← Tom Bilyeu's Impact Theory
Tom Bilyeu's Impact Theory
“People Don't Know What’s Coming!” Prepare For The Changing World Order! | Ray Dalio (Replay)
01:30:08
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- [00:00]
Commercial Narrator
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Ray Dalio
New York City's becoming more dangerous. Chicago's becoming more dangerous places. San Francisco is becoming more dangerous. You're seeing people leave some places for other places. The greatest danger for most people is failing to look at the things that could be harmful to them.
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Podcast Host
Ray Dalio, welcome back to the show.
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Ray Dalio
Great to be on your show again, dude.
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Podcast Host
I'm always excited to talk to you. This is an incredible phase that you're going through in your life where you're taking all of this incredible information that you've gleaned through your years in the financial markets. We're living through a truly unprecedented time of uncertainty disruption. I think a lot of people are really afraid in terms of what's going to happen to their money with inflation. Are we headed towards hyperinflation? And in your book, the Changing World Principles for Dealing with a Changing World Order, and the video by the same name, which is blown up, I think the reason people are reacting to that is everybody has a sense that something is happening, something that they don't understand how to navigate. And then along comes your book, your video, which really gives a lot of context to that. And so while in, by the end of this talk, I really want to give people a sense of what they can do and what we can all do to forestall the essential decline of an empire, which is what we're living through right now. But first, to get to that, I think we have to understand your concept of this is just another one of these. And by looking back over the last 500 years of history, we can see this cycle that empires go through. And the US Is just the most recent one to go through it. If you don't mind walking us through a thumbnail sketch of the six stages of an empire and then we'll talk about where we're at now and what we can do.
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Ray Dalio
Okay, it. Let's start by describing it. Something like the New Order to the next New Order. And what I mean, a new order. I mean, the new system, right. Like the World Order was made in 1945 at the end of a war, and a civil war can begin. A new order inside of a country, like the Chinese Civil War began. Their New Order Inside the Country, 1949. And so that's like a new beginning. And they always come out of wars. And a war is a fight for how the system works. So we'll begin there after the fight of how the system works. It's a great leveler. It gets rid of a lot of the debts and it starts over. And then there's a new power in the United States, the New World Order. It was an American World Order because the United States won World War II. It had 80% of the world's gold. Gold was money. It had the dominant military power. It had nuclear weapons. And because of that, we began the American World Order.
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Podcast Host
We literally got people together in a room and said, hey, we're going to be entering, literally, a new order. And they lay things out was in Bretton woods, if I'm not mistaken. And so I want people to understand, like, this is people. They get together and they actually decide this stuff.
- [04:21]
Ray Dalio
That's right. They carve up the world. Here are the borders. This one, this group gets this piece, and so on, so forth. And then they begin and during. And by the way, this has happened repeatedly throughout history. And so they start off with those new rules of the game. And you enter a period of peace and prosperity. And it's peace because nobody wants to fight the dominant power. The dominant power won, and you don't want to fight the dominant power. And so you're exhausted.
- [04:51]
Podcast Host
I mean, and this is one thing you're careful to point out in the book is like, war is horrendous. And so part of what creates that period of stability is just. We've seen so many people die. There's so much destruction of life, wealth, which is why, you know, the stakes are high when you're talking about this.
- [05:10]
Ray Dalio
That's right. And there's a change in psychology, really, that you're dealing with because quite often these things take place. They take a generation or more to take place, a lifetime. And the people who enter the war do so so boldly. But everybody who enters the war and then goes through the war wish they never went through the war because it's so terrible. But they come out, as you point out, and then the war is over. They want peace, they want productivity, and so on. And it's a great leveler, less wealth gaps and so on. And they work well together and they build a period of peace and prosperity that is a long period of peace and prosperity. But during that peace and prosperity, more and more prosperity takes place and they increasingly bet on that prosperity. And people get more in debt. And so you see the debt levels rise and you see the naturally as prosperity comes, it comes in unequal ways and some get richer than others. And so wealth gaps rise. And then those wealth gaps increasingly create opportunity gaps because the rich people have more resources to educate their children and give them the benefits. And so that happens over a period of time while the economy gets more indebted. And of course, as time progresses, other countries also rise. Those maybe that even lost the war, like Germany and Japan, they rebuild and they become competitors. And so what was a unique power of having won the war becomes less unique as there are more, as there is more competition. And then you get a new generation of people who have a different mentality. They get used to those benefits and so on, and they are, let's say, less cautious, less cautious in their financial behavior and so on. And so the classic ingredient also is that that country that wins the war also has the world's reserve currency. Because, okay, you need a currency to transact internationally. It's like a language. You need a language to transact internationally and the winner of the war gets the world's reserve currency because everybody thinks that's the most stable and they also want to save in it. And so when you have a world,
- [07:45]
Podcast Host
I think that's important to really double click on. There's two things here that I want to go a little bit deeper. So one of the profound things I've ever heard you say, and this really hit me, is that there's a reason this repeats over and over. And that reason is there's only so many personality types. And so people just are the way they are. And so if you put them into these predictable situations, they're going to react in predictable ways, which makes this whole cycle incredibly predictable. You can go back, you know, you did a detailed analysis of the previous 500 years and, and you just see the same thing happening over and over. Because, hey, the money's coming in, it's the roaring twenties, but the roaring twenties are going to lead to the thirties style depression basically every time, because people are overextending themselves because they are making the faulty prediction that if I look back at the history of my life, because it has always been this way, it's always going to be this way. Not zooming out and seeing. No, no, no, you're in a bigger cycle that repeats over and over and over. And the reason I want to hammer this home is since by the end of this, everybody watching, I want you guys to know what to do to prepare yourselves for this. This is Ray's whole point, is to make sure that people are actually prepared. But you have to buy into the fact that this is predictable, otherwise you're going to ignore the advice. And so for me, recognizing that people just are a certain way and that thusly, given similar circumstances, they will react in similar ways. And so that was, I think, really important for me to acknowledge.
- [09:15]
Ray Dalio
Yes. And you could see it not just in the cycle taking place over and over, but if you deal with the cause, effect relationships, they're logical. So, for example, if you have bad financial conditions, as measured by if you're spending a lot more than you're earning and you don't have a lot of savings, you have more debt or liabilities than savings, you're not in a good financial position. That's a fact. And if you have a downturn, if the country as a whole experiences that problem and you have a large wealth gap, you are likely to have a fight. I mean, so these cycles don't just take place as cycles, they take place as conditions that are measurable. And so in the book, it was very important to me not to just use words and theories of how this thing works, but to actually show the measures. What is the wealth gap? What is the amount of debt? What is the amount of printing? What are the conflicts that are taking place? Because then you can monitor those things.
