Ray Dalio, the founder and chairman of Bridgewater Associates is set to speak at the NY Times Dealbook Conference today. Dalio is known for his unique investing style and an even more unusual way of running the hedge fund. Bridgewater’s All Weather Fund was down 7% for the year through the end of August. The flagship manages $70 billion of the $150 billion the firm holds in assets under management.
Ray Dalio released his popular “Daily Observations” note yesterday; the letter shares the billionaire’s musings on the perils faced by the global economy. In his latest letter, Dalio said that the Fed’s QE policy is currently running out of gas and it does not seem like it is effective anymore. Dalio has been in favor of Fed’s money printing policy.
Below are notes from Ray Dalio’s interview with Andrew Ross Sorkin at the Dealbook Conference.
On being questioned about bitcoins, Dalio said he needs to think about crypto-currency before investing in it, however he said he sees merit in the idea. Regarding the Fed’s continuing money printing policy and if it’s working effectively, Dalio said that it is working with consistently decreasing results.
Dalio says he is worried about future failures with this policy. The Federal Reserve will not be able to raise interest rates for a number of years.
Dalio said going forward most investors are not going to be able to produce alpha.
On being asked a question about meditation, and how it is a factor in his success. Dalio said it eliminates stress and cancels out emotion, he said it is the main reason of his success more than any other thing.
A question from the audience: if he would start Bridgewater again today if he had the chance, Dalio said that yes, he will do it all over again.
On All Weather Fund’s concentrated bond portfolio, Dalio said that he has to increase the holdings in bonds to balance the portfolio.
On France being the location of the next crisis, he said debt is rising faster than income and interest rates are going down in France, as a result debt service payments will rise. Thus debt service payments will hurt the economy and it will become increasingly difficult to roll over the debt, in the future credit spreads will widen. He said all these factors can contribute to building a crisis in France. He said the increasing debt in France is making ECB more lenient towards it, which is not helping matters.
Andrew Ross Sorkin thanks Dalio for his economic lessons and his advice on meditation.