cheap and before too long the economy overheated and inflation took off. That has not happened in the 10 years following the financial crisis. In spite of these historically low interest rates that have never happened before, in spite of many hundreds of billions of QE, most DMs have either stagnant or no GDP growth. Maximal monetary stimulation cannot produced even a modest 2% level of inflation. The US fares best of DMs. We have used both the fiscal stimulus (a trillion dollar annual deficit last year) in addition to massive QE, zero interest rate policy until recently, and we still struggle to produce modest GDP growth. Monetary policy stimulus has been like beating a dead mule to get it going. Even when fiscal stimulus is added GDP growth is modest and fragile in the US.

Massive QE and zero or negative interest rate policy for a decade has never been tried before. We are on new ground and history does not clearly tell us how it will all unwind in the future. MMT argues that there is no problem with this. Don't worry, be happy. I don't know whether that theory will work out long term or is just a convenient excuse/justification for continuing what we're doing. I suspect that at some point, even the printing presses that produce currency won't bail us out completely. The underlying problem that drives all this is persistent secular economic stagnation in all DMs, all of which may be facing increasing problems with total debt, unfavorable demographics and slowing rates of worker productivity growth relative to the long term past.

We live in interesting times, I believe a properly balanced, widely diversified stock and bond portfolio is, as always, the best approach to this uncertainty.

Garland Whizzer
I'm getting a sense these shiny gold bars might not interest you? Sad. :)

I agree about the well balanced portfolio by the way. MMT would be very harmful to the economy and if certain political factions get their way then we may just experience it.
User avatar
willthrill81
Posts: 32250
Joined: Thu Jan 26, 2017 2:17 pm
Location: USA
Contact:

Re: Ray Dalio’s latest fearmongering round

Post by willthrill81 »

Sakura wrote: Wed Jul 17, 2019 2:18 pmMMT would be very harmful to the economy and if certain political factions get their way then we may just experience it.
MMT is just a theory. As such, it can neither help nor harm anyone.
The Sensible Steward
All Seasons
Posts: 227
Joined: Sun Dec 10, 2017 3:14 pm

Re: Ray Dalio’s latest fearmongering round

Post by All Seasons »

Adopt some risk parity and we don't have to worry about politicians embracing or not embracing MMT. :)
Dottie57
Posts: 12379
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Ray Dalio’s latest fearmongering round

Post by Dottie57 »

SevenBridgesRoad wrote: Thu Sep 13, 2018 11:20 am
Big Dog wrote: Thu Sep 13, 2018 8:58 am maybe I'm a little dense this morning, but what unfunded pensions and health care liabilities is he talking about that would require federal intervention? (I get that many states are underfunded, but what does that have to do with US bonds?
You're not dense, but I think this is what he means, using just Medicare. Medicare is a federal program promising certain benefits to a defined population. Actuaries can estimate the total cost of that promise. Medicare has accepted a future liability (promised health care benefits) without reserving the dollars to cover that liability. Currents bills are paid from current funds (payroll taxes and premiums mainly), not from a reserve (unlike an insurance company which reserves funds for future known liabilities). In the private world, this future obligation would show as a liability on your balance sheet, without an offsetting asset (a reserve fund). So that liability will need to be covered from your P&L and/or by taking on additional debt on your balance sheet to fund that liability as payment is required. Medicare is a federal program and thus this is a US unfunded liability.
Great explanation.
columbia
Posts: 3023
Joined: Tue Aug 27, 2013 5:30 am

Re: Ray Dalio’s latest fearmongering round

Post by columbia »

All Seasons wrote: Wed Jul 17, 2019 2:46 pm Adopt some risk parity and we don't have to worry about politicians embracing or not embracing MMT. :)

How would you specifically do that?

Risk parity can mean all kinds of things.
User avatar
willthrill81
Posts: 32250
Joined: Thu Jan 26, 2017 2:17 pm
Location: USA
Contact:

Re: Ray Dalio’s latest fearmongering round

Post by willthrill81 »

columbia wrote: Wed Jul 17, 2019 2:51 pm
All Seasons wrote: Wed Jul 17, 2019 2:46 pm Adopt some risk parity and we don't have to worry about politicians embracing or not embracing MMT. :)
How would you specifically do that?

