Investing for the "great sag" - Dalio

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CULater
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Investing for the "great sag" - Dalio

Post by CULater » Fri Oct 18, 2019 9:55 am

Ray Dalio sees the world economy lapsing into the "great sag", and does not expect the bull market to end with a crash. Dispensing with the usual Dalio-bashing, I wonder how this might affect one's investment strategy if at all? For me, the greater concern is the "frog boiling" scenario in which stocks just slowly grind lower or nowhere for years rather than just falling out of bed and then being jacked back up via financial engineering. Dalio says that game is over.
Billionaire hedge-fund founder Ray Dalio said the global economy is in a “great sag” marked by political extremes that recall the 1930s, but isn’t headed for a typical end-of-cycle crash.

“So this cycle is fading and we’re now in the world in what I would call a great sag,” Dalio said on the CNBC-sponsored panel Thursday at the annual meetings of the International Monetary Fund and World Bank.
https://finance.yahoo.com/news/ray-dali ... 0360.html
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Re: Investing for the "great sag" - Dalio

Post by deltaneutral83 » Fri Oct 18, 2019 10:01 am

Probably, because the market has a good memory and likes for as many predictions as possible to be wrong, so the people that think the market will crash greater than say 35% would be wrong and the people that seem to think the market will hum along with 9% returns CAGR will also be wrong. 10 year real returns of 2% would certainly be below average but without a major annual decline of more than 20% while also not having a surging set of years would also be rare and would make 98% of predictions dead wrong. So maybe that's the idea. But ultimately, who cares?

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Re: Investing for the "great sag" - Dalio

Post by Stinky » Fri Oct 18, 2019 10:03 am

Dalio’s views are popping up all over the place

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Re: Investing for the "great sag" - Dalio

Post by MotoTrojan » Fri Oct 18, 2019 11:38 am

To make this actionable... with bond yields where they are, let's all just go 100% equity. Maybe even leveraged :twisted: .

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Re: Investing for the "great sag" - Dalio

Post by 305pelusa » Fri Oct 18, 2019 12:18 pm

MotoTrojan wrote:
Fri Oct 18, 2019 11:38 am
To make this actionable... with bond yields where they are, let's all just go 100% equity. Maybe even leveraged :twisted: .
+1

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Re: Investing for the "great sag" - Dalio

Post by nedsaid » Fri Oct 18, 2019 12:35 pm

Problem with the article is that this is not the 1930's. It has been almost 75 years since the last World War whereas during the depression, World War I was only one to two decades past. We have had a decade of tepid economic growth, the economy has sped up in recent years but barely got past 3% GDP growth and only for a short time. This is hardly the decade after the roaring twenties. Another difference is that back then we had the gold standard, today currencies are free floating and are fiat money. The economy is much different today, a much smaller proportion of the population is employed by agriculture. I don't see the parallels.
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Re: Investing for the "great sag" - Dalio

Post by DonIce » Fri Oct 18, 2019 2:26 pm

I dunno. Typical markets crashes occur due to sentiment as much as anything else. It is not possible for anyone to predict whether markets will have a 20-30% correction and then rebound and continue higher, or whether they will just be flat for a few years before resuming growth.

That said, it does seem that the chances of the current expansion ending in an abrupt >50% drop like the last two did are low. The tech bubble and the real estate bubble both were characterized by extreme optimism and skyrocketing valuations, whereas that does not seem to be the case now. The overarching threat now is just generally foreseen slowing global growth, not an abrupt popping of a bubble.

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Re: Investing for the "great sag" - Dalio

Post by StandingRock » Fri Oct 18, 2019 2:36 pm

Well since "Great Depression" and "Great Recession" are taken I guess he had to say "great sag". Whatever.

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Re: Investing for the "great sag" - Dalio

Post by Seasonal » Fri Oct 18, 2019 2:46 pm

What's his track record on making macro-economic forecasts?

Is the "great sag" different from "secular stagnation" which some economists have been predicting for years?