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Podcast Host
Yeah. So this is where it starts to get a little unnerving. So, okay, you recognize these are patterns, they happen all over history and they repeat. And then because you're plotting all of this and you can look at these leading indicators that you talk about pretty extensively in the book, there's 18 that you go into detail a couple times, you break them down into ones that maybe are more important than others. But as you peg. So if there's six stages to this arc, you said that the US is in stage five. And to give everybody an idea, stage six is basically revolution war. It's the violent restructuring of the economy. And whether we're in the seventh inning of stage five or the third inning, I don't know. But the fact that we're in Stage five, which is obviously where there's massive internal conflict, which rings way too true. And the massive disparities, which you did a really cool graph in your video, where you show income inequality and that gap between the lines, you filled in with resentment. And so you have growing resentment. You get populists on the left and the right, you get internal conflict, people fighting. And then you get a potential external power looking at you going. They're weakened by their internal conflict. And that, historically, is when a rising power makes its move.
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Ray Dalio
Yeah. So I think there are three things, three big forces to keep your eye on. And when you see them in their cycle, then it's clear. First, are you earning more than you are spending?
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Podcast Host
And do you want people to look at this at an individual level or at a country level?
- [12:17]
Ray Dalio
Well, you can have both. I want them to look at it as the country, but the country's nothing more than the aggregate of the people. And so when you look at those three forces, I want to make sure that they're clear. And you could align them up and you could see where you are. Is the country earning more than it's spending and building savings, or is it spending more than it is earning and creating debt? Because one man's debts are another man's assets. And when somebody is holding those assets and they're producing a lot more of that money in debt, they go down in value. Money goes down in value as they produce it to produce that buying power. And then that gets people bad returns. It produces a higher amount of inflation, and it produces bad returns for holding debt. So in other words, cash or bonds. And then people get out of cash and bonds, and that produces rising interest rates while there's rising inflation, and that produces stagflation. So I want them to get the mechanics of that, because that's happening now. You could see it. This is not controversial. We are producing a lot of debt. We're spending a lot more than we're earning, and as a result, they're printing a lot of money. And the printing of a lot of money creates a lot of inflation. And with that inflation, then nobody wants, you know, cash is trash. You don't want to hold cash, and you get out of that, and that causes rates to rise. And that's one of those three factors. So you can see it happening. And you could also see the cycle of it, as shown in the book. The second force that is dealing with is the internal conflict force, how you are with each other. Are you operating cohesively, common mission and moving in the right direction, the system working, or are you at each other's throats? Is the system threatened? Because history has shown when the causes that people are behind are more important to them than the system, the system is in jeopardy. And that is a risky situation. It's a risky situation because it produces disorder and it can produce a form of civil war. And at those times when you have that, you see greater and greater polarity in politics. It shows up at greater and greater populism of the left and populism of the right. And populists want to fight for their side. They're not moderates. Moderates want to work together to try to find a compromise that's best for the whole. Populists appeal to their crowd by saying, I am fighting for you. And they will fight each other. And that fight can be at the threat of the system. So in history, for example, we saw four democracies in the 1930s choose to become dictatorships. And as one side fights to the other because they become so disorderly, and we have a system right now that you could see that it is possible in elections that one side, neither side, might accept losing. And so the system becomes in jeopardy, and you see that the moderates leave the system. You can't be moderate. You have to pick a side and fight. And so you see this in the French Revolution. There were moderates in the early part of it that recognizing that there were problems and wanting to work together, the moderates got guilty. The polarity began. The same was true in the Russian Revolution. The same was true in the Chinese Revolution, the Cuban Revolution, and so on. Those polarity gets greater and greater as there's a greater intensity to fight. And that is the internal piece. And so you could see where we are in that internal piece right now. We see that moderates are dropping out of choosing not to run for reelection. And you're seeing in the primary system that the fight is who's over most extreme in representing that. And you're seeing this greater polarity, and you see it reflected in many statistics, something like 10 or 15%. I forgot if it's 10% of the Democrats or if it's 10% of the Republicans, I don't remember. Versus 15%. Wish the members of the other party would die. They don't want them to measure their. They don't want them to marry their children. I mean, there is a great polarity. And you're seeing that lead to changes in where people live. They're moving to different areas, not just because of tax reasons. But because of differences in values. And so that kind of. You can see it today happening these things, but you also can see the arc of them in the book because it measures statistics. It shows these things happening. So when you have financial problems and you have this kind of polarity and you have a bad time, you have a lot of fighting internally. So imagine where we are in the economic cycle. We're in the part of the economic cycle where they have given. The government has given a lot of money and credit to people. They've put it out. Well, no surprise. That's leading to a lot of inflation. Okay? Inflation takes buying power away from people. And it also means that then there's going to be higher interest rates and that's going to squeeze people. And so that makes that wealth gap and that wealth issue more difficult. So that's the second force. And the third force is the rise of a great power, the geopolitical force that's going on that we're seeing today with China and Russia and so on. And how that's changing. Because when the power of a country diminishes, okay, when we get weaker financially or how we are with each other and so on, there are greater vulnerabilities. And there's always the competitive power that learns how to become stronger. And competition always happens. There's the establishment and then there's the new competition. And as they get stronger, they get stronger in all ways, militarily and commercially and so on. And that's the dynamic that we're seeing.
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Podcast Host
Yeah. So we've got Taiwan looming in the sort of political background. You said many times in the book that that's an indicator that you'd really be looking at if there was a fourth skirmish over Taiwan, that you would get increasingly worried. We definitely need to talk about inflation in a minute. Cause I want to know what people should be doing in that environment. But first, like the. And I don't know if people are like me, but the thing that got me to stop and really start paying attention to this was how far into stage five we are. That was the thing that compelled me, that I have to slow down. I really have to look at this because I actually don't. Thinking about money, despite my longstanding pursuit of success, that's really been about something else for me. Money has been a byproduct of that. And that's in the book. And I don't know if your number has changed, but in the book you say that you give a 30% chance of the US falling into civil war. I think in the next five to 10 years. And that a major conflict with China at 35% in the next 10 years. And you said, look, it's a guess, but you lay out a lot of data before you say that. It's just a guess. So it's obviously a very well informed guess. One, do those numbers roughly hold for you still? And if they do, how do we pump the brakes on this?
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Ray Dalio
I would say those numbers probably are a little bit higher now. I would say, I was afraid you'd say that things are progressing a little bit quicker.
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Podcast Host
Do you mind ballparking me? If we're not at 30, are we 31? Are we 40?
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Ray Dalio
Yeah, let's say, let's say 35 to 40% on, on each, let's say. And who. And I'm not, I'm not being precise, but the events that happened in the Ukraine and that is, is bringing all this development internationally up at a little bit quicker pace. It's the same dynamic. There are two sides and there'll be neutral countries just like in the war, there was the Allies and the Axis powers and then there'd be neutral countries. And so that part is developing. The US Conflict part is probably progressing a little bit quicker. So I mean, let's say the odds of that on the, on the, you, on the world order, the developments in the Ukraine, maybe I should put those in perspective. You like me to.
