Where is the economy is today – is it growing? Flat? Declining?
What about YOUR economy – your personal investments, your nest egg? How safe is it, and how likely it is to grow at the rate you want it to? When you think about your current investments, how do you feel? Secure, or are you half-panicked?
For many, the recession of 2008 still lingers. Those who suffered are waiting, white-knuckled, holding on to their portfolios and still wondering what to do next. We have, after all, been in one of the longest bull markets in history and bull markets always come to an end at some point. So how do you protect yourself from the possibility of another 2008? And how can you start to take a more proactive, confident approach to your portfolio?
When Tony wrote Money Master the Game, he had the unique privilege of sitting down with some of the most successful, masterful investors and financial gurus of all time - including the legendary Ray Dalio.
Ray founded the investment management firm Bridgewater Associates in 1975 out of his two-bedroom New York City apartment. Four decades later, Bridgewater has grown to be the largest hedge fund in the world, managing over 160 billion dollars, and making more money for its investors than any other hedge fund in history. Dalio himself has appeared on the Time 100 list of the most influential people in the world, as well as the Bloomberg Markets list of the 50 most influential people. And in Money Master the Game, Ray explains just what it means to create a balanced portfolio and even revealed the exact percentages of a simple portfolio that will protect you from the dips and even the dives in the market.
But now - as Ray nears retirement, he has made the decision to share even more of the systems and strategies that have brought him such massive success in his deeply personal book Principles: Life & Work.
Tony recently sat down with Ray to discuss just why Ray felt so inclined to share his wisdom with the world and why Principles is an absolute must-read for everyone - whether you’re in the financial industry or not. And in this episode of the podcast, you will hear from Tony and Ray as they discuss the evolution of Ray’s career, the catastrophic mistakes he made that almost destroyed everything he built, and how the lowest points in his life taught him his biggest lessons. You’ll also hear Tony and Ray discuss their personal beliefs about creating a successful and productive workplace culture, and why everyone should strive to create a meritocracy and invoke “radical honesty” in their lives.
This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
Hey guys, welcome back to the Turner Ovens protest. This is any
editorial director for Robins Research International.
Asked episode you heard from Tony and investing legend Re Dalia as they drove into raise new book principles, life and work.
Covering some of the key lessons that raise learned for over his lustrous career and a key tips, tactics and insights. He wants to pass on to others now in this special follow up episode. Tony catches, up with Ray to dig a little deeper into a few core principles that each and every one of us can gain practical and even personal advice. From.
So first lover, it's great to hear your voice again. Thanks would take an extra time with us. You know you recently asked on Facebook what the favourite principle was quote from your book from so many people, and I
that one of them, for me at least, are so mary- was that most of
its greatest opportunities come out of those moments of struggle. It's up to you to make the most out of those tests of creativity in character.
I have always believed that crisis creates breakthroughs for people very often, people do anything till they have to
related to that our viewers are kind of interested in knowing where the markets are today and how should investors think
investing in environment, so driven so powerfully by the FED and economies.
Upset about is really just
the movers individual ministers think about you know, do
what the inevitable market crashes, because people are concerned about market evaluations right now. We talk before we didn't touch on their. So let me get your point of view about how they can do,
damage of these types environments and how they should think about market crash of warnings,
turning to educate people that you know, corrections happen Europe, the last hundred fifteen years. They happen on average once a year that we get these crashes every three to five years, what's been along much longer time and that on this run, obviously so, how should people look at the markets today and how they look at how to deal with when inevitable crashes come? Will? I think that when you re asking the question about the issues of struggle,
let's go to the psychological, so I think you really talking about psychology and gasket. Yes, you're talking about even cycles, yes
So what before we get into the particular of the moment there is this behaviour patterns of people that they get very much caught up in the moment and the history of the average investor is:
you sell at the loaves and to buy at the highs because they get caught into that particular cycle. So now, you're asking the question of how should a person operate that way? There are two ways that you can approach this. You can either approach that as
seeking balance and playing the game, always being imbalance and saying, if I'm in imbalance, I'm going to be good or you can play the market timing you can in which is basically saying
Ok, now that there's a crash, what do I do now that there is a rally what'll? I do and in other words being the active
mayor who was moving in and out. I think it's very important to distinguish those two approaches, because the balance is one of them.