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Re: Investing for the "great sag" - Dalio

Post by Brianmcg321 » Fri Oct 18, 2019 2:51 pm

#yawn
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Re: Investing for the "great sag" - Dalio

Post by Portfolio7 » Fri Oct 18, 2019 4:28 pm

I was able to find the article below. It appears that over 1991-2017 the time frame of the chart below, Dalio's CAGR was about 12%, per the author. The S&P 500 was about 10.5% for that same time period, I believe

https://www.gurufocus.com/news/607625/r ... ng-results

That's a solid career, though I'm not sure it qualifies as superb. I listed the return range, and how many years he had returns in that range. Just for kicks, I threw in the S&P500 with dividends since 1994, since I had that readily available.

The S&P 500 had a higher percentage of losing years, but also a higher percentage of years with 10% or greater returns.

% Return Dalio S&P
20+ 10 9
10-20 3 6
0-10 10 5
0 or less 4 5

< 0% 15% 20%
> 10% 48% 60%

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Re: Investing for the "great sag" - Dalio

Post by AHTFY » Fri Oct 18, 2019 6:12 pm

Portfolio7 wrote:
Fri Oct 18, 2019 4:28 pm
I was able to find the article below. It appears that over 1991-2017 the time frame of the chart below, Dalio's CAGR was about 12%, per the author. The S&P 500 was about 10.5% for that same time period, I believe

https://www.gurufocus.com/news/607625/r ... ng-results

That's a solid career, though I'm not sure it qualifies as superb. I listed the return range, and how many years he had returns in that range. Just for kicks, I threw in the S&P500 with dividends since 1994, since I had that readily available.

The S&P 500 had a higher percentage of losing years, but also a higher percentage of years with 10% or greater returns.

% Return Dalio S&P
20+ 10 9
10-20 3 6
0-10 10 5
0 or less 4 5

< 0% 15% 20%
> 10% 48% 60%

Image
"The charts above do not indicate whether these results are gross or net to Dalio’s clients."

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Re: Investing for the "great sag" - Dalio

Post by dmcmahon » Fri Oct 18, 2019 7:00 pm

Well if returns are going to be flat for a long time selling covered out of the money calls or selling well under the market puts might be ways to exploit it. My crystal ball is, as usual, too cloudy for such actions, so I’ll just project lower average returns and plan to save more. To some extent a slowdown seems inevitable if you believe the population growth curves will finally slow, natural resources cannot continue to be exploited at current rates forever, and that many of the highest payback investments were picked off early in the Industrial Age and now the Information Age.

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Re: Investing for the "great sag" - Dalio

Post by Dink2018 » Fri Oct 18, 2019 7:59 pm

As much as investment research as I read everything comes back to "make a freaking killing" as the "thing I can control" all the other stuff is window dressing.

None of us can control or predict the markets so we might as well focus on the earnings and spending side.

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Re: Investing for the "great sag" - Dalio

Post by asset_chaos » Fri Oct 18, 2019 8:07 pm

CULater wrote:
Fri Oct 18, 2019 9:55 am
I wonder how this might affect one's investment strategy if at all?
These are predictions about future market returns. I don't know about you, but since I have no ability to effect market returns, predictions about them don't effect my investment strategy. At best, echoing dcmachmon, they might effect my savings goals, if accumulating, or spending goals, if spending down a portfolio.

The other area that flat (or sagging) market predictions impact on is costs. If future returns stagnate, then keeping costs, investment costs, tax costs, advisory costs, as low as possible becomes even more important. And the costs I chose to bear are at least something that is (mostly) within my power to control.
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Re: Investing for the "great sag" - Dalio

Post by MotoTrojan » Fri Oct 18, 2019 9:47 pm

AHTFY wrote:
Fri Oct 18, 2019 6:12 pm
Portfolio7 wrote:
Fri Oct 18, 2019 4:28 pm
I was able to find the article below. It appears that over 1991-2017 the time frame of the chart below, Dalio's CAGR was about 12%, per the author. The S&P 500 was about 10.5% for that same time period, I believe

https://www.gurufocus.com/news/607625/r ... ng-results

That's a solid career, though I'm not sure it qualifies as superb. I listed the return range, and how many years he had returns in that range. Just for kicks, I threw in the S&P500 with dividends since 1994, since I had that readily available.

