Ray Dalio Tells Investors: "Don't Trade Against Pros Like Us, You Will Lose... Own Gold"

Tyler Durden's picture

Before his presentation to the University of Texas, Bridgewater's Ray Dalio gave a far-ranging interview to Bloomberg's Erik Shatzker which we will have more to say about in the coming days, but the overarching theme was what to expect from markets going forward. He said that while there are "asymmetric" risks to the downside, asset prices will correct to a point where risk premiums return and investors come back, and predicted that equities will return about 4% in the long term. The concern he had was whether the slowdown in markets will have negative repercussions for the economy at a time when central bank policy is becoming less effective.

Repeating comments he has given before, Dalio said that the "next big move I believe will have to be toward quantitative easing, rather than a big tightening,” he said in the interview. The recent developments have surprised the Fed, because it is not paying enough attention to the long-term debt cycle, adding that "If you look around the world, our risk is not inflation and our risk is not overheating economies", something all too clear to the nearly 30% of global economies currently blanketed by negative interest rates.

He also had some rather dire comments on China which we wil get back to in a future post, but what caught our attention was the following exchange in which Dalio discussed whether ordinary investors have a chance of making money in the current market when faced with institutional behemoths like Brigewater which as the world's biggest hedge fund manages over $150 billion.

His honesty was refreshing.

SCHATZKER: Broadly speaking, what's going to work? And what is working, perhaps more appropriately, today?


DALIO:  I think there are two ways that the average investor should think of investing.  One is, are you going to create a good strategic asset allocation mix that is a balanced portfolio, that means you will not go to the betting table and bet against active investors like me? Look, I'm scared to be wrong in the markets.  It is not easy to win in the market.  It is more difficult to win in the markets than to compete in the Olympics.


SCHATZKER:  Hang on a second.  Hang on a second. You guys have an extraordinary track record of winning.  Is it harder to compete in the markets today than it been since you founded Bridgewater?


DALIO:  No, I don’t think so.




DALIO:  Not the way we do it.  And the reason I'm saying not the way we do it is we do not take systematic biases.  I think for a lot of people, they are systematically long everything. And so when the world gets bad, it's bad for them. In 2008, it was great for us.  I don't know, we had nearly 10 percent return in 2008. So we have the opportunity to go either way.  We just my be wrong.


DALIO:  So I'm so scared about being wrong that it has help reduce my chances of being wrong because I'm so scared.  I won't take bets that I don’t feel good about.  And we diversify our portfolio.  And that is how we got the track record.  So you asked me about investors.  So I'm trying to go back what investors should do.


SCHATZKER:  And what you think is appropriate for your investors.


DALIO:  I want to just convey to investors, I think in the average investor, most everybody, do not compete against pros like ourselves or other people; do not making tactical asset allocation bets or moving around in the markets, because you will probably lose.

It is worth noting that Dalio does not suggest that investors will lose because he thinks markets are rigged, something we and Eric Hunsader have been noting for years, instead Dalio's point is that ultimately directional, "tactical" bets will rarely work.

If you're talking about tactical bets, in other words, I could come on the show and I can say, I think this is good.  But then what happens is if I come a month later and I then change my mind because something has happened, then I will mislead people.  So the tactical bets, I don't think, are going to be helpful.

Granted, Dalio is pitching his "All Weather" portfolio, and yet this statement is perhaps one of the more honest admissions of how the market "works" or rather doesn't, because unlike the  empty suits who come on TV to pitch any given stock who ultimately have no idea what will happen and are merely flipping a coin (and who are never heard from again when the trade goes against them) Dalio is warning to give up on hopes for quick "long" (or short) bets leading to major winnings, and instead stick to broader market returns in the form of a diverisifed portfolio. Then again, since for most "ordinary" investors the stock market is merely an chance to strike it rich, fast, we doubt his advice will be heeded.

But the surprising moment of biggest honesty came when Dalio laid out what should comprise a properly diversified portfolio:

I would say that we are in an environment where it is very important to have a well-diversified portfolio, and that'll include assets gold.  In other words, what could I tell investors, try to achieve balance in various ways.  That's a whole subject about how to do it.


And also I think that gold at 5 percent of your portfolio, 5 percent or 10 percent of your portfolio, under the circumstances, would be also a prudent thing to doPrudence is the important thing to do.  The reason I'm also referring to that is we have a situation where a debt is money. In other words, we have a fiat monetary system, too.  And so we are having problems as these central banks operate.  And so  think of it as another form of cash and when cash now has zero or 0 percent interest rates or less, think of it as one of those possibilities in terms of how do you create diversification.

Debt is indeed money, and so is gold, and unlike debt whose yield increasingly more central banks are now artificially pushing into negative territory and will soon do everything in their power to eliminate physical money so that electronic money is subject to the same "financial repression" as every other asset, gold has and always will be an inert metal with intrinsic value, with zero counterparty risk, zero "central banker policy risk", and whose only real risk is being confiscated through another presidential executive order.

Yes, Bridgewater may have gone through a rough patch recently as we exclusively revealed a few weeks ago, but we applaud Dalio for the intellectual honesty and telling the truth.