Things which I think the individual can do very well. Yes, they eat the timing in which the
individual plays poker against the pros in terms of
I'm gonna, be the right one to buy when I'm terrified and the thing is boring apart or to do the opposite is- is
probably not going to work. Well, there's so much the goes into the analysis, so it really depend
on which one you wanted me to answer. I would say first balance what the individual should do,
is learn how to do the balance, and I think you wrote it up so clearly and well. You know it takes more than a couple of minutes to be able to get her into it or book. We discussed it you
founded and you can explain how the individual can achieve,
and I think that would be the most important thing. If you're going down that path, then then
natural thing that you end up doing it is that you buy it
I will send you a shower the highs, because what happens is if you're, having balance and lets say, the stock market goes down. What you have to understand
is another part of your portfolio will go up? Maybe it's! The bond market goes up. Maybe it's the gold market, because, if you achieve balance real,
Is that it's almost like squeezing a balloon? You know it goes from one one: contract someplace, it expands
something else, the losses that might take place in one
portfolio produce essentially gains because
the changes in that environment and by having
a balance, but when it one one goes up then, and you
the balance to achieve that balance that naturally you're going to take profits from that which was the most as did the best,
and go down and by those things that were less in order to get back into balance and that's the way to play balance and now
would be what I would recommend for your investors. If you're going to play the game of trying to play poker against the pros, then you better understand how to do that with
four nation. We we literally spend hundreds of millions of dollars and trying to take him for
Asian and do all of those types of things in order to compete against the other people? And I you know I I I
no really had to tell you how to do that. Well, but just have humility, because
peering in the markets is more difficult,
competing in the Olympics. The average guy thinks just because he has an opinion. He thinks he's going to be able to walk away, but you
have to take money away from somebody in order to make money in the markets better than the averages and that's a tough game. So you know that's a whole of the sky
But in my experience the reason I was so grateful to you that you we went into such depth on your all, whether now call the all seasons version you gave for the general public, because, without that nobody makes it
we make some of the statistics we call for peoples. You know you look at the last twenty years at the Essen P and the average of turns been eight point two, but in that, if you mischief
the top ten trading gaze in twenty years, a drop down to four point five, and if you miss the top twenty Drake trim days and that twenty year period,
the two point one, you miss the top thirty training day. You lost money, so people who think
it can time. Almost never do and you did such a beautiful job, but I
we want to bring the people's attention because markets get over heated people start thinking about how to play ball
markets and, as you said, some people going to do that, but not many human things enable do that successfully through time. So I wanted people here that directly from you instead of me. So thank you for that
as you know, you also pointed out that,
for the last twenty years after these plunges in the market in the two weeks after of the ten worst days,
had the best days- hats rights, similar to those days in the twenty year period from London. So, who do you think is buying and who do you think a salad in those days the other person do selling is the reactive person. Who is panic than that moment, and, and you know, the boy
where is the ability to know the difference and where the value is in? That's you know, that's a tough game, so I'm worried sick
perfect guides when you people feel that from you instead, so thank you
back. There's so much talk about it right now, as you can imagine with markets where they are setting,
so they have for just a follow up. Is Europe
everybody, seems to be fascinate these days. A digital Europe, Crypto currencies like Bitcoin theory himself work, then going drop. Twenty percent
the weekend yet still up five percent and the year I'm curious. What are you
bottom this type of an asset as is just going to Vegas. Why what's yours
How do you know the real value of the product this nature? And what would your view? I think that through it depends what
we talking about a we talking about Bitcoin specifically, are we talking about blockchain? Are we talking about digital currency? Some of these terms get confused.