Risk parity can mean all kinds of things.
Generally, the 'risk' being balanced is volatility. Admittedly, there are some very good reasons to not treat volatility as risk, but you need some kind of metric for this strategy.
The Sensible Steward
klaus14
Posts: 953
Joined: Sun Nov 25, 2018 6:43 pm

Re: Ray Dalio’s latest fearmongering round

Post by klaus14 »

hdas wrote: Wed Jul 17, 2019 10:59 am Long article. TLDR >> Buy Gold :greedy

I think that it is highly likely that sometime in the next few years, 1) central banks will run out of stimulant to boost the markets and the economy when the economy is weak, and 2) there will be an enormous amount of debt and non-debt liabilities (e.g., pension and healthcare) that will increasingly be coming due and won’t be able to be funded with assets. Said differently, I think that the paradigm that we are in will most likely end when a) real interest rate returns are pushed so low that investors holding the debt won’t want to hold it and will start to move to something they think is better and b) simultaneously, the large need for money to fund liabilities will contribute to the “big squeeze.” At that point, there won’t be enough money to meet the needs for it, so there will have to be some combination of large deficits that are monetized, currency depreciations, and large tax increases, and these circumstances will likely increase the conflicts between the capitalist haves and the socialist have-nots. Most likely, during this time, holders of debt will receive very low or negative nominal and real returns in currencies that are weakening, which will de facto be a wealth tax.
Also buy TIPS.
If it plays out as Dalio predicts, we will see a lot of inflation. TIPS wont react as wildly as gold but it will preserve capital.
To hedge my bets, i am targeting 10% Gold and 10% TIPS in my now 55/45 portfolio (rest of the bonds are in LTT, EM and CD)
My investment algorithm: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=351899&p=6112869#p6112869
Big Dog
Posts: 4608
Joined: Mon Sep 07, 2015 4:12 pm

Re: Ray Dalio’s latest fearmongering round

Post by Big Dog »

Dottie57 wrote: Wed Jul 17, 2019 2:47 pm
SevenBridgesRoad wrote: Thu Sep 13, 2018 11:20 am
Big Dog wrote: Thu Sep 13, 2018 8:58 am maybe I'm a little dense this morning, but what unfunded pensions and health care liabilities is he talking about that would require federal intervention? (I get that many states are underfunded, but what does that have to do with US bonds?
You're not dense, but I think this is what he means, using just Medicare. Medicare is a federal program promising certain benefits to a defined population. Actuaries can estimate the total cost of that promise. Medicare has accepted a future liability (promised health care benefits) without reserving the dollars to cover that liability. Currents bills are paid from current funds (payroll taxes and premiums mainly), not from a reserve (unlike an insurance company which reserves funds for future known liabilities). In the private world, this future obligation would show as a liability on your balance sheet, without an offsetting asset (a reserve fund). So that liability will need to be covered from your P&L and/or by taking on additional debt on your balance sheet to fund that liability as payment is required. Medicare is a federal program and thus this is a US unfunded liability.
Great explanation.
Strongly disagree. Well, It is well written, but I believe it to be incorrect. Government accounting does not work that way; that's the beauty of it, the feds really don't keep a Balance Sheet per se.

Moreover, Dalio makes clear that the he believes it all falls apart in 'two years'. SS is funded thru '35 so that can't be it. Sure, Medicare is increasing every year, but two more years of increased Medicare care costs are hardly the scenario for a collapse. It just seems that something is missing from the article. Perhaps what he meant was all of the mandatory spending would be a "problem", of which SS+Medicare are a big part, ~60% of the mandatory spending. But that still leaves the other 40% of benefits paid out.