The S&P 500 had a higher percentage of losing years, but also a higher percentage of years with 10% or greater returns.

% Return Dalio S&P
20+ 10 9
10-20 3 6
0-10 10 5
0 or less 4 5

< 0% 15% 20%
> 10% 48% 60%

Image
"The charts above do not indicate whether these results are gross or net to Dalio’s clients."
What was the volatility of the account though? The S&P500 may not have been the most appropriate benchmark if his portfolio had far less volatility, not to mention some International equity holdings.

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Re: Investing for the "great sag" - Dalio

Post by bottlecap » Fri Oct 18, 2019 10:55 pm

Ray Dalio knows very little about economics. Based on the stuff that he's written in the recent past, what he does know is wrong.

That's not to say that bad stuff for the economy can't be just around the corner - it usually is. But if he turns out to be right, we will be witnessing the proverbial broken clock in action.

Not worth reading or worrying about due to his lack of knowledge.

JT

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Re: Investing for the "great sag" - Dalio

Post by HomerJ » Fri Oct 18, 2019 11:13 pm

CULater wrote:
Fri Oct 18, 2019 9:55 am
Ray Dalio sees the world economy lapsing into the "great sag", and does not expect the bull market to end with a crash. Dispensing with the usual Dalio-bashing, I wonder how this might affect one's investment strategy if at all?
Dalio-bashing is relevant. Because he's been wrong plenty of times before, his predictions today should not affect one's investment strategy at all.

This is basic common sense.

Now, sure, a flat market that lasts for a long time certainly could happen.

That's what happened from 1966 to 1982. In 1966, the DOW was around 1000. In 1982, 16 years later, the DOW was still around 1000.

P/E ratios can fall back to "normal" by the price dropping OR by the price remaining the same, and over time, earnings increasing.

So both ways work. A crash, or a long "sag".

"Stay the course" works for both. There is no need to change one's investment strategy.

One's investment strategy should ALREADY include the possibility of low returns over a long period.

Because it's happened before. Multiple times.

Stop trying to predict the future. It can't be done. Prepare for low returns all the time. Don't try to change your investment strategy based on what you (or Dalio or anyone else) thinks is going to happen. Prepare for bad times, and you'll do fine if bad times show up, and you can easily adjust upwards if we get average or good times instead.
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Re: Investing for the "great sag" - Dalio

Post by Strayshot » Sat Oct 19, 2019 7:33 am

I think Ray Dalio wrote an excellent book in “Principles” and that he is a savvy businessman, so I respect his opinions. The reality is that I weight his predictions just as much as everybody elses, which is to say they have no weight at all in my actions.

Philip DeMuth is much smarter, with a focus on what we can control (not predict, but control) which are our taxes and taxability.

Jack Bogle (RIP) is the smartest of all, with a focus on the largest portfolio drag elements being fees and expenses and the quantifiable problems of chasing returns through fads and active management vs regular investment into the broad market via passive management.

I will read stuff from Ray, but I will continue to follow Phil, Jack, and others with the right philosophy on controlling what I can and letting the market do the rest.

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Re: Investing for the "great sag" - Dalio

Post by lostdog » Sat Oct 19, 2019 7:58 am

We've been sideways for two years. The same thing happened in 2015 and 2016. This is just garbage click bait noise. The 10 year bull market is a click bait story made up by the press to help get clicks when they write something about it being over with very soon. They just want people to take action.
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Re: Investing for the "great sag" - Dalio

