Dalio Speaks

[Markola]

“Billionaire investor Ray Dalio says that the US is already in the latter stages of a debt crisis and predicts that the government will find it difficult to seek sufficient buyers for newly issued bonds.”

https://dailyhodl.com/2023/06/11/bi...as-country-faces-shortage-of-treasury-buyers/

If he’s right, I don’t know what’s actionable for our 50/50 portfolio but I’m glad we have about 20% exposure to the Vanguard International Bond Index Fund as an attempt to cover all the bases.

 

[VanWinkle]

“Billionaire investor Ray Dalio says that the US is already in the latter stages of a debt crisis and predicts that the government will find it difficult to seek sufficient buyers for newly issued bonds.”

https://dailyhodl.com/2023/06/11/bi...as-country-faces-shortage-of-treasury-buyers/

If he’s right, I don’t know what’s actionable for our 50/50 portfolio but I’m glad we have about 20% exposure to the Vanguard International Bond Index Fund as an attempt to cover all the bases.

It is always doom and gloom with Dalio. I would never invest based on anything he says.

 

[Markola]

…Which is not addressing his comments. Comments by the creator of the world’s largest hedge fund.

 

[COcheesehead]

If you believe his prediction, then rates will rise. Bonds properly purchased (laddered) will give better returns than equities.
Bond funds will lose NAV and the blood bath we’ve seen over the last 18 months will continue. Equities will have headwinds because of higher rates. All IF he is right, but so far I have not seen anyone accurately predict the future.

 

[bobandsherry]

He says lots of things, like this last Sept. And well, you draw your own conclusion as to accuracy.

https://www.reuters.com/markets/us/...s-stocks-fall-20-if-rates-rise-45-2022-09-15/

And this is 2021.... [emoji2369]

https://www.cnbc.com/2021/12/07/bil...ic-disaster-is-coming-preparation-advice.html

And this is 2018... So yes, he says lots of things. [emoji41]

https://www.cnbc.com/2018/09/11/bil...7th-inning-of-the-current-economic-cycle.html

 

[Lsbcal]

I get frustrated with Dalio. Was just watching the better part of his recent 1 hour youtube interview. The points are all very general and I get no specific ideas from him. Has been that way every time I see his presentations.

 

[Markola]

None of you are Ray Dalio fans in general. His specific point in this article is that buyers of US bonds are less enthusiastic lately. And we know that China has been buying less of them. That seems a problem in the way he lays it out.

 

[JDARNELL]

None of you are Ray Dalio fans in general. His specific point in this article is that buyers of US bonds are less enthusiastic lately. And we know that China has been buying less of them. That seems a problem in the way he lays it out.

I think the US is not gonna have a problem issuing $1T in new debt. We’re still the best baby Ruth in the punch bowl although that’s not saying much.

 

[COcheesehead]

None of you are Ray Dalio fans in general. His specific point in this article is that buyers of US bonds are less enthusiastic lately. And we know that China has been buying less of them. That seems a problem in the way he lays it out.

I don’t even know who he is, so how could I be a fan? Seriously, I follow no one’s advice, but if what he says is true, bonds with high coupons are coming our way. I buy what is, not what may be.

 

[MichaelB]

None of you are Ray Dalio fans in general. His specific point in this article is that buyers of US bonds are less enthusiastic lately. And we know that China has been buying less of them. That seems a problem in the way he lays it out.

Definitely not buying less. Just to clarify, China purchases of US Treasuries are entirely to recycle their trade surplus. These purchases fit into a category called “interest rate insensitive” because the PBoC will buy regardless of the rates. Not buying would cause the yuan to appreciate and make China’s economy less competitive.

 

[Markola]

^^^^. Thank you Michael. I’m comfortable mostly agreeing with you that China remains hooked on dollars, though the composition of their holdings has less of an appetite for treasuries.

https://www.reuters.com/markets/asi...easuries-sticks-with-dollar-bonds-2023-02-22/

Though China is buying less treasuries, they are making up for it in US Agency Debt, which is https://www.investopedia.com/terms/a/agencybonds.asp

 

[JoeWras]

Now if it were RayInPenn I'd listen.

Miss you, Ray.