As let me give you my thoughts on each one in the hurry. Thank you out. Let me start with the currency thing. There were two purposes of a currency
a medium of exchange. You can buy and sell things with it
store hold of wealth when you buy a bond where you put your money on deposit, you get paid back in a currency, and it's because of the expectation of that currency value that you make loans, and you put you in the form of deposits, are buying bonds and so on. Ok, right now, these digital currencies are not effective in either of the two ways, in other words
by and large not perfectly, but in other words, if you try to take your digital currency and you go out and you sad like to buy stuff with it right now, it's
very, very on developed, so what's happening now, is not largely not that in that regard,
and in terms of the store hold of wealth. It's not an effective store hold of wealth, because its volatility is so great that it's really speculate
on its volatility, that is having the market participants. So it is a speculative market that has underneath it that there are different versions of it. Like you point out, there is theirs.
Dead coin and then there's a theory, em and then there's another one and another one, and they will be that way. So the way that I view it is an under needs. It is a technology blockchain that is a totally valid,
rate technology that I think will be very important in our future? So it's very similar to saying this is like the internet
believed that the internet will do well and then what
say? Do I want a better unblock, doing
wanna bet on Bitcoin. That would be something like
saying do I want then, on that particular technology will Bitcoin become blackberry? Ok, because a theory or the net
version comes along even while the blockchain technology,
in the development of currencies and whatever happens so right now, so you have to ask yourself what does that mean? I think that the blockchain technology is great, but just imagine
that you were saying. The internet technology is great. Ok them which stock do you buy, and how do you play that? That's a difficulty, the idea of being a viable per
see is a is a long way off. Although central banks will use the blockchain technology and am
their digital versions of currencies, although they'll be Nathan quite differently than the ones that we're looking at. So it's. How are you
playing? What are you doing? Are you playing for the long term investment of technology? Had that's like saying how do you play with the internet modeling easy thing it's manifestation is. I will say that right now, most of the the playing with it is worthy. Let's call it the speculation in it is for a sail reason,
and it's a lot of speculation going on it- has the ingredients. If you were to take Bitcoin and then some of the others
it has the ingredients of a bubble? Ok, maybe it's a risky thing and there's not a good grounding. So I just want to distinguish what I'm saying: it's not something
that intellectually, I could get my head around how to deal with that point. On speculation
they concern. I like the underlying,
technology as a currency has gone a long way to go farther. That's beautiful,
for those eyes one.
In back. One moment, though, where you mentioned earlier talk about the balanced portfolio, any environment and how it helps sheet of violence
oh hi per se. What is that you
What to me before ins and most of your money, at least for the money that you have for your family and for it for your foundation and support its in a balanced strategy? Is that grant yes great in the same kind of strategy that
we talked about and notes covered in your book, just why it should be about
so that is knowing where you put your money, is helpful for people. Do
questions real, quick. You know
Did you study of enormously successful people, Jeff Baisers Bill Gates, these jobs, you I'm musk and so forth? What did you find? They have in common, and are you here one of them, but when you look
the other people outside yourself, but you took it under you. Take a lot of very
personality tests and you focus on qualities that they might have in common? What are these great business titans? Having common that you found
and by the way you're one of them. It has the same sort of qualities and income, and so it's it's an interesting going. First, they have not.
They can visualize a future and see a present and see the gap, and
a compel compelling need?
to eliminate that gap and it's it's it's a compulsion. To. Finally, I mean I need to reduce that gap and they have a practical reality that actually lets them do that that they go in.
And they don't let people stand in the way of them doing that. That is the interesting thing that they operate in a very open minded ways, but they also don't let people do in that bag.
When you have an independent point of view, that is not popular. That is different from the crowd, as each of those people say
you dont know whether your ride or whether you are wrong, but you
Visualize it and you can tasted and people around
were telling you it's wrong, it's not the right thing. The question is: what do you do with that, and so what they will do is they will work themselves through that they will have
in other words, they'll do the double checking and whenever it is announced through and now pursue with perseverance and they pursue its smartly with perseverance and other work.
They understand Riskin reward, you say
mind they dont mind making mistakes along the process of learning to get to the journey. They believe that's right, they can and on. A very important thing is in dealing with the feelings of others. This is- and this is a big dilemma I
Mohammed units, the founder of Micro microphones,
and received the Nobel Peace Prize that they could
I shall not allow slaughter determine it was assessed by fortune magazine to be one of the top greatest entrepreneurs of our time he's given his life to other things.