Post by Shallowpockets » Sat Oct 19, 2019 8:33 am

The sag could be simply geodemographics. For a while here we have had the upgrowth of China and its middle class and same with India. Markets for growth. Now that is sagging.
The only place left in the world for major growth is Africa. Most of us would look at that and say, not in our lifetimes would that happen.
Then there is plain old demographics here in US. The great sag could be that the wealth index is skewed to the rich who are much much fewer than those we rely on to fuel the engine. The consumer is not making the money they need to fuel that engine.
It always seemed to me that if you pay people more, they spend more. Maybe not BHers, but the general consumer. If you are only making enough to make ends meet, there isn’t anything left for that extra bump to boost the economy. The consumer has already gone into big time debt to function, and now there are no means left to sustain it.
Sure, the markets always rise, but if that up trend is strung out slowly over a generation, that’s your sag.

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Re: Investing for the "great sag" - Dalio

Post by zaboomafoozarg » Sat Oct 19, 2019 11:36 am

Seasonal wrote:
Fri Oct 18, 2019 2:46 pm
What's his track record on making macro-economic forecasts?

Is the "great sag" different from "secular stagnation" which some economists have been predicting for years?
I think the Great Stag sounds cooler than the Great Sag.

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Re: Investing for the "great sag" - Dalio

Post by nisiprius » Sat Oct 19, 2019 8:47 pm

Will we know whether this prediction came true or not?

Let's put a stake in the ground. Let's agree to "meet" here ten years from now and decide on whether Dalio was right or not. If not ten years, than after what period of time and why?

To begin with, we need a definite criterion that distinguishes a "great sag" from a "classic crash-type event." It has to be definite enough that reasonable people who may differ about many things can agree on which kind of event it was.

And we need agreement that if there is a "classic crash-type event", then Dalio was wrong. No going back to anything else he might have said earlier or elsewhere about a crash. He is staying there will not be a "classic crash-type event," but something else.
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Re: Investing for the "great sag" - Dalio

Post by zaboomafoozarg » Sat Oct 19, 2019 9:15 pm

nisiprius wrote:
Sat Oct 19, 2019 8:47 pm
Let's put a stake in the ground. Let's agree to "meet" here ten years from now and decide on whether Dalio was right or not. If not ten years, than after what period of time and why?
10 years sounds good, it'll be long enough to encompass basically an entire decade. Since it covers a decade, people will likely often cite market performance over 1/1/2020-12/31/2029 for the rest of the century.

I've set up a Google Calendar reminder for 10/19/2029. As long as Google and me are still around in 10 years I'll see it.
nisiprius wrote:
Sat Oct 19, 2019 8:47 pm
To begin with, we need a definite criterion that distinguishes a "great sag" from a "classic crash-type event." It has to be definite enough that reasonable people who may differ about many things can agree on which kind of event it was.
It seems like that would imply a cap on the maximum drawdown for the total US market index. I don't really know what constitutes as low for a period of a decade. Maybe 20%, 25%? I'll see if I can find some data on max drawdowns and when they occurred. Or I'm sure many people here already have spreadsheets full of that data.

In addition, there'd have to be a cap on the annualized return over the 10-year period. 2-3% real, something like that? Maybe lower?

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Re: Investing for the "great sag" - Dalio

Post by DesertDiva » Sat Oct 19, 2019 10:44 pm

yada yada yada

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Re: Investing for the "great sag" - Dalio

Post by Random Musings » Sat Oct 19, 2019 11:45 pm

DesertDiva wrote:
Sat Oct 19, 2019 10:44 pm
yada yada yada
Perhaps a portfolio diversified with manssieres would provide support against the great sag.

Dalio, what do you think, bro?

RM
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Re: Investing for the "great sag" - Dalio

Post by Jebediah » Sat Oct 19, 2019 11:50 pm

Seasonal wrote:
Fri Oct 18, 2019 2:46 pm
What's his track record on making macro-economic forecasts?
His track record is 100% accuracy

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Re: Investing for the "great sag" - Dalio

Post by Muffin Master » Sat Oct 19, 2019 11:55 pm

Ray Dalio is good or at least his track record is IMOP but ,,,

the SP500 went sideways 13 yrs from 2000 and and NAS was longer 16 yrs. A lot of ups and downs but net sideways. A channel. Long term consolidation I think some called it. I did very well during this time.