 

[VanWinkle]

Now if it were RayInPenn I'd listen.

Miss you, Ray.

+1

 

[Dtail]

…Which is not addressing his comments. Comments by the creator of the world’s largest hedge fund.

Creator of the worlds' largest hedge fund doesn't mean he is better at predictions of future events.
I supported hedge funds in independent security valuations among other functions. They make monies mostly not due to predictions, but due to massive fees generated on their clients, computer generated trading and at times inside information, etc.
In general, he is usually on the negative side of predictions.

 

[FREE866]

Many smart people, like Dalio, say a lot of things. If I altered my investment philosophy every time someone really intelligent said something about where stocks were headed I'd still be working!

 

[milford]

Dalio has been on tirade over the decline of the US for many years already and he does make some good points, however I think what he fails to take into account is that US is still the best of the worst. US debt is still the safest in the world and keep in mind some other countries are still suppressing interest rates (i.e. Japan) so its not like you have a lot of other options when you look at grand scheme of things.

 

[Midpack]

From the 2018 link above…

Ray Dalio, the billionaire founder of the world’s biggest hedge fund, told CNBC on Tuesday that the current economic cycle is in the seventh inning, predicting it has about two years left to run.

It does seems like he’s been doom and gloom for as long as I can remember. So he has to be right eventually?

Why didn’t you heed his warning in 2018, what’s different?

 

[all4j]

^^^^. Thank you Michael. I’m comfortable mostly agreeing with you that China remains hooked on dollars, though the composition of their holdings has less of an appetite for treasuries.

https://www.reuters.com/markets/asi...easuries-sticks-with-dollar-bonds-2023-02-22/

Though China is buying less treasuries, they are making up for it in US Agency Debt, which is https://www.investopedia.com/terms/a/agencybonds.asp

The concern I have with such articles is that they necessarily are looking in the past. Since the article, China has struck deals with several entities for non-dollar denominated trade. LNG with UAE, grain with Brazil, etc. (btw, Brazil deals have other impacts as well).

I didn't see any mention of the Fed decreasing their purchases. Plus, don't we need more buyers in the future than in the past? Even if China continued at past pace, it wouldn't be enough. I don't hear Dalio saying no one will buy, but saying we'll have to pay more to get them to buy.

As for actionable? There's a lot more that goes into this than covered in the 4+ min vid. Other options include inflation protecting steps such as TIPS, etc. Whether 50/50 allocation is right, I can't say. But I do think the outcome of 50/50 may be different than projected a few years back & it pays to monitor depending upon your personal margin for error

 

[Go-NoGo]

A couple of things I have learned over the years after listening to the talking heads on business news channels:

1. Everyone is "Talking their book" - Everyone.
2, Nobody knows nuthin.


Discounting the above 2 points (or accounting for, depending on your point of view) has served me well, I am fully invested in my asset allocation plan and plan to keep doing what I have been doing.

 

[Markola]

Many smart people, like Dalio, say a lot of things. If I altered my investment philosophy every time someone really intelligent said something about where stocks were headed I'd still be working!

Me too. I’m a buy-and-hold index funds Boglehead and by mentioning the word “actionable” I implied I was looking to take action. To clarify, I’m not. But I enjoy watching the global economy churn and found Dalio’s insight interesting. Some others don’t. Cest la vie.

 

[RetiredAt49]

Holy crap I guess I better liquidate everything and hide my entire NW (in cash) under my mattress [emoji12]

 

[target2019]

Me too. I’m a buy-and-hold index funds Boglehead and by mentioning the word “actionable” I implied I was looking to take action. To clarify, I’m not. But I enjoy watching the global economy churn and found Dalio’s insight interesting. Some others don’t. Cest la vie.

In the reactions here you're seeing some misrepresntations. I see in his writings that he has gone to a deep level of analyzing business cycles, and writes books.

There's also the fact that he founded Bridgewater Associates, and is financially successful in that regard. His view of history is interesting. But I don't change my 85% Bogle approach for anyone at this point of my life.

 

[ncbill]

Hedge funds are successful because they take 2% of all assets under management plus 20% of any gains as their minimum annual fee.

Not because they can predict general market shifts.