But he doesn't take any income himself. He just puts it within these things and graceful social impact, and he
It will not let the other people stand in the way the goal a lot of people have discomfort. In other words,
they'll be somebody got
he made sometimes uncomfortable you gotta, cut through and get to the the the on the job done, even if it means discomfort for people you're gonna work yourself through that they are people who can see the big picture
and the details you, maybe maybe they see it all themselves or maybe
They are working well with others who can see things that that they know that they can camp. I will refer to some some of the names, because I've done these discussions with them and the personality tests and I promise to keep up the particulars private show.
But their nearest. There are some people who can visualize the big thing. Ok, let's
you are going to Mars
in other words, colonise Mars at an end and the end such things and at the same time, can pay such attention to the details, so that that range is a big deal and they they achieve that range and I'll give you other names. Thinking of other people won't give me their names, Sir, who are able to.
Basically see the big picture, but no, they can see the detail and then they have partners the biggest secret to all of this.
Is to know how to partner well with people who could see where you can say and to one way or another, be able to see the big picture and execute the details so to put together the the teams correctly. They also tend to do things that are that new assume people don't do together. Let lemme give example very creative, but also very structured.
I often ordinarily you'll have a creative person who you know you say over their very, very creative, but you know they don't like structure and or very structured person doesn't like creativity. Both of those things are needed now, whether they,
do that together or whether they are able to do them both simultaneously. That's that
so they have vision. That gap is the things that they have a compelling need to eliminate and they do it with by bringing
these different qualities, whether they have that in themselves or in partnership with others, they.
All really the best ones are
Paul, who not only have good mental maps of how things should be done, but they have high levels of humility. It may now look that way to an outsider. You may look at some of these people,
when you could say, while they just sound so brilliant them they're asking the questions. But if you are in discussion
with them- and I'm sure you been in discussions with them, went what you find out is generally speaking, that what they do their curious
voraciously curious, now wondering if they're wrong, they're taking in information. So they don't look, ask confident when they're doing it
when you're. In those conversations, it really depends who, their speaking with they have an ability to distinguish the smartest people to speak with from the less smart people to speak. So so they tend to speak to the smartest ones and think it speak too, but they liked
people who disagree with them so that they can make sure that their right and they can learn yes, spirit,
that also discovered. You know when you talk about the compulsion. To close that gap, I guess
We believe that when it myself not dimension the people that you mentioned in the people you and I have as mutual friend, we all seem to have that- that portion and common, it's the one that jumps out to me most but your
So we write that ability to see the big picture and the details. There are very few people do that at the bridge, the people to do
which they say they have a really great ability to partner with others those skills of their missing. What makes them effective at partnering like that, once the quality and then that makes them the agreed upon the number one differ: renunciation character is the ones who can,
oh above their own opinion, and to see it through others. Eyes like observe this repeatedly. There are certain people who are attached to their opinion may think we're just because they think they have this opinion that the opinion has merit. I mean there are terrible terrible opinions. The ability in one sentence to didn't two words, the ability to be
simultaneously open minded to take things in to take information in an process it, and also be assured of so that they can do the back and forth is the ability to so to rise. To say I might be wrong and how
do we fit together thing you're out whether I'm right or wrong. So you know there are three things that I d better.
Essential to do in order to have an idea, meritocratic relationship and whether that, in partnership
or its own family relationship or almost any relationship it. It's a better relationship
It's an idea, meritocratic partnership. Nothing is not just one person's symbolism. Somebody else
as you have seen, how do you have to do that? There are three steps that you have to do. First, you have to put your honest thoughts on the table that build Europe thereon his thoughts on the table, and you could look at them. Lotta people at problems doing that, but they have to that's that's important. The second thing
is you have to know the art of thoughtful disagreement, in other words, when I'm describing the ability to take in and think and work yourself through that,
view disagreement as a curiosity and a respect for the other person to do well, rather than an argument
There is an instinct jewels, subliminal reaction to disagreement. That makes people think it's a fight or there's something, and I'm gonna want. Why emphasise decision making is a two step process. First, take it in second,
side you are taking it in does not in any way diminish your ability to decide your being stupid. Any of us I'd be stupid if we don't take it in and then decide so. The capacity so step number two is to have thoughtful disagreement. First, you're, honest thoughts on the table. Second, the no, the art of thoughtful disagree.