If he is calling for a slow consistent grinding down slope for the next 10 to 20 yrs with low volatility and negative total returns yr over yr. ... ARRR

That's a very big call. The retiree that could be devastating but for my kids it will be great until I show up on their doorstep!

Always have a plan B :-) LOL

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Re: Investing for the "great sag" - Dalio

Post by Forester » Sun Oct 20, 2019 3:59 am

HomerJ wrote:
Fri Oct 18, 2019 11:13 pm
That's what happened from 1966 to 1982. In 1966, the DOW was around 1000. In 1982, 16 years later, the DOW was still around 1000.
This also makes me sceptical of the declining demographics argument. There has been economic stagnation when fertility was booming.

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Re: Investing for the "great sag" - Dalio

Post by Chicken Little » Sun Oct 20, 2019 7:55 am

I'll admit to not understanding the demographics argument at all.

There is an unlimited supply of underutilized people right now. If it really were a path to free growth, they'd just be let in. The idea that cultural or political barriers prevent that strikes me as nonsense. Nobody is against having more money.

Isn't Japan going to be in great shape once they "digest" their demographic bubble? Aren't they still going to continue to invent new things to sell to themselves and the rest of the world? Won't fewer people fill up all the "better" jobs first. Aren't there going to be fewer people left over to scrabble for bad jobs and fewer people that ultimately require assistance?

Closing in on 8 billion people right now. As an economic theory, that number needs to expand to 10, 15, 20 billion to keep GDP growing? That's about as pointless an enterprise as I could ever imagine.

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Re: Investing for the "great sag" - Dalio

Post by JPM » Sun Oct 20, 2019 8:02 am

Doom and gloom counterpoints:
Financial conditions are very good at the moment. Interest rates are low and do not appear set to move higher any time soon.
Feds are running a trillion dollar deficit this year on plan and it looks like the deficit will come out even higher than planned. With a lag, it should hit the economy in the election year.
Demographics can be interpreted more than one way. Millennial generation is bigger even than the Boomers. They are moving into the phase of life where they have their educational debt under control and will be settling down into family life, buying shelter and all that goes with it. Also they will be saving for retirement and putting money into financial assets just as the Boomers liquidate for retirement.
Immigration of working age population is up and shows no signs of slacking. Has it's downside, but grows the economy in the US and avoids the population decline anticipated in Europe and east Asia.

Everything might turn out just fine, as it has for the last 75 years. We won't have 35 years of declining interest rates but that means that financial assets won't grow as fast.

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Re: Investing for the "great sag" - Dalio

Post by financeperchance » Sun Oct 20, 2019 11:42 am

Always check these CNBC hedgefund "gurus" on the Tip Ranks website before deciding whether their opinions carry any special weight.

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Re: Investing for the "great sag" - Dalio

Post by nisiprius » Sun Oct 20, 2019 11:54 am

Jebediah wrote:
Sat Oct 19, 2019 11:50 pm
Seasonal wrote:
Fri Oct 18, 2019 2:46 pm
What's his track record on making macro-economic forecasts?
His track record is 100% accuracy
Care to give us a reference to a reliable source, that confirms that statement?
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Re: Investing for the "great sag" - Dalio

Post by Forester » Sun Oct 20, 2019 12:53 pm

financeperchance wrote:
Sun Oct 20, 2019 11:42 am
Always check these CNBC hedgefund "gurus" on the Tip Ranks website before deciding whether their opinions carry any special weight.

Image
That's not a fair benchmark. Dalio invests globally and isn't just long stocks.

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Re: Investing for the "great sag" - Dalio

Post by HomerJ » Sun Oct 20, 2019 9:42 pm

Forester wrote:
Sun Oct 20, 2019 12:53 pm
financeperchance wrote:
Sun Oct 20, 2019 11:42 am
Always check these CNBC hedgefund "gurus" on the Tip Ranks website before deciding whether their opinions carry any special weight.