But then, increasing mandatory spending is not a new concept....
3funder
Posts: 1814
Joined: Sun Oct 15, 2017 9:35 pm

Re: Ray Dalio’s latest fearmongering round

Post by 3funder »

I would never take what he says to heart; however, I applaud him for what has been a very successful long-term go at investing.
Global stocks, US bonds, and time.
OnTrack
Posts: 799
Joined: Wed Jan 20, 2016 10:16 pm

Re: Ray Dalio’s latest fearmongering round

Post by OnTrack »

Big Dog wrote: Wed Jul 17, 2019 4:19 pm
... Moreover, Dalio makes clear that the he believes it all falls apart in 'two years'. ...
Where does he say "two years"? What I see is:
"There’s a saying in the markets that “he who lives by the crystal ball is destined to eat ground glass.” While I’m not sure exactly when or how the paradigm shift will occur, I will share my thoughts about it. I think that it is highly likely that sometime in the next few years ..."
Also, the scenario in his article includes more moving parts than social security and Medicare or even all mandatory spending.
https://www.linkedin.com/pulse/paradigm ... -ray-dalio
Prahasaurus
Posts: 1028
Joined: Fri Mar 29, 2019 1:02 am

Re: Ray Dalio’s latest fearmongering round

Post by Prahasaurus »

I would hesitate on drawing in major macroeconomic conclusions now, as I’m very convinced the USA is at a major inflection point politically, similar to what we last saw in the early 80’s, and you are going to see major changes in economic policy over the next 2-3 years.

These issues will become front and center during the next presidential election. I don’t think most people in the USA have seriously started to process these issues, because there is still the mistaken belief that little will change in the short term. And major media outlets, run by very rich people, are reluctant to give a lot of these issues airtime, or treat them as credible policy. But that will have to change soon, there is no way around it, once they become the centerpiece of policy for one of the two major US political parties.

The result? I think we will see significant changes to healthcare (a huge part of the overall US economy), education, taxation, and financial regulations. The impact on many of the issues regularly discussed here will be immense.

I also think the next 2 years in the US will be some of the most volatile we’ve seen since the late 60’s or early 70’s. It’s very hard to make any predictions at any time, but especially now, when I believe so much is about to fundamentally change.

Note: this is not a political post, in that I’m not promoting one policy over another, or favoring one party over another. I am only stating that I strongly believe we are in for a period of intense political (and hence economic) volatility.
Asset Allocation: VT
JBTX
Posts: 11227
Joined: Wed Jul 26, 2017 12:46 pm

Re: Ray Dalio’s latest fearmongering round

Post by JBTX »

I want him to be wrong, but I fundamentally agree with his assessment, although it is notoriously difficult to translate such assessments into predictions, and even if you are right timing can kill you.

We are projected to have a trillion dollar deficits next year, even with a strong economy and low interest rates, and large unfunded obligations down the road.
User avatar
willthrill81
Posts: 32250
Joined: Thu Jan 26, 2017 2:17 pm
Location: USA
Contact:

Re: Ray Dalio’s latest fearmongering round

Post by willthrill81 »

JBTX wrote: Thu Jul 18, 2019 1:28 amWe are projected to have a trillion dollar deficits next year, even with a strong economy and low interest rates, and large unfunded obligations down the road.
And yet despite full knowledge of that across the world, inflation remains very low, despite the Fed's best attempts to increase it.
Last edited by willthrill81 on Thu Jul 18, 2019 10:38 am, edited 1 time in total.
The Sensible Steward
Big Dog
Posts: 4608
Joined: Mon Sep 07, 2015 4:12 pm

Re: Ray Dalio’s latest fearmongering round

Post by Big Dog »

Where does he say "two years"?
Huh?
In an interview with Bloomberg TV on Wednesday, Dalio expressed his concern about two years from now, when, in his view, the economic recovery is likely to sputter out. It won’t just be a debt problem this time around, he said, but rather a story about unfunded pension and health-care obligations. To address that looming crisis, the U.S. will need to ramp up issuance of U.S. Treasuries.