And number three that, if disagreements remain to have agreed,
upon ways of getting past them. You can have the best partnership in the world and you're still going to reach a point where you disagree or one of the rules of the game to get past, and this can be with your life partner, or this can be with your business. Partner, do have
protocol that, when you reach that point, you're gonna follow that product
Give us an example: anyone right real an example. If you would right that's because it makes so much well, I mean they're all sorts of protocols you
it either say we go to a third party to arbitrate. We flip a coin. We do at the bridge. What do we do
What we call believe ability waited decision making believe ability.
The decision making years that groups and maybe too complicated, to explain in a nutshell. But it's basically that knowing
persons believe ability that actually is scored with points that come from and agreed upon system an amateur points. You have
you get believe ability. So let me give you the concept very simply believe ability waiting, because we all do this.
In our own way. Support
You have a serious disease, and now you can make your decision and what you're gonna do about that disease. The smartest thing that you could possibly do is to find the three
artists, doctors that you can find who are willing to disagree with each other openly and anti end to hear that conversation and to end to go through that, and because, let's say all three doctors tell you to do
same thing and what they're telling you to do make sense. Ok, then, you have a green light to go ahead if they are willing to argue with each other, and you
can hear that then you'll get a move on their education, that's really fabulous and you could ask the questions and then, when it comes to the end of the day, you're going to sort of say I have to make my decision and you end up here
more way that decision, based on your assessment of the different doctors believe abilities in the issues that they're having a partnership that these are all day
front ways of getting past the disagreement. But you must have this means of an agreed
fine way. There would have otherwise it just because another fight for its common and the best way is to just for generally People Europe, the people who are listening out. There is, if you both mutually agree,
Who is that may be a friend or somebody you. You say all. We trust their judgment and they'll help you through it and we're going to go and will let will work ourselves selves through with their guidance and let them decide or whatever leave you wear that NATO help problem
at the most common here I have to? I would want to echo those listening for me anyway, avenues that make so much sense, but the cons-
of. Looking at disagreement with curiosity and respect the combination, those two qualities is spectacular, mean that, on out about you get truth, you get creativity.
Connection, you get new ideas, it keeps the openness and yet still allows you to grow and Stana make your own decisions beautiful last question:
your time? My friend, you know,
on a personal note, I noted that you stepped down as they conceive, YO and talked about the next five years. Your involvement and Bridgewater is gonna
You now have diminished transition, a I'm just curious,
I know you're gonna, be work in another book on investment principles and beyond.
What is life? Look like re doll value in this next chapter. What's next, the first of all on just to be clear. My chapter remind my life here is to make sure
dollar great without back. That's my number one mission, my game
but a play, the markets in the game with Bridgewater as much as they want me to do it and I'm going to do it is, and in July men and a pleasure cousin. I love that, like playing, I dont, know chess or to address or never skiing. Since I was a kid,
I'll, do it for the rest of my life, because I love it and so on
to be able to be more engaged in that big
I'm not having to manage the company. So I'm excited about doing now.
I'm gonna do that and arm and then but my
My number one objective is to make sure that people are good without me, so I've done
above the things spending time with my my family, my great my grandkids at
Grandkids. I've got a third on the way. I'm telling you it's a joy. It's a real! I'm curious, I love adventure. I loved ocean exploration. I love so many things. My life is so pact,
with very, very interesting things that I dont have anywhere near enough time for them, and so the markets and the get
economy in the world will be my passion, plus all these other things and spending time with friends but it'll, be a different phase in my life
In that I will feel every one of them is totally joy joyous. It won't be out of the same sense of arms.
Asian, because, if they're well without me, then I'm good, and so that's why I wanted to write this book,
pass along everything that I know that it's been a valued me put it into the book. I can say to myself,
sleep my grandkids read the book and I'm not around anymore. I dont have any advice. That's now in me. That's not in that book about life in and work and when I do the same with the union,
common principles and the economic principles than its outside of man,
Others are good and I, for one, am it's a joy. I
amongst the bands and friends of yours that are so thrilled that your sharing this, what the world, because the world needs at someone
and we can see that the book is skyrocket,
the best selling less than eighty one is listening here. We have an already picked up principles.