Image
That's not a fair benchmark. Dalio invests globally and isn't just long stocks.
Ah, but why does he invest globally and short stocks? Is it because he made some predictions and was wrong?

Because I don't think his position is that "Nobody knows nothing", and he's just diversified to cover all the bases, like people here do.

I'm thinking he thinks he knows something (since he wrote an article basically stating that "he knows something"), and he chose different investments on purpose in order to do better than the U.S. stock market.

But so far, his crystal ball appears just as cloudy as everyone else's.
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Re: Investing for the "great sag" - Dalio

Post by B. Wellington » Mon Oct 21, 2019 6:49 am

dmcmahon wrote:
Fri Oct 18, 2019 7:00 pm
Well if returns are going to be flat for a long time selling covered out of the money calls or selling well under the market puts might be ways to exploit it. My crystal ball is, as usual, too cloudy for such actions, so I’ll just project lower average returns and plan to save more. To some extent a slowdown seems inevitable if you believe the population growth curves will finally slow, natural resources cannot continue to be exploited at current rates forever, and that many of the highest payback investments were picked off early in the Industrial Age and now the Information Age.
+1

Yep and if you are already retired, plan to be flexible with your WR rate and expenses if/when needed.

What other options are there for the small investor...?

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Re: Investing for the "great sag" - Dalio

Post by nisiprius » Mon Oct 21, 2019 7:16 am

If you truly are convinced that Ray Dalio can get meaningfully better investment results by acting on 1) actionable predictions that 2) he makes better than anyone else, the rational thing to do is invest in one of his hedge funds.

If, like me, your portfolio is a digit or two short of making you "qualified" to invest in one of his hedge funds, then this is all pure noise.

(Note that Dalio has three, Pure Alpha, All Weather, Pure Alpha Major Markets. Usually the headlines about Dalio's or Bridgewater's outperformance only involve one of them, so be sure to pick the right one).

Even if he's really "got it," his interviews and opinion pieces are out there to draw investors to his funds. He isn't giving away secrets worth billions for free. Whatever you think you have learned about the "great sag," the key details are not likely to have been disclosed in the interview and, more important, his knowledge of how to act on that information isn't in the interview. You can't do what he does by reading these things any more than you can do what Ted Williams did by reading The Science of Hitting.

My personal assumption is that this is not even a serious prediction, it's just a way to build affinity. If you like the idea of investing in China, and have independently come up with the idea of a "great sag" ahead, you might feel comfortably in tune with Dalio.

At least with a guru like Bill Miller or John Hussman or Bill Gross, you or I could buy a mutual fund they managed--Legg Mason Value Trust, Hussman Strategic Growth, Janus Henderson Unconstrained Bond Fund. Then we didn't need to worry about whether you were timing your actions appropriately or choosing the right examples of the kinds of securities they liked. We not only had the guru's statements and observations, we had the guru's own timing and execution of his strategy.

Of course, people rarely make forum postings nowadays about what these gurus have said, because of the speed with which a guru is forgotten when their streak of successes ends. But back in the day we got a fair number of "Bill Miller thinks" and "Hussman says" and "Bill Gross warns" postings.
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Re: Investing for the "great sag" - Dalio

Post by CULater » Mon Oct 21, 2019 11:37 am

How about Dalio's homemade All Weather portfolio as an investable option derived from his views? Or something close. It hasn't done bad over time.
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Re: Investing for the "great sag" - Dalio

Post by Van » Mon Oct 21, 2019 11:47 am

Based on the "breat sag" prediction, I'm going to sell all of my stock and go 100% into bonds, or I'm going to sell all of my bonds and go 100% into stock.

What I'm really going to do is what most of us do when we see predictions like this: NOTHING.

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Re: Investing for the "great sag" - Dalio

Post by nisiprius » Mon Oct 21, 2019 1:00 pm

CULater wrote:
Mon Oct 21, 2019 11:37 am
How about Dalio's homemade All Weather portfolio as an investable option derived from his views? Or something close. It hasn't done bad over time.
1) As far as I know, it's not his. That's why it's called the All Seasons portfolio, not the All Weather Portfolio.

