Ray Dalio Looks at History

May 21, 2012
J. Webster
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Reading Ray Dalio’s Q&A in Barron’s is like getting a nice snapshot of financial history. Dalio, the hedge fund legend of Bridgewater Associates, likes to look back and get some idea of what lies ahead. He even goes back to 1776, when the 13 colonies declared independence from Great Britain.

But what stuck out in the Barron’s piece was how Dalio looks at deleveraging and economics with let’s say a more long term view. Sure, markets can turn on a dime and change drastically, wherein I’m sure Dalio will then change his view, but I get the feeling that he makes investing decisions not based on a ticking clocks or a crazy countdowns. I’m guessing he doesn’t care too much how stocks swing from day to day. Just look at how he views the whole deleveraging process from the last four years:

“Deleveragings go on for about 15 years. The process of raising debt relative to incomes goes on for 30 or 40 years, typically. There’s a last big surge, which we had in the two years from 2005 to 2007 and from 1927 to 1929, and in Japan from 1988 to 1990, when the pace becomes manic. That’s the classic bubble.

And then it takes about 15 years to adjust.”

If you watch Bloomberg or CNBC or Fox Business, it’s about the ticking clock and you must buy or sell today before it’s too late. To me, it seems like the great investors, and the ones who make piles of money, are buying stocks in a much more disciplined fashion and often with a much longer time frame. They don’t care too much about the daily ups and downs of the stock market, they look out three to six to nine to 24 months away.

Full Q&A at Barrrons.com.

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