And that’s where it all unravels.
staustin
Posts: 456
Joined: Mon Mar 14, 2011 9:36 am

Re: Ray Dalio’s latest fearmongering round

Post by staustin »

Prahasaurus wrote: Thu Jul 18, 2019 1:08 am I would hesitate on drawing in major macroeconomic conclusions now, as I’m very convinced the USA is at a major inflection point politically, similar to what we last saw in the early 80’s, and you are going to see major changes in economic policy over the next 2-3 years.

These issues will become front and center during the next presidential election. I don’t think most people in the USA have seriously started to process these issues, because there is still the mistaken belief that little will change in the short term. And major media outlets, run by very rich people, are reluctant to give a lot of these issues airtime, or treat them as credible policy. But that will have to change soon, there is no way around it, once they become the centerpiece of policy for one of the two major US political parties.

The result? I think we will see significant changes to healthcare (a huge part of the overall US economy), education, taxation, and financial regulations. The impact on many of the issues regularly discussed here will be immense.

I also think the next 2 years in the US will be some of the most volatile we’ve seen since the late 60’s or early 70’s. It’s very hard to make any predictions at any time, but especially now, when I believe so much is about to fundamentally change.

Note: this is not a political post, in that I’m not promoting one policy over another, or favoring one party over another. I am only stating that I strongly believe we are in for a period of intense political (and hence economic) volatility.
well said... In recent interviews Dalio's perspective has been that our current system has not been good at allocating profits, i.e., increasing wealth gaps. His comment, from an investors perspective, is that it's a situation that will ultimately need to be corrected; and the manner in which that happens is not at all clear. This makes sense to me. Thus, personally, the DW and I are maintaining as liquid a portfolio as possible, while increasing allocations to bonds / stocks of those economies that have balanced budgets and stable currencies. We prefer to own assets in those currencies and countries as opposed to physical gold, since they're income producing. Perhaps completely wrong. But, prior examples of hyperinflation give me extreme heartburn. Just my opinion and what makes me comfortable at the moment.
OnTrack
Posts: 799
Joined: Wed Jan 20, 2016 10:16 pm

Re: Ray Dalio’s latest fearmongering round

Post by OnTrack »

Big Dog wrote: Thu Jul 18, 2019 10:37 am
Where does he say "two years"?
Huh?
In an interview with Bloomberg TV on Wednesday, Dalio expressed his concern about two years from now, when, in his view, the economic recovery is likely to sputter out. It won’t just be a debt problem this time around, he said, but rather a story about unfunded pension and health-care obligations. To address that looming crisis, the U.S. will need to ramp up issuance of U.S. Treasuries.

And that’s where it all unravels.
I see, thanks. That article ( https://www.bloomberg.com/opinion/artic ... -nightmare - I can't read more than a few lines without paying $1.99) is from 9/12/18, about 10 months ago, so by that prediction it is about a year from now. I was quoting his July 17, 2019 article on LinkedIn where he is less specific ( https://www.linkedin.com/pulse/paradigm ... -ray-dalio ).

In the Sept 2018 interview ( https://www.bloomberg.com/news/videos/2 ... away-video at 1:40) he does hedge: "when the next down turn comes, probably in a couple of years ...".
Last edited by OnTrack on Thu Jul 18, 2019 9:48 pm, edited 2 times in total.
columbia
Posts: 3023
Joined: Tue Aug 27, 2013 5:30 am

Re: Ray Dalio’s latest fearmongering round

Post by columbia »

No offense against his (Dalio’s) ability to make billions (which I clearly lack), but if one is an alarmist about both stocks and bonds, then you’re pretty much Peter Schiff.
User avatar
nedsaid
Posts: 19275
Joined: Fri Nov 23, 2012 11:33 am