Full interview below

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iggenFlot's picture
iggenFlot (not verified) Mar 3, 2016 5:36 PM

Anyone want to trade some gold for a 1974 AMC Hornet?

Lost in translation's picture

Do you have a '65 Mustang 2 + 2?  Or a '57 Chevy 2-door?

If so, let's talk.

kliguy38's picture

I'm perfectly happy with my trades........AND my physical

jcaz's picture

Walk-in biz slow, Ray?  Try cold-calling next.....

Escrava Isaura's picture



Dalio: Look, I'm scared to be wrong in the marketsIt is not easy to win in the market.  It is more difficult to win in the markets than to compete in the Olympics.


Dalio, first, your analogy that gambling is harder than compete is nonsense because sports involve physical skills.

Second, the stock market can’t go down, period. I said it before and I’ll say it again: It’s 1930’s. Stock markets CAN NOT go down because it would trigger a Great Depression. We can’t have that because we will never recover. Our imperialistic system is already disintegrating as is.

The next step down is war; then, survival. Gold will be irrelevant.

Humanity went through the Renascence and the Age of Enlightenment.

The coming cycle will be the Age of Barbarism.


Stainless Steel Rat's picture
Stainless Steel Rat (not verified) Escrava Isaura Mar 3, 2016 6:27 PM

Do the exact opposite of everything financial media tells you, that's how you win.  "If they're pumpin', they'll soon be dumpin'."

Pickleton's picture

Love the moniker.  Loved the books.

Pladizow's picture

Is Ray eating his own cooking and purhasing $15+Billion of gold?

Antifaschistische's picture

here's what I think I know I know.  :)

one day, I will either wish I had not wasted a cent on gold, or I will wish I had 100% of my savings in gold/silver etc.

There will be no "oh, I should have put 5% in gold"....it will either be 0% or 100%.

Haraklus's picture

5% is a little low, but 10%?  It's pretty easy to see a scenario where gold is up 200-300%, stocks have a brief jaunt down 50%, and you can double your stock holdings before the Fed rushes in with good headlines and QE, renormalizing all of those old relationships.  Straightforward scenario where having it as a diversifier is useful.

Besides, since you can't know the future, covering your ass in either extreme scenario seems like a good idea.  5% gold allocation would likely make you a 1%er in the extreme revaluation scenario,  but wouldn't cost you much in the alternative scenario.

29.5's picture

Or how about this. Devote 100% towards PMs. Buy silver when AU/AG ratio is high. Convert to Gold when ratio is low. Rinse repeat ad infinitum.

crossroaddemon's picture

That's the dumbest damn thing I ever heard. Know what? Fiat ain't going nowhere. 

No Quarter's picture

+1  Just had a nice partial trade on some work for 74oz Ag ASE's and Maples today at spot ... Wish more of my clients wanted to pay in this way. Mix of currency and phys works well, everyone is happy, everyone got what they wanted. How does it get any better? 

SoilMyselfRotten's picture

One barbarous relic for another, eh?

Life of Illusion's picture



Beautiful just Beautiful Ray….


Now get gov out and let free markets rule

Wannabe_Oracle's picture

'free markets' -- that's hysterical. ./

new game's picture

fuck you ray, u pompus ass fuck...

HRH of Aquitaine's picture
HRH of Aquitaine (not verified) Mar 3, 2016 5:36 PM

Great. So just in case the economy and your portfolio and the world go tits up at least have some gold so you don't end up penniless. Brilliant. Just fucking brilliant.

Kaiser Sousa's picture

"Debt is indeed money."

sorry guys...as i have said over and over again -

"Debt is not money...and Money Can never be debt...There are only 2 forms of real money. Physical Gold & Silver..."


devo's picture

What is this populist bullshit? There have been many forms of real money over the course of humanity. Salt, sea shells, spices etc. Money is what people choose to transact in. The problem with fiat is we didn't choose it, but rather it was forced upon us.

Kaiser Sousa's picture

"There have been many forms of real money over the course of humanity."

how many have been Money for 5,000 fucking years and running?

fiat aint forced on me... if u then thats ur fucking problem...

i dont save in their worthless script and never again will...

u r myopic, misguided and ill informed.

argue with history not me...i aint in the fucking mood for your "bullshit..."

and remain the MoneyChangers slave while ur at it...

exi1ed0ne's picture

Goats have that distinction as well, if not longer.  "Money" is whatever items of percieved value two parties have decided to exchange.  I love gold too man, but come the fuck on.  There are many ways to transport value through time, gold is just one of the best.

devo's picture

He sounds like a paranoid schizo living in a bunker. Don't bother with logic.

Kaiser Sousa's picture

yeah and dont bother with monetary history either...

u sound like a mother fucker that doesnt know of what the fuck he speaks...

keep talking asshole while we keep stackin...



crossroaddemon's picture

Grow up. Your pet rocks will never again be acceptaed as a medium of exchange. The only possible exception would be if the current power structures fall... and if you think we're going to be that lucky excuse me while I laugh in your face.

Kaiser Sousa's picture

its amazing how u can laugh in someones face via the web...

fucking moron.

gcjohns1971's picture

I would like to suggest you've conflated "currency" for "money".