Does Dalio in fact personally endorse it, and can you give us a link to something by Dalio that says so?

2) It is different from the All Weather portfolio. It doesn't include all of the key asset classes and it doesn't use leverage, which is an key part of the "risk parity" strategy..
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Re: Investing for the "great sag" - Dalio

Post by CULater » Mon Oct 21, 2019 2:07 pm

The All Seasons portfolio seems to be a simplified version of Dalio's All Weather strategy, attributed to Tony Robbins who was advised by Ray Dalio, as quoted on the Robbins website:
First, Dalio says, we need 30% in stocks — for instance, the S&P 500 or other indexes, for further diversification in this basket.

Then, you need long-term government bonds. Dalio recommends 15% in immediate term (seven- to ten-year Treasuries) and 40% in long-term bonds (20- to 25-year Treasuries). This counters the volatility of the stocks.

Finally, Dalio rounded out the portfolio with 7.5% in gold and 7.5% in commodities. As he notes, “You need to have a piece of that portfolio that will do well with accelerated inflation, so you would want a percentage in gold and commodities. These have high volatility. Because there are environments where rapid inflation can hurt both stocks and bonds.”
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Re: Investing for the "great sag" - Dalio

Post by HomerJ » Mon Oct 21, 2019 2:28 pm

CULater wrote:
Mon Oct 21, 2019 2:07 pm
The All Seasons portfolio seems to be a simplified version of Dalio's All Weather strategy, attributed to Tony Robbins who was advised by Ray Dalio, as quoted on the Robbins website:
First, Dalio says, we need 30% in stocks — for instance, the S&P 500 or other indexes, for further diversification in this basket.

Then, you need long-term government bonds. Dalio recommends 15% in immediate term (seven- to ten-year Treasuries) and 40% in long-term bonds (20- to 25-year Treasuries). This counters the volatility of the stocks.

Finally, Dalio rounded out the portfolio with 7.5% in gold and 7.5% in commodities. As he notes, “You need to have a piece of that portfolio that will do well with accelerated inflation, so you would want a percentage in gold and commodities. These have high volatility. Because there are environments where rapid inflation can hurt both stocks and bonds.”
https://www.tonyrobbins.com/wealth-life ... market/30/
Sounds like a good long-term holding for "all seasons". I could get behind someone using a portfolio like that going forward.

But are you going to change it the next time Dalio posts a new article with a new prediction?

If you change your mind and your AA every few years, it gets a lot harder.
Last edited by HomerJ on Mon Oct 21, 2019 6:53 pm, edited 1 time in total.
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Re: Investing for the "great sag" - Dalio

Post by DesertDiva » Mon Oct 21, 2019 5:17 pm

Random Musings wrote:
Sat Oct 19, 2019 11:45 pm
DesertDiva wrote:
Sat Oct 19, 2019 10:44 pm
yada yada yada
Perhaps a portfolio diversified with manssieres would provide support against the great sag.

Dalio, what do you think, bro?

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Re: Investing for the "great sag" - Dalio

Post by Hector » Mon Oct 21, 2019 5:31 pm

If he is right, stock is not a good place to be.
The way interest rates are today, bond is not a good place to be.

So what can we do? Maintain whatever AA we have and pray.

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Re: Investing for the "great sag" - Dalio

Post by MotoTrojan » Mon Oct 21, 2019 6:21 pm

Hector wrote:
Mon Oct 21, 2019 5:31 pm
If he is right, stock is not a good place to be.
The way interest rates are today, bond is not a good place to be.

So what can we do? Maintain whatever AA we have and pray.
Why aren't stocks a good place to be? Just because they may not return what they used to doesn't mean they won't return the highest return overall of asset classes.