Re: Ray Dalio’s latest fearmongering round

Post by nedsaid »

garlandwhizzer wrote: Wed Jul 17, 2019 1:39 pm All these incredibly low interest rates, in some cases negative interest rates, on 10 year bonds in DM sovereign bond markets! All the many hundreds of billions in DM QE that has been poured into the economy! In theory and in the historical past low interest rates even without QE have robustly stimulated the economy in time. GDP growth has taken off when borrowing was cheap and before too long the economy overheated and inflation took off. That has not happened in the 10 years following the financial crisis. In spite of these historically low interest rates that have never happened before, in spite of many hundreds of billions of QE, most DMs have either stagnant or no GDP growth. Maximal monetary stimulation cannot produced even a modest 2% level of inflation. The US fares best of DMs. We have used both the fiscal stimulus (a trillion dollar annual deficit last year) in addition to massive QE, zero interest rate policy until recently, and we still struggle to produce modest GDP growth. Monetary policy stimulus has been like beating a dead mule to get it going. Even when fiscal stimulus is added GDP growth is modest and fragile in the US.

Massive QE and zero or negative interest rate policy for a decade has never been tried before. We are on new ground and history does not clearly tell us how it will all unwind in the future. MMT argues that there is no problem with this. Don't worry, be happy. I don't know whether that theory will work out long term or is just a convenient excuse/justification for continuing what we're doing. I suspect that at some point, even the printing presses that produce currency won't bail us out completely. The underlying problem that drives all this is persistent secular economic stagnation in all DMs, all of which may be facing increasing problems with total debt, unfavorable demographics and slowing rates of worker productivity growth relative to the long term past.

We live in interesting times, I believe a properly balanced, widely diversified stock and bond portfolio is, as always, the best approach to this uncertainty.

Garland Whizzer
Garland, hard to say exactly why despite all the stimulus that we aren't seeing faster GDP Growth worldwide. Inflation stays stubbornly low. Let's round up the usual suspects.

A big one is demographics. People worldwide are just not having as many children. Population growth drives a lot of things. Household formation for one thing. We are getting older as a population as well. Spending peaks in the late 40's for individuals.

Second is productivity improvements. We saw the PC revolution of the 1980's, the internet revolution of the 1990's, the smart phone revolution of the 2000's and the 2010's, and a new revolution in robotics and artificial intelligence. We can make more and better stuff with fewer people. This is a big factor in keeping inflation low.

Third, globalization in the economy. The three T's that I have talked about: tweets, tariffs, and trade rattled the markets and appear to be slowing the economy around the world. But this effect is a minor counterbalance to an increasingly global economy. I think of the decades of outsourcing and offshoring. My former employer announced just after Memorial Day weekend that many finance, supply chain, and human resource functions would be outsourced and some of these jobs could wind up in the Phillipines and India. These are white collar jobs formerly thought to be immune from offshoring. This was dubbed by former colleagues as the Memorial Day Massacre. I think this is only the beginning for white collar workers in the US. We simply can do and make things cheaper overseas than here. One reason, I think, that wage inflation has been subdued.

There is a manufacturing comeback in the United States, I see it here locally in my local metropolitan area. Manufacturing companies desperate to fill jobs. Some of this is due to tax policy, some of it is due to relatively low energy costs, some of it is due to companies wanting to reduce shipping costs and to make things closer to their markets. Again, this seems like a short term countertrend to the longer term megatrend of manufacturing jobs leaving the country.

So those are my ideas but my explanation here seems inadequate. My suspicion is that much of this is demographics. Children drive a lot of consumption, robots do not. It seems like the robots producing stuff faster than a slow growing population can consume it. As the late Senator Ernest Hollings might have said, "There is a whole lot of producin' goin' on out they-a." Too much producin' and too few consume-ahs and too little consumin'.
A fool and his money are good for business.
User avatar
travelogue
Posts: 259
Joined: Sat Aug 12, 2017 4:29 pm

Re: Ray Dalio’s latest fearmongering round

Post by travelogue »

Another complication to the “buy physical gold” strategy: apparently safe deposit boxes aren’t really that safe.

https://www.nytimes.com/2019/07/19/busi ... -ios-share
Plz
Posts: 116
Joined: Tue Oct 09, 2018 10:26 pm

Re: Ray Dalio’s latest fearmongering round

Post by Plz »

We listen to Buffett because of his long term investment success.