Currency need not retain value, because its sole function is trade.

Under Gresham's Law, money disappears because hidden, while rapidly depreciating currency circulates rapidly...because everyone would rather trade it for something of concrete value.

Accordingly, the statement that monetary metals are not traded for goods but predominantly held as institutional assets actually SUPPORTS the proposition that they are money...and that debt based fiat is simple depeciating currency.

This is something that appears largely forgotten by academic economists when dicussing the prospect of NIRP.

It is not lack of spending that troubles central banks, but the lack of aggregate credit expansion that keeps debt (including that from which springs currency) from collapsing.

Kaiser Sousa's picture

the fact that these idiots speaking on monetary affairs do not know the difference between currency and a STORE OF VALUE which any commodity called Money must maintain is eveidence enough that they'd be better off shutting their ignorant mouths...


devo's picture

You watch Mike Maloney on youtube and spew his nonsense, and then call yourself an authority. Get more sunlight, bunker dweller.

Kaiser Sousa's picture

oooh..."bunker dweller"...

boy ur really pissing me off with ur name calling.

please stop hurting my feelings with your erudite rebuttals on sound money.


exi1ed0ne's picture

Vocabulary is at the heart of everything. If two people don't share the same definition of a word they will never successfully communicate. Inflation is probably the worst misused word, since without an object it means whatever the speaker and the audience want to hear. Monetary vs. price inflation for example.

Unfortunately political discourse perverts standard vocabulary to deliberately twist ideas, and I've stopped trying to vocalize things like money, inflation or currency, and instead talk about ideas like transmitting value through time. I'd rather argue ideas than semantics or history personally, because that just turns most people off or devolves into an ideological pissing match on who is more pure.

tl;dr Currency, money and a host of other economic words no longer mean what they once did and are tainted - nothing words

exi1ed0ne's picture

"Money" is a nothing word nowadays.  While I disdain debt and think as an asset class its risks are to big for my limited risk appetite, people are free to trade with whatever they consider has value.  Funny green pieces of paper, Wu-tang Clan albums, debt tranches, government bonds, seashells and other ultimately worthless things.  Other than being the one IN (unproductive) debt, the only problem trading debt always has been that the music eventually stops and another greater fool is left standing without a chair.  A chair gets removed and the music starts again, while everyone believes there will be a chair for them on this go around like the last time.

devo's picture

Pretty much. Except I'm not sure it's only greater fools standing around. There are some smart people, fully informed on the risk in purchasing debt, who will get their faces ripped off holding bonds. Why? Because they think they can make a little money in the short term + get out in time. That's always the error... because nobody truly wants debt.

Antifaschistische's picture

oh yah, and 'don't try to compete against us'..

'give all your money to the 'professionals' so they can scalp your savings and do all your 'investing' for you'

pillory-hillary's picture

is he talking for all algos?

I need more asshats's picture

Ray works for .fed? I did not know.

gmak's picture

You  mean: DOn't trade against us: We're the insiders in a rigged game.

Flying Wombat's picture

Governments and Central Banks are Losing Control; James Turk Discusses Gold and Silver on Shadow of Truth


Kohiba's picture

Hey Ray Dalio.... GO FUCK YOURSELF!

luna_man's picture



"Don't Trade Against Pros Like Us, You Will Lose"...Right, So Far!


I'm Still Shorting CRIMINALS,...You included!  What you got to say about that?


mr. too big for his pants 

gmak's picture

"And we diversify our portfolio.  And that is how we got the track record.  "


Diversification is for pussies and pension fund managers.  Clearly, you're not the big swinging dick you think you are Ray.  If you werent an insider with the FED and the Squid on speed dial, you'd be just another Cramer.


Case in point? If your were TRULY diversified in 2008, you would have lost your shirt. You put on insider bets with insider information in order to generate a return. You lying schmuck.

rhadamanthus's picture

Monero is up 35% today. . . anonymous digital gold. 

shovelhead's picture

Different atomic number than the real stuff?

Yen Cross's picture

  Fuck Dalio and the high horse he rode in on.

4thHorseman's picture
4thHorseman (not verified) Yen Cross Mar 3, 2016 6:15 PM

Try and fuck my horse and you'll get kicked in the nads.

Dazman's picture

I respect Ray Dalio because he is intelligent.

I despise him because he has said numerous times that the FED should continue inflating the money supply, presumably such that what he just said comes true: assets outperform cash. Which OF COURSE they will do with inflation of the money supply (leading to asset price inflation).

If that was not the case, there would be no need for asset managers (as everyone would instead hoard cash), and Ray Dalio would therefore be out of a job.

Ergo, he is acting out of self-interest and cannot be trusted.

BeanusCountus's picture

Followed this guy since he first predicted that Fed would have to start buying treasuries three months before they announced it. He was the only one, and was right. Respect his thinking. Has never wavered from gold belonging in one's portfolio at 5-10%. Ordinary guy cant invest with him though. You need at least 100-200M for a call back.

4thHorseman's picture
4thHorseman (not verified) Mar 3, 2016 6:12 PM


You'll need some to cross the river Styx when SHTF happens....