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Podcast Host
Absolutely.
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Ray Dalio
Okay. There is a very close relationship, a common objective of the Russians and the Chinese. So there is a competition in the world and there's a dominant world power which is perceived as being overly controlling. So the Chinese believe that the policy of containment of the United States, in other words, just right within their borders, that there isn't a region that's suitable for them in much the same way as the United States. There's always a geographic region that as an area of influence in the United States, in the area like the Cuban missile crisis, Cuba, when there's a threatening power in Cuba, we reacted to that, that kind of geopolitics. They believe that the United States is sort of containing them and they are growing in power so that there's that dynamic and Russia has the same kind of view and so that there's a common, let's call it enemy, competitor. And there are five types of wars. There's a trade war, there's a technology war, there's a geopolitical influence war, there is a capital war, and then there's a military shooting war. And we are in the first four of those wars in this competition with
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Podcast Host
China or with Russia?
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Ray Dalio
Russia with China. Well, we're not in a shooting war with China. We are in a shooting war of sorts with Russia and the Ukraine. We're providing arms and so they're shooting and so there's a military war going on. And, and we're in it in our way. So we're at those particular spots and the capital war is sanctions. We hear the notion of sanctions and what that means is they're economic and the way they work is to shut off, to produce economic pain by either not letting them get at their money or not letting them get their money to goods that they can import. And these have happened through time in Japan. That was what set us up for the bombing of Pearl harbor because the United States cut off Japan's oil supply, was in the process of doing that, and also confiscated its bonds. Much the same way is happening now. And that put them into a corner that led them to bomb Pearl harbor and then we went to a military war. So that's where we are now. And that also is risky because it threatens the value of the dollar. Because right now debt is dollars, any currency. The way you hold it is you hold it in the form of debt. You don't hold it just in paper. And because it's, there's a rising inflation and because there is a lot of printing of money and because there's also a greater fear on a number of countries that they too could be sanctioned, there is a selling of dollar denominated debt. So you're seeing that the bond market
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Podcast Host
is going down and interest rate started escalating recently.
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Ray Dalio
Yeah, that's right. And so there is that, that dynamic that's going on. The capital wars are the ones that accelerate immediately before the military wars. Usually the coffers are empty, they're printing a lot of money and then they're trying to use economics as a weapon. So we're in that part of the cycle now in terms of how this will transpire, I think there are three big questions that we're going to learn about, get answers to pretty quickly. The first is does Putin and Russia win or lose? I'll describe win as what he wanted at the outset, which is win for Russia would be to have the Ukraine be some non threatening position, such as a neutrality, a guaranteed neutrality, and for Russia to have control over eastern provinces. And for Russia not to be economically devastated instead to be maybe have something like a 10 or 12% decline in GDP. And for Putin to be in power if those four things happen, then the cost of his actions will have been worth what was obtained from that. And that would be viewed as a win. It would be then also a loss from the Western countries. The world is looking at the power of American sanctions because American sanctions are the greatest power the United States has. If it was a military power, the world has come to the position that a number of countries have had an equal ability to do harm to the United States militarily, as the United States have to do to them. And so we don't have a dominant military power anymore, but we do have a dominant sanctions power.
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Podcast Host
We're still ahead of China.
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Ray Dalio
The United States ability to have economic sanctions is much ahead because it controls the world's reserve currency. That's the biggest asset. But in weaponizing the dollar, it is leading those to get around and not want to hold dollars because they get worried that they're going to be confiscated. So we will see if that dollar sanctions power, we'll see how powerful it is. If it isn't very powerful, that's going
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Podcast Host
to be a problem because others will perceive our weakness.
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Ray Dalio
Well, and they'll also realize then, then you only have military power. I mean, think about this way. If this war is not a difficult war for the United States and Europe for the most important, it produces higher oil prices and the like. But while Russia is throwing in military, we are throwing in sanctions. And these sanctions don't cost lives. It's not a military war. So we're fighting it with sanctions and they're fighting it with military. If you didn't have that, how would you fight this war? It would be a much more difficult situation. And the third thing that we're seeing is how the world is lining up. The world is lining up, which there are in wars typically Axis and Allied powers. And you could see by the actions that are taken as to which are lining up. Who voted in favor of what at the United Nations? Who is allowing what rules, who is trading with the other party? Who would Russia actually put out a list who are friendly and adversarial countries. You'll see at the next G20 meeting who will be in favor of Russia attending that meeting and who will be in favor of it not attending. And that's making clear how the sides are lining up. So you're seeing those sides line up and all sides are in preparation for war.
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Commercial Narrator
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- [31:36]
Podcast Host
Okay, so, all right, we've got that. Escalating. Things are moving faster between us and China than we thought. Escalating tensions here in the US Inflation is one thing I want to really touch on. So what do you do in an inflationary environment? As somebody who's not. I don't consider myself a savvy investor. And so I always wanted to. I used to joke with my money manager, I want to be as close to my money buried in the backyard as possible. And obviously for inflation reasons, I have since learned that that is a terrible strategy. But what do you do?
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Ray Dalio
Well, first thing is you realize that holding cash and dead assets is a bad thing. So a lot of money is in cash because people think that cash is the safest investment. But they are measuring that in the amount of money that they get. Nominal returns. And they say it doesn't wiggle much. But think about it, it's lost. As of the most recent statistics, 8.5% over the last. Inflation is 8.5% and they receive virtually no interest rate in cash. And so There have an 8 1/2% loss of buying power as a result of inflation. And so psychology should change and is in the process of changing to realize that you have to think in terms of buying power, not the number of dollars you have. And you have to think how much is your buying power. And so the worst thing is to be in cash. Like I say, cash is trash and to be out of the bonds. The next thing is to have a diversified portfolio of assets. The diversification means some assets that are inflation hedge prone. For example, you're better off to own an inflation index bond than a regular bond. You're better off to own what makes
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Podcast Host
something an inflation index. Like what are the nature is that going to be? Gold and precious metals, tangible things. Like what are the things that are resistant to inflation?
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Ray Dalio
Yes, and inflation index bonds because their returns are tied to inflation.
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Podcast Host
Interesting. I don't understand that well enough to know how one would do that. Is that worth going into? I don't know what the punchline is going to be.
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Ray Dalio
Yeah, I think the punchline is, if you take a look at it, it's simple. It's like a regular bond, except its payments are linked to the inflation. So they compensate you for inflation.
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Podcast Host
So is this a government bond?
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Ray Dalio
Yeah, government bond.
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Podcast Host
Okay.
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Ray Dalio
And there are some tax advantages to them too. So look into them.