Dalio is obviously one of the best managers out there, but is there a way to look up his historical performance like we can for Buffett?
azanon
Posts: 3142
Joined: Mon Nov 07, 2011 9:34 am

Re: Ray Dalio’s latest fearmongering round

Post by azanon »

Plz wrote: Fri Jul 19, 2019 7:34 am We listen to Buffett because of his long term investment success.

Dalio is obviously one of the best managers out there, but is there a way to look up his historical performance like we can for Buffett?
Would be interested to see that, but I would add that the only fair comparison would be a risk-adjusted one.
Plz
Posts: 116
Joined: Tue Oct 09, 2018 10:26 pm

Re: Ray Dalio’s latest fearmongering round

Post by Plz »

azanon wrote: Fri Jul 19, 2019 7:37 am
Plz wrote: Fri Jul 19, 2019 7:34 am We listen to Buffett because of his long term investment success.

Dalio is obviously one of the best managers out there, but is there a way to look up his historical performance like we can for Buffett?
Would be interested to see that, but I would add that the only fair comparison would be a risk-adjusted one.
How would you adjust for risk?

I think it’s fair to compare Dalio’s performance to the s&p and/or any of the regular boglehead asset allocations.
azanon
Posts: 3142
Joined: Mon Nov 07, 2011 9:34 am

Re: Ray Dalio’s latest fearmongering round

Post by azanon »

Plz wrote: Fri Jul 19, 2019 7:43 am
azanon wrote: Fri Jul 19, 2019 7:37 am
Plz wrote: Fri Jul 19, 2019 7:34 am We listen to Buffett because of his long term investment success.

Dalio is obviously one of the best managers out there, but is there a way to look up his historical performance like we can for Buffett?
Would be interested to see that, but I would add that the only fair comparison would be a risk-adjusted one.
How would you adjust for risk?

I think it’s fair to compare Dalio’s performance to the s&p and/or any of the regular boglehead asset allocations.
The industry standard way is by volatility. Sharpe and Sortino ratios are usually used I think.

I personally could not care less what someone's return is. I want to know your return, per unit risk. If return's all that matter, the winner will be someone that held the best individual stock, or maybe bitcoin, or something like that, so that's not a very useful measure.
Topic Author
hdas
Posts: 1395
Joined: Thu Jun 11, 2015 8:24 am

[Deleted]

Post by hdas »

[Deleted]
Last edited by hdas on Tue Jan 28, 2020 5:47 pm, edited 1 time in total.
....
Plz
Posts: 116
Joined: Tue Oct 09, 2018 10:26 pm

Re: Ray Dalio’s latest fearmongering round

Post by Plz »

azanon wrote: Fri Jul 19, 2019 7:44 am
Plz wrote: Fri Jul 19, 2019 7:43 am
azanon wrote: Fri Jul 19, 2019 7:37 am
Plz wrote: Fri Jul 19, 2019 7:34 am We listen to Buffett because of his long term investment success.

Dalio is obviously one of the best managers out there, but is there a way to look up his historical performance like we can for Buffett?
Would be interested to see that, but I would add that the only fair comparison would be a risk-adjusted one.
How would you adjust for risk?

I think it’s fair to compare Dalio’s performance to the s&p and/or any of the regular boglehead asset allocations.
The industry standard way is by volatility. Sharpe and Sortino ratios are usually used I think.

I personally could not care less what someone's return is. I want to know your return, per unit risk. If return's all that matter, the winner will be someone that held the best individual stock, or maybe bitcoin, or something like that, so that's not a very useful measure.
Hmm, I’m not sure what you mean. That’s not an indictment on you or even my disagreeing with you, but rather shows my personal ignorance on the subject. Would you mind walking me through an example?

For example, using your example of holding just one stock, say Amazon, which I think returned 28% last year. What’s the risk adjusted measure?
azanon
Posts: 3142
Joined: Mon Nov 07, 2011 9:34 am

Re: Ray Dalio’s latest fearmongering round

Post by azanon »

hdas wrote: Fri Jul 19, 2019 7:57 am
azanon wrote: Fri Jul 19, 2019 7:44 am
Plz wrote: Fri Jul 19, 2019 7:43 am
azanon wrote: Fri Jul 19, 2019 7:37 am
Plz wrote: Fri Jul 19, 2019 7:34 am We listen to Buffett because of his long term investment success.