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Re: Investing for the "great sag" - Dalio

Post by columbia » Mon Oct 21, 2019 7:03 pm

MotoTrojan wrote:
Mon Oct 21, 2019 6:21 pm
Hector wrote:
Mon Oct 21, 2019 5:31 pm
If he is right, stock is not a good place to be.
The way interest rates are today, bond is not a good place to be.

So what can we do? Maintain whatever AA we have and pray.
Why aren't stocks a good place to be? Just because they may not return what they used to doesn't mean they won't return the highest return overall of asset classes.
Perhaps the ERP will remain in the normal range, but I’m not super excited about the expected returns in the face of standard (greater now?) equity risks. For some, that risk just might not be worth it.

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Re: Investing for the "great sag" - Dalio

Post by mrspock » Mon Oct 21, 2019 7:33 pm

nisiprius wrote:
Mon Oct 21, 2019 7:16 am
...
Of course, people rarely make forum postings nowadays about what these gurus have said, because of the speed with which a guru is forgotten when their streak of successes ends. But back in the day we got a fair number of "Bill Miller thinks" and "Hussman says" and "Bill Gross warns" postings.
+1 . You can add John Mauldin & Bill Bonner to the list. The guys have been hocking similar views for 2 decades, Mauldin arguably warned about the housing crisis reasonably well, but on pretty much every other "prediction" he's been way off. Bonner has been a gold bug since the AOL days for crying out loud.... still waiting for the great economic collapse.

And a bonus sage commentary: Mr. Schiller himself. Pretty good books, not so great predictions. The guy makes his CAPE ratio public in the mid 90's, and other than about 4 days in 2008 when the moon was aligned with Venus (sarcasm...but only just) -- it's been indicating a grossly overvalued market. Had you been using the CAPE ratio as signal on when to buy stocks you'd have missed out on a massive bull market.

https://static.seekingalpha.com/uploads ... origin.jpg

And yes... I get it, everyone has to make a living, and I'm sure they are all well meaning but listening to these sages is a pretty good way to hurt your portfolio performance in the long run.

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Re: Investing for the "great sag" - Dalio

Post by saintsfan342000 » Mon Oct 21, 2019 7:57 pm

Random Musings wrote:
Sat Oct 19, 2019 11:45 pm
Perhaps a portfolio diversified with manssieres would provide support against the great sag?
Boglehead Hall of Fame post right there.

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Re: Investing for the "great sag" - Dalio

Post by Jebediah » Mon Oct 21, 2019 8:27 pm

nisiprius wrote:
Sun Oct 20, 2019 11:54 am
Jebediah wrote:
Sat Oct 19, 2019 11:50 pm
Seasonal wrote:
Fri Oct 18, 2019 2:46 pm
What's his track record on making macro-economic forecasts?
His track record is 100% accuracy
Care to give us a reference to a reliable source, that confirms that statement?
Dailo called the EM sag of 1998, the dot com crash, the value rotation of 2001-2003, the GFC, bondmageddon 2013, the recent rise in gold, and the recent decline of interest rates. He's been calling interest rates so spot on for so long, it's like he's a fly on the wall at the FOMC meetings.

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Re: Investing for the "great sag" - Dalio

Post by nisiprius » Mon Oct 21, 2019 8:47 pm

Jebediah wrote:
Mon Oct 21, 2019 8:27 pm
He's been calling interest rates so spot on for so long, it's like he's a fly on the wall at the FOMC meetings.
Care to give us an actual tabular record of his interest rate calls, and what actually happened, rather than your personal recollection? What is "spot on," in numbers?
[he called] bondmageddon 2013
Please post exactly what he said... did he use the word "bondmageddon?"

And, just to be clear, do you mean that he predicted "bondmageddon" would happen in 2013? Or do you mean that in 2013 he predicted that there would be a "bondmageddon," and, if so, when did he predict that it would occur?

And then look at this chart of the Vanguard Total Bond Market Index Fund, from which I've removed the years, and tell us just where on this chart you think you see something you would call "bondmageddon?" Something much bigger, more pronounced, and very different from the regular volatility we see constantly happening all along?

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