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Podcast Host
Why don't people just flood into that?
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Ray Dalio
Well, I think it's one type of asset. The flooding into any one thing is an issue. But moving from the nominal bonds in which the government just says I'll give you this amount of money and it has the unbelievable and unlimited ability to print the money it gives you, it would favor inflation index bonds and it can be other assets. Some people would say something in terms of cryptocurrencies or it might be those other assets.
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Podcast Host
What's your take on crypto? So crypto is a huge part of my portfolio. I think you'd be mortified to see just how much so. But yeah. What are your thoughts on crypto?
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Ray Dalio
I think that too much, people pay too much attention to one at the extreme of the other, that either somebody's all crypto or they're all gold or they're all something. And I believe that that's a challenge. I think that crypto, like gold is not a productivity earning asset and it can be controlled by governments in lots of ways. It's been outlawed in a number of places. And it also can be monitored. The privacy element is not secure from governments doing monitoring. And the size of crypto is about the size of Microsoft. It's all crypto combined. And so to be overly concentrated in it in my opinion is a mistake. But to have some of it is a good, is a good thing. So the question is always what amount of it. So that's, you know, I have a little bit about it. I'd probably shock you about how little I have. You shock me about how much how much you have. But having some of it. So the and other things I would say is that geographic location is important. In other words, not just all in US and US dollar, not assets. I would say that the three things that, that again I'm looking at if I go down countries is first, are they earning more than they're spending? Do they have a good income statement and balance sheet? This is going to be very important in the period of head because the amount of credit that's going to be available to bridge the gap between spending and earning cash flows and so on is going to be quite narrower. So a lot of companies even that were able to raise cash and not have good cash flow because of maybe growth expectations in the future will find it more difficult. That'll be true for individuals. It'll be true for countries. So does it have a good income statement and balance sheet will be important. The second is places. How are they working with each other? Is there civil civility or is there civil war? On the brink of civil war. Because countries where they work well together, they're productive, are going to have a real competitive advantage, orderly places, safe places to be.
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Podcast Host
Are countries on the rise in that? So obviously I'm shocked to say this out loud, but the US Would be in a bad place in terms of that. What are places that have great stability there?
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Ray Dalio
Well, there are parts in the United States that are better than other parts of the United States.
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Podcast Host
Meaning like local government bonds or something like that?
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Ray Dalio
Well, I'm out talking about the like where you want to be and then that'll be. But yes, it could be bonds, it could be places. I'm talking now the places the. For example, we just had the shooting in New York City on the subway and New York City's becoming more dangerous, Chicago's becoming more dangerous places, San Francisco is becoming more dangerous. You're seeing people leave some places for other places. You're seeing them leave, I don't know, to Texas. Texas is Austin or to Florida and so on. So there are differences in within the United States and differences from the United States.
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Podcast Host
People need to think about picking up and moving and actually going and being in a different place. Yeah.
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Ray Dalio
And those are also the better places economically because when people do leave and they do that, those who leave are higher income and higher taxpayers. And as a result, there's more of a hollowing out that takes place in that which creates an economic problem as well as a lifestyle problem. So I think you're going to see greater differentiation in places which affects where you want to be and where people who can afford to be there want to be and also affects what their economies and markets are like. And that's so. And then the United States. So, you know, and the third element is, so are they financially strong, in other words, income more than expenses and good balance sheet? Are they civil with each other so they're working together rather than hurting each other. And number three is, are they in a position where they're likely to be in a war or are they likely to be out of a war? You know, you don't want to be in a war. So. And those places, investing wise, history has shown, do worse because they have to spend more money. There's more problems, more pain that's being exchanged. Neutral countries in wars do very well, as it turns out. So Elements of diversification. So it's a long winded answer to your question, but I would not want to be in debt or cash. And those instruments, I would want to diversify. Well, with a bias toward inflation protected assets, and I would want to diversify between locations, countries, in terms of the investment based on the criteria I just mentioned.
- [42:07]
Podcast Host
Okay, that all makes sense. Now you've said that competing in the markets is harder than competing in the Olympics, which I found funny and distressing all at the same time. You said that you guys at Bridgewater spend hundreds of millions of dollars on research alone and that somebody like me is going to have to compete with that. So what's the advice for the average person that isn't going to be doing that? And how often should people be reassessing, I feel like in a turbulent environment, should I be looking at this like every week? Like, how often do you, like if you were managing your personal account without computers, at least without the, you know, sort of hyper auto trading, how often are you looking at it and how do you avoid trying to compete against the best of the best of the best?
- [42:55]
Ray Dalio
I think that you have to understand what a good strategic asset allocation mix is. That is how to create a good, well, diversified portfolio. Assuming that you don't know how to make these buy and sell decisions. Because what happens is, think of it, it's like a poker game and you're playing against others and those others are putting in. Most lose. Most buy at the highs and sell at the lows. Most behave emotionally. Most don't have the same information. So it's a very difficult game. Like I say, you wouldn't think I'm going to go try to compete in the Olympics. But more people think that they can compete in the markets. They think, I think the markets are going to go up or down. And the track records there are terrible for most people, okay, because of those handicaps relative to others. So for that reason, you start off with a well diversified, balanced portfolio because diversification can reduce your risk without reducing your return. If you understand how to get equally attractive investments that are not correlated with each other, that diversify each other, you can build a diversified portfolio. It would take too long for me to explain how to do that right now, but that becomes the headline. And I described it in my book Principles for Life and Work. Also, Tony Robbins described it. He asked me about it and then described it in his book, I forgot the name of it.
- [44:50]
Podcast Host
Money Master the Game, okay?
- [44:53]
Ray Dalio
And he describes it pretty well. And for the, that, you know, I Direct you there. I'm going to be writing a book, I'm in the process of doing it about economic and investment principles and then I'll describe it more completely. But right now that's the best I can do in this interview.
- [45:11]
Podcast Host
Now for sure that that already is really helpful. Let's talk about day trading, for lack of a better word. So I think about this a lot because I'm in the world of NFTs as a creator far more than as somebody who's buying them. And as I look at Web3, the reason I don't treat it as an investment, I don't think of NFTs as an investment class. Even though people are treating it like that, they're treating it like a hedge against inflation, some people treating it like a get rich quick scheme. It's that same idea that the vast majority of the money is being made by I think less than 5% of the wallets. And so 95% of people are getting beaten to death while 5% of people make all the money. And it feels like that's a similar idea to how somebody like myself, who I know enough to get moving to do the research and things like that. But I don't want to be in there trying to day trade. So is this, in some ways you definitely want to be thoughtful about your mix diversifying, making sure you're going for uncorrelated asset classes following the guidance that you just gave us. But is there also an element of don't try to time the market, it's time in the market and so get my diversified portfolio set and forget or do I need to be in there constantly re upping, rebalancing, that kind of thing.