Dalio is obviously one of the best managers out there, but is there a way to look up his historical performance like we can for Buffett?
Would be interested to see that, but I would add that the only fair comparison would be a risk-adjusted one.
How would you adjust for risk?

I think it’s fair to compare Dalio’s performance to the s&p and/or any of the regular boglehead asset allocations.
The industry standard way is by volatility. Sharpe and Sortino ratios are usually used I think.

I personally could not care less what someone's return is. I want to know your return, per unit risk. If return's all that matter, the winner will be someone that held the best individual stock, or maybe bitcoin, or something like that, so that's not a very useful measure.
This is emblematic of the current status quo: a rich aging society afraid to take risks to produce meaningful absolute returns. Hedge Funds represent that, nobody even tries to make it big anymore. Asset gatherers selling anti-correlation with equities, charging 2-20. What happened to the American Cowboy?.Cheers :greedy
> Actually, a fairly large contingent of Bogleheads agree that if there's no need to take risk, then you shouldn't, including some very notable bogleheads.
> I wouldn't feel too bad for Ray personally - he's worth 18.4 billion.
> Now I had heard Bridgewater charges their institutional clients only 50 basis points (so not 2 and 20), but I'm not 100% certain.
> American Cowboys often die young living dangerously. Maybe people got tired of dying young? Just guessing... Cheers to you too.
azanon
Posts: 3142
Joined: Mon Nov 07, 2011 9:34 am

Re: Ray Dalio’s latest fearmongering round

Post by azanon »

Plz wrote: Fri Jul 19, 2019 8:08 am
azanon wrote: Fri Jul 19, 2019 7:44 am
Plz wrote: Fri Jul 19, 2019 7:43 am
azanon wrote: Fri Jul 19, 2019 7:37 am
Plz wrote: Fri Jul 19, 2019 7:34 am We listen to Buffett because of his long term investment success.

Dalio is obviously one of the best managers out there, but is there a way to look up his historical performance like we can for Buffett?
Would be interested to see that, but I would add that the only fair comparison would be a risk-adjusted one.
How would you adjust for risk?

I think it’s fair to compare Dalio’s performance to the s&p and/or any of the regular boglehead asset allocations.
The industry standard way is by volatility. Sharpe and Sortino ratios are usually used I think.

I personally could not care less what someone's return is. I want to know your return, per unit risk. If return's all that matter, the winner will be someone that held the best individual stock, or maybe bitcoin, or something like that, so that's not a very useful measure.
Hmm, I’m not sure what you mean. That’s not an indictment on you or even my disagreeing with you, but rather shows my personal ignorance on the subject. Would you mind walking me through an example?

For example, using your example of holding just one stock, say Amazon, which I think returned 28% last year. What’s the risk adjusted measure?
My grasp of statistics is actually somewhat modest (despite having had a grad level stats class) - there are much better mathematicians here than me. So by volatility, i referring to measures such as standard deviation, "worst year", "max drawdown", and all of that is evaluated in a clean number by Sharpe Ratio (my personal favorite) and Sortino Ratio. You could test a few portfolios or asset allocations at portfoliovisualizer here: https://www.portfoliovisualizer.com/, choosing "Backtest asset allocation" or "Backtest portfolio".