Get it now. It'll change your life, good I'll, show you how to run your life and how to run your business. More importantly, it will make you think about that.
Principles that are most dear to your own life that will shape your decision making shape your life. I can't rave about it enough its touch.
I presume that so many times, and I want to emphasise, while these are principles that help me in their principles than helped a lot of people,
most important thing, I'm speaking to you in the audience. The most important thing is that you
have your principles, yes, and that you you think about it, and I would I would recommend- because I stumbled on that. If you can write down your principle when you're encountering something- and you can
provided. You can clarify pro the people. I think we're in an era in which we
have lost even the connect
of what is principles when it up just a yellow.
More don't. You have, of course, later. Ok, I think that we
were in an era in which there was religion and religion was such an important thing in it
if and when we had the religion, it didn't think about different principles. There's some differences between the religions, but basically a lot but think about principles and named created, created community principles, and there was calm and pray
labels and as we as do the popularity of religion has declined when we ve come
into an era. Where does the more the individual we're not thinking as much about what is a principle, as distinct from a decision in? If you think about it in school, they want
did you such principles of how to live your life for just generally speaking, even think
What are your principles we, so I think we're in an era in which there is the
individual, and I like individual thinking and respect it, so I think we're in a in an era in between
in a time where we will need to be clear on our principles and an end visually and then collectively and the way that we're gonna come by that. That's where I believe is by individuals riding down their principles and being clear about.
The principles starting to think in a principle level way, and then, by being clear on the principles, then we could see what
suppose do we have in common and one of the principles that separate us, and I think it's an issue for our country right now, because if you take a look at it, what are our principles? Are we just fighting over tactical things or do we have principles in common and what are those principles? For example, you know like the notion of equal opportunity is that our goal is that it is that a principle in common? What are what is it that are our principles that bind us together as a people and
What is it individually? I think that there is a gap in those things and I think by being clear, whether you you don't have to even write down your own principles. You might find that you like this person's principles or this religions, principles of that, but to be clear on what your principles are and to operate in accordance with those principles and to be able to communicate,
them with others is the most important thing, because whether you have principles in common is what binds people together or divides them, and I think it's important to be clear that the most important thing
I think you're absolutely right- and I think you know, without clear principles at decisions are made just emotionally there, maybe rationally, and that's where you see the worst part of human beings very often or
the least successful part of human beings, but we find those in common. That binding is there and it's easy to make decisions. Either people get focused, as you said, on tactics and therefore
We all give a damn about our children, whether or not you believe
the gun should be available not be available soon greatness, crazy examples out there for everything,
between the tables on this interview in the second year, renting a quick pause and we're gonna flip over and
taking the worst role. You're gonna be, in our view, be on my principles. I went to see what we can.
Nobody did- you know my wife is based on principles. I couldn't get up and do seventy
the road day and night top pointing out as they would people from seventy five countries.
When people say not only what they're going to do, but I have a set of principles but at what they do guides me to help them to get to where they need to be so without that I don't know how I have even function. So I really personal thank you for this part from jumpin back on again for these additional questions,
and I'm just again one everybody go pick up your book immediately, because this
guide you to figure out principles that can enhance,
the quality of your life enhance your business but also, as you said, guy
you too really uncover one of the principal that matter most. Do you see gonna wind, your life with what you believe is right for you and wine when other people in a way that allows you to grow your organization, your family, your community, your life. So thank you
I really really prepared love every time we have conversations so stimulate great love. It thank you are about to take a bye, bye
for more on re dollars, principles, life and work visit, W W, w dot principles, dot com where you can watch raise TED talk on how to build a company where the best ideas when listen to some excerpts from the audio books, or simply order your own copy of principles. Today, twenty robins pot cast is directed and hosted by twenty Robins and Mary bucket. Any org is our electoral director, an occasional host. The pot cast is produced by carry song and other culprits in Jimmy curve. Hop an angel dilatory are additional editors, special thanks to die, and I call for a creative review, copyright Robins research,
Transcript generated on 2020-04-04.