- [46:30]
Ray Dalio
It's a little bit like you can start off with and I think this is most important. What's your strategic asset allocation mix? And then it's like going to the poker table and then you say, what is my angle? Where's my eck? Where do I get to take money away from others? Because I'm better at it. Okay, but you start. Everybody should start with a balanced portfolio. Okay? Most everybody, they have careers to do. And I think they're arrogant. They think they can go in there and they could take money away. Maybe some can. But if you're going to play that game, the first thing is also test your decision rules. Don't just go in and then you say I'm going to wing it and, and do it and because you won't even have enough sample size in your decision rules to know Whether you're good at it or bad at it, what after the first five times you're going to pronounce how you are, It's a learning experience just like any other learning experience to develop your expertise. What I find is really important is to take my decision rules and test how they would have performed in the past to at least giving you some perspective of what I might expect in the future. But you have to think through a game plan and operate that way. So I by and large would say first, the most important things you could do are actually the simplest things you could do to build that strategic asset allocation mix, not to be out in there day trading your life's fortune away.
- [48:10]
Podcast Host
That makes sense to me. I want to go back to the idea of we've got the cycles. It's so far every global reserve currency ever has collapsed and been replaced. And so it would certainly be hubris to think that the US's time as that reserve currency is going to last forever. But in your video you showed a guy holding up the falling line and trying to forestall that effect and hopefully carry it out longer or at least make it a more gentle tapering out. What can we be doing to forestall some of the internal conflict? How do we get. I know there's a lot of momentum going that stops people from making more than they spend at the government level, but are there techniques like if I could convince you to run for office and you got elected, what would you do to forestall that inevitability?
- [49:16]
Ray Dalio
Well, again, there's those who control the system and what should be done. And then there's what the individual should do, assuming that they can control the system. So your question really is, I view it in terms of those two parts. What's necessary is you have to earn more than you spend as a society. And so we look at our country as a whole and so you have to get financially sound.
- [49:44]
Podcast Host
And this is what people talk about with austerity, right?
- [49:47]
Ray Dalio
Well, or productivity in one way or another, it's the same thing.
- [49:55]
Podcast Host
So productivity would be make more money. So keep spending what you're spending, but make more money.
- [50:01]
Ray Dalio
That's right. Okay. And that that opportunity has got to be as much equal opportunity across the population because if it is for the averages may be very misleading. And if most people are not benefiting or have that opportunity, it is something that is suboptimal for the development of the country because you don't know where the talent comes from.
- [50:41]
Podcast Host
What's the lever we pulled to do that though?
- [50:44]
Ray Dalio
Well, let me get it out, and then I'll get to the. To how I would do it. Okay, but I'm just saying, okay, what you have to do is two basic things. You've got to be. You've got to be financially strong, so you've got to get. You have to be productive so that your income is greater than your expenditures. And you've got to be good with each other. You work well together. You're not destructive with each other. If you compromise, if you do those two things, like you're good with each other and you're, you know, so you're productive and you're financially sound, you've got to do those things. Now, under those things, there are a number of things. You have to educate your population well. They have to learn how to be civil with each other. You have to provide a system that allows productivity to be good, blah, blah, blah. But to answer your question, and really get to the punchline, because that's what I need to do. You need to create a system that both increases the size of the pie and divides it well, okay. And most importantly, divides opportunity. Well, not just the output. Well, but opportunity, but also the wealth well. So you have to increase the size of the pine divided well. And the way that I would do that is I would start by having a bipartisan cabinet and bring together smart moderates, people who can work on both sides. Because I think that the first thing is that the polarity is going to kill us. I think we're going to fight before we're going to resolve smartly what we should do. So I would want to have a bipartisan cabinet, and I would also want to have a program that's like a Manhattan Project in which I take the smartest from both sides and work to engineer a program that is like that. So that when they come out with the program, there's the moderate left and the moderate right, in a sense, who are. Who are agreeing, because we each have our own ways of doing this thing, you know, And. But what we'll do is we'll kill each other over which exact way we do it. And I think that to have a common bipartisan program that is raising productivity and redistributes opportunity and wealth, well, is the most fundamentally important thing. So I would have that bipartisan cabinet, and then I would have those moderates have to deal with the extremists on their body, their parties, because I believe that more than likely it's going to be the extremists who are going to destroy the system threaten the system because they won't be able to compromise. The fight will be so bad. And the answers do not lie in the extreme extremism.
- [54:01]
Podcast Host
Yep, I would agree with that very much so. If you were to guess what were. What are going to be some of the elements to create that are going to come out of that Manhattan Project. Like if you had to throw some of your own ideas in the ring, I'm sure you've thought through this.
- [54:19]
Ray Dalio
You know, it's, it's, it's kind of like very easy. You could see what happens before. Education and infrastructure are two areas that are fabulous in terms of being great investments and are not treated as great investments. My wife particularly and me peripherally work in the state of Connecticut for education. I'm going to give you a picture. Connecticut is usually average per capita income number one, two or three in the country. And in Connecticut, in high, high school students, 22% of the high school students are disengaged, which means that they have an absentee rate of greater than 25% in their failing classes.
- [55:12]
Podcast Host
Whoa.
- [55:13]
Ray Dalio
And. Or disconnected means they've dropped out of school and they don't know where they are. So one in five students. More than one in five students education system is failing. They will be on the streets. They will be not doing good things on the, on the streets. They are likely to be incarcerated. There are gangs and gun shootings and, and so on that almost end, okay, that all must end. That there have to be. There's a level of bottom to which you can't let the society go. And we found through largely her efforts and so on, that for seven to nine thousand dollars per student we could get them through high school and into jobs and then they become productive.
- [56:11]
Podcast Host
What is it about that money? How do you allocate that to break that cycle?
- [56:18]
Ray Dalio
There are things that you can do at certain points in their life, particularly between eighth and ninth grade, that you can help them make that transition and understand how they're doing and then work with providing supports to make them successful. Some cases putting them in a direction where they go into trade programs so that they'll be prepared for jobs and so on. But there are. My main point is that's only just one example. As I see, we're operating a lot philanthropically in different areas and we see so many cost benefit to creating improvements and great investments that would have a big effect. But it starts with real education. And because you have to have an educated population and a civility, it's a very difficult thing. When the children are raised, children are raised where, you know, children quite often a single parent in a slum, where there's drugs, where there's guns, where there's gangs, who are you going to relate to? What is your best likelihood of an income? It's through drug dealing and it's with gangs. That's your community and so on. That cycle has got to be broken. And I'm only giving that as, as one example. But there are so many cost effective ways of putting in money. Infrastructure like to not have laptops and connectivity is today the equivalent of not having running water and electricity or the telephone. And we see it with education. We were again in Connecticut. We found 60,000 students didn't have computers. How were they going to get educated? So we got them the computers and the society that would allow that something wrong and then connectivity. So certain basic infrastructure. I mean there are a lot of good investments that are not necessarily, they don't necessarily come from the business profit seeking world. Profit is a good but highly imperfect way of allocating resources. Because in some cases something, you know, building a road may not be profitable, but it might. When the United States built roads and it built railroads and so on, it dramatically increased productivity. So there's infrastructure and changes that have to be made. And there's great advances on these things, great advances on how to educate using computer technology that also not only helps the student learn, but it also helps the computer learn about the student and how they think. So there's a lot of potential. Think about it this way. The world is richer today. We have more per capita income, we have more technology and know how it just has to be redeployed in a way where it maximizes the efficiency and essentially the equal equality of opportunity so that we pull together. Now that's a dream, you know, Is it a likelihood? It's not a likelihood. Okay. Because people in these cycles go to fight and you know, they're focused more on them winning.