So Warren could be pitted against, say, Bridgewater's All Weather fund. I would anticipate Warren would easily beat Bridgewater on return only, but I'd be curious to see how they do comparing Sharpe Ratios.... That's answering the question, how much return did you get per unit of risk that you took.
User avatar
CULater
Posts: 2832
Joined: Sun Nov 13, 2016 9:59 am
Location: Hic sunt dracones

Re: Ray Dalio’s latest fearmongering round

Post by CULater »

I like the idea of the All Weather Portfolio: stocks, long bonds, gold, and commodities. It guarantees you will always be unhappy and scared with your allocation because something is in the tank, and that's what good diversification is supposed to do. Problem I have is that I can't bring myself to do it...
On the internet, nobody knows you're a dog.
Maverick3320
Posts: 1115
Joined: Tue May 12, 2015 2:59 pm

Re: Ray Dalio’s latest fearmongering round

Post by Maverick3320 »

willthrill81 wrote: Wed Jul 17, 2019 1:02 pm
Sakura wrote: Wed Jul 17, 2019 12:54 pm Ah yes, MMT or more aptly the Magic Money Tree.

Funny how countries that issue their own currency have defaulted before such as Russia and brazil. And since deficits don't matter for the magic money tree acolytes then we should print enough to buy the entire world's production of goods and services.
MMT does not say that "deficits don't matter." That's a common misunderstanding. One of the central tenets is as shown below.
MMT states that a government that can create its own money, such as the United States...is limited in its money creation and purchases by inflation, which accelerates once the economic resources (i.e., labor and capital) of the economy are utilized at full employment
https://en.wikipedia.org/wiki/Modern_Monetary_Theory
We've come to the point where even Bogleheads are defending MMT....yikes.
User avatar
willthrill81
Posts: 32250
Joined: Thu Jan 26, 2017 2:17 pm
Location: USA
Contact:

Re: Ray Dalio’s latest fearmongering round

Post by willthrill81 »

Maverick3320 wrote: Sat Jul 20, 2019 4:29 pm
willthrill81 wrote: Wed Jul 17, 2019 1:02 pm
Sakura wrote: Wed Jul 17, 2019 12:54 pm Ah yes, MMT or more aptly the Magic Money Tree.

Funny how countries that issue their own currency have defaulted before such as Russia and brazil. And since deficits don't matter for the magic money tree acolytes then we should print enough to buy the entire world's production of goods and services.
MMT does not say that "deficits don't matter." That's a common misunderstanding. One of the central tenets is as shown below.
MMT states that a government that can create its own money, such as the United States...is limited in its money creation and purchases by inflation, which accelerates once the economic resources (i.e., labor and capital) of the economy are utilized at full employment
https://en.wikipedia.org/wiki/Modern_Monetary_Theory
We've come to the point where even Bogleheads are defending MMT....yikes.
I was merely pointing out that the widespread view that "MMT says that deficits don't matter" is false.

Can you point out a theory with better explanatory power than MMT? I'm open to new ideas.
The Sensible Steward
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Ray Dalio’s latest fearmongering round

Post by abuss368 »

Bogleheads know better. Build a diversified low cost portfolio with a few index funds. Stay the course and maintain your asset allocation that allows one to sleep at night.
John C. Bogle: “Simplicity is the master key to financial success."
Topic Author
hdas
Posts: 1395
Joined: Thu Jun 11, 2015 8:24 am

[Deleted]

Post by hdas »

[Deleted]
Last edited by hdas on Tue Jan 28, 2020 5:48 pm, edited 1 time in total.
....
Leesbro63
Posts: 10640
Joined: Mon Nov 08, 2010 3:36 pm

Re: Pure Alpha giving back gains from las year

Post by Leesbro63 »

hdas wrote: Sun Jul 21, 2019 8:46 pm Perhaps this has to do with it:
Bridgewater’s flagship fund suffered one of its worst first-half performances in two decades this year after being wrong-footed by rebounding markets.

The $150bn hedge fund group founded by Ray Dalio saw its Pure Alpha fund, which tries to surf macro-economic trends, lose 4.9 per cent in the six months to June as global equity and bond markets bounced on hopes of looser monetary policy.
Cheers :greedy
Isn’t plus or minus a mere 5 percent in 6 months just noise?
Topic Author
hdas
Posts: 1395
Joined: Thu Jun 11, 2015 8:24 am

[Deleted]

Post by hdas »

[Deleted]
Last edited by hdas on Tue Jan 28, 2020 5:48 pm, edited 1 time in total.
....
Post Reply