Ray Dalio: I Predicted The 2008 Crash, I Know What Comes Next
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What is the main topic discussed in this episode?
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Are you seeing signs that we're in an AI bubble and therefore a economic collapse?
They're classic signs and that has implications for the economy and it's bad for the society and everybody loses money. But we also have some other things that are going on that happen around the same time. And I can go through these if you want. Please. So what I'm saying is clear because I'm a global macro investor.
And you were one of the few managers to foresee the great financial crisis. Yes.
And so right now we're very excited about AI and we should be very excited because it's going to be revolutionary changes. But it's creeping into almost everything. The way I look at it is I look at the human body and I see like it's replacing the body and so on. And then it replaces some aspects of the mind, levels of thinking and reasoning. But at the same time, we have another problem that's existing, geopolitics. I mean, China is a larger trading partner with most countries than the United States is. And that's a changing of the world order. That is one of the ingredients, right? And then also, you've got large wealth gaps. The government don't have enough money. And so when you have the downturn, then you have people at each other's throats.
So a lot of people, they're thinking about how to sort of secure their future. How do they all prepare?
Let me say that history has shown that it's not the most intelligent people that are the most successful. But the key thing to keep in mind is intelligence.
Guys, I've got a favour to ask before this episode begins. The algorithm, if you follow a show, will deliver you the best episodes from that show very prominently in your feed. So when we have our best episodes on this show, the most shared episodes, the most rated episodes, I would love you to know. And the simple way for you to know that is to hit that follow button. But also, it's the simple, easy, free thing that you can do to help us make this show better. And I would be hugely grateful if you could take a minute on the app you're listening to this on right now and hit that follow button. Thank you so, so, so much. Ray, for people that might not know who you are, you founded Bridgewater Associates in a two-bedroom apartment in 1975, and you grew it to the world's largest hedge fund.
What was the total amount of cumulative net gains that you delivered for those investors over that period?
I think it was something like 53 billion. We produced about a 12% return with never any significant losses, and it was uncorrelated with other investments.
And you were one of the few managers to foresee the great financial crisis, which allowed Bridgewater to post positive returns of 9.5% in 2008, while the S&P 500 plunged by almost 40%.
Are we in an AI investment bubble and what historical signs show it?
Yeah. Let me start with the thing that I'm most curious about, because I sat here with an investor called Jeremy Grantham, who you might know. He told me that we're staring in the face of an AI bubble and therefore a economic collapse potentially.
If you look at the data, it would be compatible with history for the peak to be very soon. Everything is in line. This is, I think, the biggest investment bubble in American history. What's your perspective on that?
He's right. I don't want to jump to conclusions as much as I want to explain reasonings that lead up to conclusions. I'm at a stage in my life that I want to help people understand cause-effect relationships.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:03–3:33
2
Are we in an AI investment bubble and what historical signs show it?
3:33–15:15
3
What causes economic bubbles to burst and how did Ray Dalio explain the mechanics?
15:15–1:15:47
4
How should individuals and entrepreneurs prepare financially for a potential crash?
1:15:47–1:27:46
5
Why is holding cash risky over time and what diversification does Ray Dalio recommend?
1:27:46–1:31:32
Speakers
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