- [60:30]
Podcast Host
Yeah, I want to, I want to put a point on that. So as you were talking about it, I was like, okay, how do we end up here? How do we get people out of this? There's a couple things that I see. So as a kid of the 80s, loving America was cool and like, it was just natural. All my friends loved America. And recently I had a friend who was like, oh, I went on vacation and I put up an American flag outside my door and I was like, I guarantee that's going to get ripped down. He was like, oh yeah, it's already been ripped down. And I was like, that's crazy. Like, we live in la, this is a major American city. And for that to be considered offensive. So anyway, I think about these kids. So I don't know how much you know about my obsession and why I work as much as I do. I worked in the inner cities. I worked with these kids that you were talking about, like up close, you get to know them, you love them, you want them to succeed, you want them to do well. So you start asking a basic question. They're really smart. Not universally, it's normal distribution. But you've got some really smart people in the inner cities just being destroyed by their zip code. So I'm like, okay, wait, how did we end up here? Like, what would they have to do, know, whatever. And for me, I came down to a lot of this is mindset. Like they, they've been told the world doesn't want you to succeed, so they don't even try. Which if you believe that the world is just stacked against you and that it's impossible, then of course, why would you try? So I was like, okay, we've got to get the right ideas in their head so that they will take the right actions to learn and get educated. Now, I didn't get deep enough to learn about how many people don't have computers and connectivity and all that. That's distressing. But when I think about why, because you said in a society like ours, something is wrong if you're allowing that to happen. And my answer to that is, you've got the civility quotient of in some cases, I just don't want to see the other side have their way. So if the right answer comes from the wrong side, then I'm going to fight against it. If I'm the other side, then you've got, we can agree that the country is worth loving. So even just saying, like, hey, we've got to put aside our differences because we're all Americans and let's make sure that we are elevating all Americans. It's like, nope, I can't rally behind the flag. I can't get behind this idea. And so now all these people are stuck in this purgatory of nobody's looking at metrics to say, hey, we are trying things. Is it actually working? And if the metrics aren't improving, then we have to change the policy. But that's not happening because of all the fighting. But I do think that it's partly because you have that we can't Even agree to rally around the country. Does that strike you as without patriotism? I don't know. Is patriotism a force for good, evil? How do you see that?
- [63:20]
Ray Dalio
I think good produces good type of patriotism. So I went through the same cycle. And I'll talk about metrics, too. The reason I put metrics in there is. And every six months or 12 months, I'm going to update the metrics so that everybody could look at those objective numbers and see are we improving or we deteriorating. And I think if the politicians, the people in government were held accountable for those numbers so that you can objectively say, is education, is the wealth gap rising? Is there greater productivity? These are measurable things. You can then see they're not just measurable about outcomes, they're measurable about health. If you have a better healthy income statement and balance sheet, you are healthier financially and so on. So those metrics will put out. But yeah, no, I saw the cycle. United States World order began in 1945. I was born in 1949, and I benefited from it. And it was not just an American perspective, that American dream, it was a world dream. It was the only country in the world where there was really a sense of equal opportunity. I was very lucky. I had two parents who, who cared for me. They loved me, gave me good guidance. I went to a public, all public schools, and I came out to a world of equal opportunity. That's all I needed. Okay, that's all almost everybody should get. Why shouldn't everybody get that? And it was a place where anybody from all over the world could come and you were not. You could be a citizen. And it was the only place in the world where you could really be part of that and not considered an outsider. So all that immigration brought the best talent. And we operated in a place where there was rule of law and everybody respected the law. There were property protections and you could make a life. That was the type of life that you've had, the type of life that I've had where free to speak, free to do those things, to have opportunity. And so I'm free to invent, free to do what you're doing and I'm doing. And that is the American dream. And that was a beacon for people all around the world. That was what the United States was and so on. And that is good. That is good. Okay, now we have something different and we have a dynamic which is going on because we all abuse that because we had to spend so much money, because we became decadent in terms of Overspending on some things and undertaking care of other things and so on. And now there's a fight, and that becomes that dynamic. So, yes, if we could recreate the realization of what that was, what is the American Dream, what is fair, how does that work and rekindle, then that has a tremendous power in being able to bring that back. But the dynamic of history shows that it's more. More likely that it goes the other way. But, yes, if we rekindle that, the idea of heroes, you know, we don't have any heroes. Why don't we have any heroes? Because we're tearing people down. Heroes are role models, people who we admire. There are many people I admire, you know, and I've seen in my lifetime, you know, we should see more of those role models as examples of how to be. But yes, we're missing that. We've become a decadent, largely a decadent society that's at each other's throats. And we're in trouble.
- [67:13]
Podcast Host
Yeah, we're in trouble. Innovation. Speaking of, there's like almost a distrust now of people that strive for success. There's a distrust of science to some extent. There's. I feel like. And maybe I'm crazy because the stats will bear this out, but it feels like we used to be the place everybody would want to come. If you had that entrepreneurial dream and you wanted to build something and you wanted to generate wealth and innovate something, this is where you would come. And then I look at somebody like Elon Musk, who, honestly, man, just seems like an alien. I don't know how he's pulled off everything that he's pulled off. It's absolutely bananas. And yet there are people who just can't have it. They can't have the level of success that he's had and aren't necessarily even looking at it from the lens of the innovations that he's created. Do you think that that's a predictable change in attitude that people have and they lose the desire for innovation? Is it just being decadent or is there a rebellion against education? I don't know. I don't. I was so shocked to hear that there are people that aren't inspired by what he's doing, but instead are, like, just opposed.
