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Ray Dalio on U.S economy


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If anyone gets "macro", it is Ray and his team (acknowledged by Paul Volcker as being better than the Fed before the crisis) - here he is on the U.S economy.





And how does the economic picture in the U.S. look to you now?

The U.S. economy is in the middle of a short-term debt cycle. It’s in one of those periods when we would think of them as fairly boring years. If I said to you, “What were 2004 to 2006 like?” You don’t remember. They don’t stick out. They didn’t have tight monetary policies. They didn’t have loose monetary policies. Now, short-term interest-rate return is about 1 percent. The expected return on bonds is about 3 percent. Equities at about 4 percent. It’s in the middle of a business cycle within a very long-term debt cycle. The high level of the debt cycle means it has a sensitivity to interest rates. A tightening that’s too fast would cause the economy to go into a difficult situation. That’s where the U.S. is.

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Ray is brilliant but has been wrong before. He knows this. You don't see him making large concentrated bets. His firm makes tons of small bets that in aggregate work out to be great returns. I think he is one of the people who understands the economy best, but he's also had his fair share of mistaken predictions.


Seems like there is a macro based fanaticism on this board. I get caught up in it from time to time too and am recently just coming off of a 2 year stint where I was using macro predictions to manage my portfolio exposure (much to my detriment). I think for us value investors, we're better off ignoring macro concerns and focusing on index valuation levels and cheap companies. Those are easier to predict, time, and understand.

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