- [68:34]
Ray Dalio
I think it's. I think everybody's got these opinions and they're so critical and not, you know, if everybody could just take care of themselves. You know, it's. It's like, start with. With oneself, the aspiration. And I think the reality should be to Be self sufficient. Plus okay, here, here's my view. Success doesn't have to be making the most money or the most contribution. Success for a successful life is that you have the life, the type of life that you want for you, but you earn more than you spend so that you're self sufficient. And if every individual could do that, you would have self accountability and a successful society. And so it's not a bad thing, it's a good thing when people produce things that others want and they end up making in many cases billions of dollars doesn't have to be the billions of dollars to be successful. But let's not resent that. I think when we think about the prejudice, the prejudice of either against the billionaire or against the poor person, that prejudice. I think supposing we eliminated the billionaires, most of the billionaires. One thing is inheriting the billions, another thing is creating the billions. Most of that comes from coming up with something that people wanted and then they and people spent a lot of money on that thing. And I think if you were to take those items that they created and you say the society is not going to have those items, would you have rather not had them? I think it's all a matter of stop the fighting, be productive, have the life that you want. You know, not all this fighting and criticism that is going to tear down each other.
- [71:10]
Podcast Host
Yeah. One thing that I've heard you talk about that I really resonate with is the idea of leading with understanding. Listen, first try to figure people out. I know your stance on China has become controversial, I guess, but when I hear what you say, it's basically understand them. Even if they end up becoming our enemy. To understand them would be incredibly important. Is that a life strategy you have of trying to understand people? Are you somebody who sees yourself as somebody bringing people together? What do you think is that importance in terms of understanding others?
- [71:51]
Ray Dalio
Well, just, just from really just on seeking understanding is a very practical thing and it's interesting as could be and then, and then it has a lot of really good results because with that understanding you can understand how to trade things to have win win relationships rather than lose lose relationships. So yeah, I think that most people are operating in their perspective of what's good for them and then the best are operating with a concept of win win relationships that they understand that if I have a win win relationship I can like I've got principle one and one equals three. If there are two of you and you can trade things and you can help each other, that's a Win, win relationship and that is the best. But in order to do that efficiently, you have to understand their perspective. And also their perspective is not as much like a characterization of good and evil. It is them doing what they believe is in their interest. Now that may do you harm and you might call that evil, but you know, it's almost that back and forth. So, so when you have that open mindedness so you can understand understanding somebody else's perspective is not the same as believing that what they're doing is right. You may have a choice. But if you have somebody who has a different religion or a different way of doing things to at least have an understanding of that, to see it through their eyes. Right? You don't, you can reject it. You could say I don't want it or. But even then you have the capacity to deal with it in a much more informed way than if you don't understand it. So understanding, I think is, is, and that is important. And then of course the world works in a real, in a way where it's the reality that they will move in a certain way and then you move in a certain way in those interactions. And if you don't have that understanding of the reasons why, you're never going to be able to play the game, whether that's a playing a game against them or playing a game with them to try to produce the best possible outcome, you're never going to be able to do that. Well, and so yes, I see this tremendous misunderstanding because there's a tendency to demonize the other side. Okay. And that's, you know, and so it becomes a distorted reality in which there's an inclination to go fight and there's misunderstandings. Well, even if you're going to go fight, make sure you've got understanding.
- [74:57]
Podcast Host
Yeah, So I was introduced to Taoism when I was probably 16 and so that gave me, when I was young, I really had an obsession with China and Chinese philosophy and I studied Laozi, Zhuangzi and just really became enamored with the east and Eastern thought. And so for me it's been almost strange to watch China take on a very different tenor in terms of the way the US perceives China. Right. To see this stuff escalating and getting darker and darker. What I find interesting is, like you said, to understand them is not the same as to agree with them. And I think that that's very important. First of all, I'm not a scholar on it, so I don't know. But when I take that, what you're saying And I apply it to the US of, okay, lead with understanding. Lead with trying to figure out where they're coming from. Lead with recognizing that if you don't and you encamp into this us versus them, it is inevitable that you conflict. And so when I look into the future, I have, whether I like China or think they're out of their minds, I have no interest in going to war with them. Just the loss of life is just too catastrophic to even contemplate. So I started thinking, okay, like, how do we bring these together? And you had a key insight in the book that I thought was really powerful. And you said, look, no matter what you think about China, you have to understand that they believe they're doing what is right. You're not going to convince them to do it the American way any more than they're going to be able to convince us to do it the Chinese way. And I found that insight very compelling because you go into this ideological battle when you think, oh, we can convince them we can win. When you think that you can draw them over to your side, that's one thing. But if you can't, then it becomes a very different game of, okay, how do we negotiate this relationship if I'm not going to be able to convince them? And so in the book, you bring up another idea, which is the idea of dialecticals, two opposing forces coming together. And in the friction is the superior answer. So I know that China looks at themselves that way and they use dialectics. I think that the U.S. given the conflict between the left and the right, has to start doing the same thing of saying, hey, we actually need to value this friction, that it's not. I'm not trying to convince somebody on the other side to think like, I think I'm trying not to even think of myself as having a side, if I'm completely honest. But I understand that there are personality types, they see the world differently. They're never going to persuade each other, but hopefully we can let go of some of that the warfare mentality and bring people back to a table of compromise. Am I understanding that the dialectical nature of those two opposing forces correctly, and do you think that that is a useful way to. Instead of trying to get the other side to agree, to find the strength in that push, pull.
- [78:09]
Ray Dalio
Yes. And that, yes, totally, unequivocally. And in addition to understand the cost of lose lose, and additionally the issue of sovereignty, You know, The invention of countries, which came in the late 17th century, after the Thirty Years War, was one of the Great inventions. They were not countries. There were no borders. Amazing thing, there were no countries, there were borders. The way it worked is most countries were run by families because there were royal families. And there was a constant fighting, like, I want to go take more. Or they would take more. And there was constant fighting. And they had a war, 30 years war, they called it. And at the end of this 30 years war, they were so sick of war that they came up with this idea of countries. So countries that had a border and that you would determine, those inside those countries would determine what went on in those countries back then. They fought whether it should be Catholicism or Protestantism or whether it was the Pope or whether it was. They fought about a lot of things. But when they had that, they said, okay, that's what we're going to do. It is. We're going to do it within borders. So I think that's interesting. So the idea is that by and large, if you have a domain and it's in your border that you have control of that, that's one element. Then there's win, win relationships versus lose, lose relationships. And the things that you were talking about, the dialectic forces, one to recognize the pros and the cons and to try to get into an equilibrium level. I think that all of that is right. None of these things works perfectly. So the question of what is it? Can anything go on within those borders? And it's okay, maybe there are common rules that the system as a whole agrees, can or can't or something. But those kinds of rules I think are important. So as we go down the checklist, you know, kind of live and let live, Win, win is better than lose, lose, understand each other, where they're coming from so that you could do good trades. And don't misunderstand, you know, lose, lose wars are terrible types of things. That doesn't mean there are not things worth fighting for. But if you operate within the parameters of borders, then it's largely your own business. And then we come to ourselves. And the most important thing, whether there's international or domestic issues, is be strong. It's like be healthy. If you're strong and healthy, you don't have to worry domestically and you don't have to worry internationally. And it's just basic things of what's strong and healthy. You earn more than spend, you're good with each other. You know, you educate your population, you're productive. Those are basics. Be that, take responsibility for yourself doing that. The United States should take responsibility for itself doing that. Like Every other country can. And if it does that, it will be strong and it'll be healthy and it'll be fine.
- [82:18]
Podcast Host
Yeah, yeah. Ray, I really want to be in a positive place about where all this is going. I'm such an optimistic person by nature. But there's something about watching that breakdown that you did of the last 500 years. I think I told you this when we were doing the pre call. I couldn't listen to the book first thing in the morning because it was like putting me in this really almost stressed out state of like, man, we're good.
- [82:51]
Ray Dalio
But I have a principle.
- [82:52]
Podcast Host
Please.
- [82:54]
Ray Dalio
If you worry, you don't have to worry. And if you don't worry, you need to worry. Because the thing that I could give you is this worry about realistic things that you can worry about. That's what I want to give the people. That's why I did the video, by the way. The video, you could skip the whole book. The video is an animated video. 10 million people have watched it in no time. It's something that's very digestible and it carries the picture. Because if you worry, then you'll do something to prevent those worries. If you worry about going to World War II, if you worry about those, and if we could get enough people who believe in these things, then we will have a different choice, right? There'll be less likelihood of us fighting with each other and doing each other harm and instead doing more good things that'll raise ourselves and raise our living standards because we have the resources to. To be doing those things. So yeah, the greatest danger for most people is failing to look at the things that could be harmful to them because they don't like to look at them. It's like some people would rather not know that they have a serious disease or some, okay, look at it, deal with it, and then you're most likely to be able to deal with it effectively and minimize problems or take advantage of opportunities. There's a lot of potential here for us to do amazing things. Technologies, the ability to think. I mean, we've seen amazingly wonderful things. The capacity for. You have a pandemic and we come up with vaccines, the capacity to get around the fact that we can't get out of our houses. All of that could all raise living standards if we could all work well together.
- [84:57]
Podcast Host
At the end of the book, you said something that was really interesting along these lines of, I build my portfolios from. I look at the absolute worst case scenario. The thing that just is, I can't let that happen. Under any circumstance. And so I address that. And so if you said, I even have an end of the world portfolio strategy and that you allocate resources to these different buckets to make sure, well, if the world completely collapsed, and I don't know what you deem the end of the world, but that's a pretty bold title. But that you look at those things you said, people assume that when I look at those, that it actually makes me pessimistic. But in fact, the exact opposite is true. It's liberating to know that I have thought through those scenarios. I have taken action. And I will say that's another thing. People may look, but if they don't do anything, like, I really wanted to get you back on the show because when I read your book, I was like, ray, this is. I think I was actually nervous coming into this interview. I'm like, this may be the most consequential interview I've ever done. Because if people take away from this that we're really at a tipping point moment, and that the way that we all act in these coming months and years could determine the world order, whether we maintain stability or whether we go into a period of such tumultuous chaos that the loss of life is just unimaginable. And by looking at that and saying, okay, that's real, and now what do we do about it? It's a real possibility. Twenty years ago, I would never have bought into it. I'd be like, oh, he's an alarmist. But it really feels real to me now. And so I can't encourage people to skip the book because I think the book has a lot of additional information. The video is phenomenal. It's probably the right place to start, but then to read the book and to get that information, to really grow, to understand exactly how these loops repeat will give you an understanding of what we need to do to forestall that. And the things are simple, but they are very difficult to do. So our goal is to be healthy and strong. So spend less than you make. Make sure that you are presenting yourself well on the world stage and getting along well with each other. But that means we have to race back to the middle. And that was like. I had this sense of, like, what I always told people was, fill your heart with love whenever you're going into it. And it feels stupid, feels dumb when I say it, but when I think about somebody that I disagree with or whatever, that it's the dialectic approach of I need to learn from this friction rather than trying to convince them. I need to learn from their friction. I need to have respect for them as a human. So I need to want to come to a place where we can compromise and them not try to, you know, drag me over to their side. Me not try to drag them over to my side. Or again, I try not to have a side. But just like, what works? What are the metrics? Look at the metrics. Is this actually working? If it's not, adjust. If it is, pour gas on it. Right. So, but figuring that out, coming back to the middle and actually taking action on the stuff that you lay out, it's incredible. I think that you've done the world a tremendous service by taking these however many years you're going to do it and giving us all these incredible books and talks and videos that outline all the things you've learned. So one, just thank you. And then two, where can people engage with this, with all the material that you're putting together?
- [88:36]
Ray Dalio
Well, so first, you're welcome. And I want to emphasize that what I did in the book was to describe, like, maybe what we could collectively do, but also what individuals can do if we don't collectively do the right thing. Because either can happen. And that's why, in a sense, quote like what I call the end of the world portfolio is to know that if this, no matter what happened, if there was a civil war or there was anywhere or whatever, that I have my protection in a certain amount and I've taken that off the table. And then once that's off the table, there's relief. There's a lot less worry. And then you could be more aggressive doing the things that you'd ordinarily do with the other part of the portfolio. Even thinking that way creates great relief. It's like having an insurance policy and so on. So. But the, I think the actions that you describe to get informed one way or another, the book is the best because it's most complete and it brings you through it. But the video is. Is really easily digestible. As I say, 10 million people in six weeks. And, you know, it's grown, it's. It's a hot video. Many people see the video and then they go to the book, whatever way that I can pass it along. And yes, it's my pleasure. I'm 72 years old and I'm at a phase of my life where the main thing I want to do is to pass along what I have that's going to help others, particularly beyond me. So let me thank you for being a partner and being able to pass
- [90:34]
Podcast Host
this along to your listeners anytime, Ray, anytime, every time has been an extraordinary gift. So I thank you. Very grateful for what you're doing to help us get back to the middle and. And do things well. Be healthy and strong. I appreciate it. All right, everybody, please go watch the video. It's absolutely incredible. Just type in Ray Dalio, changing World Order. It will pop up on YouTube. It's incredible. It's about 44 minutes. It is unbelievable. The book is even more incredible. So if you liked the video, definitely go get the book. It's ext. Extraordinary. And then also, you're updating things@economic principles.org if I'm not mistaken.
- [91:09]
Ray Dalio
That's right.
- [91:10]
Podcast Host
So check that out as well. It's all extraordinary. Yeah. I cannot recommend Ray highly enough. And speaking of things that I can't recommend highly enough, if you haven't already, be sure to subscribe. And until next time, my friends, be legendary. Take care.
- [91:22]
Ray Dalio
Peace.