Economic Paradigm Shifts

[brainz01]

Ray Dalio posted this today and I thought it was a good read:

https://www.linkedin.com/pulse/paradigm-shifts-ray-dalio/?published=t

He looks at the US macro economic environments ("paradigms") of the past 10 decades and shares some perspectives regarding where the US is at and what's likely to do well going forward. It's well-written not too long or technical.

Spoiler: He seems to suggest an equity market correction and outperformance of commodities (gold/silver) are likely, though timing is in question

He gives no specific investing advice, although his "All Weather" ETF portfolio would seem to have one covered without taking too much risk: Eg: Ray Dalio All Weather Portfolio: ETF allocation and returns

No relation or advice given. Just thought is was a good read/summary.

[Sooner or later]

He is a damn smart dude and has made a mountain of money.

His All Weather portfolio is very conservative wirh only 30% stocks (Vanguard Total Market) yet still showed an 8% return.

Can't really disagree with his call on higher precious metal prices moving forward. He makes a good case.

Good read, thanks for sharing.

[tabs]

Originally Posted by brainz01

Ray Dalio posted this today and I thought it was a good read:

https://www.linkedin.com/pulse/paradigm-shifts-ray-dalio/?published=t

He looks at the US macro economic environments ("paradigms") of the past 10 decades and shares some perspectives regarding where the US is at and what's likely to do well going forward. It's well-written not too long or technical.

Spoiler: He seems to suggest an equity market correction and outperformance of commodities (gold/silver) are likely, though timing is in question

He gives no specific investing advice, although his "All Weather" ETF portfolio would seem to have one covered without taking too much risk: Eg: Ray Dalio All Weather Portfolio: ETF allocation and returns

No relation or advice given. Just thought is was a good read/summary.

I can not bring up the link...so that i can read it..

[Seahawk]

Excellent link.

I am working my MIL portfolio with my wife. The MIL married well the 2nd time around and my wife is her guardian.

Thanks!

[mgatepi]

Down market with precious metals up......really this is a NEW prediction for you guys?

[Sooner or later]

Originally Posted by mgatepi

Down market with precious metals up......really this is a NEW prediction for you guys?

No. It was an interesting take on his reasoning.

[brainz01]

Originally Posted by Sooner or later

No. It was an interesting take on his reasoning.

I liked his thought process as well. He makes a simple case for why various stakeholders (equities, fixed income, and the Fed) are behaving as they are and how that will likely [eventually] play out.

And I’ve also appreciated that his All Weather portfolio is unconventional, yet has performed well for many decades and for logical reasons: holding the right mix of uncorrelated assets should enable a portfolio to be more efficient/less subject to volatility.


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[brainz01]

Originally Posted by tabs

I can not bring up the link...so that i can read it..

You can also Google: Dalio Paradigm Shift. He got quoted a bunch today. Zero Hedge appears to have copied his article in full, but with added emphasis, so that could be an alternate source.


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[NoRush993/951]

Yes his article makes sense but it won't play out like that this time. Study Latin America for your guide to what happens to equities during extended times of debasement.

[ian c2]

I cannot get enough sleep , so cannot concentrate on this “high-end” stuff .

[brainz01]

Originally Posted by NoRush993/951

Yes his article makes sense but it won't play out like that this time. Study Latin America for your guide to what happens to equities during extended times of debasement.

Are you suggesting the US would suffer an "Argentine-like experience"?

A core problem for Latin America, Weimar, and other nasty historical debt crises is that those countries were indebted in a currency not under the control of the borrowing/defaulting country. I.e., they owed money they could not print. Hence their debt spiral and devaluation was uncontrolled, protracted and extremely painful.

IMO, Lat Am is not a relevant comparison to the US situation. It could however provide insights for the Europeans (eg: Greece).

BTW, I posted a link to this (free) book previously: https://www.principles.com/big-debt-crises/ It's also by Dalio and is an amazing distillation of the past hundred years of debt crises. It's also incredibly dry, but the first several (summary) chapters are truly informative. The other chapters give all the details of the big debt crises. It's interesting history -- stuff that's sure to repeat in a variety of ways. I'll go back and re-read what the equities markets did in Lat Am -- I honestly don't recall. I suspect equities probably did ok after the initial crushing of the devaluation (but I doubt they look good in real terms as measured pre-crisis). I think Dalio's recent article is suggesting that positioning to avoid being over-exposed to a likely future repricing of debt and equities is warranted. What happens after that repricing would be a new economic paradigm and subject to repositioning...

Disclaimer: I'm an idiot and have no affiliation with any of the above. This is not investment advice; merely economic discussion/speculation.

[RWebb]

Paradigm shifts are best observed in the rear window of history

[NoRush993/951]

Originally Posted by brainz01

Are you suggesting the US would suffer an "Argentine-like experience"?

A core problem for Latin America, Weimar, and other nasty historical debt crises is that those countries were indebted in a currency not under the control of the borrowing/defaulting country. I.e., they owed money they could not print. Hence their debt spiral and devaluation was uncontrolled, protracted and extremely painful.

IMO, Lat Am is not a relevant comparison to the US situation. It could however provide insights for the Europeans (eg: Greece).

BTW, I posted a link to this (free) book previously: https://www.principles.com/big-debt-crises/ It's also by Dalio and is an amazing distillation of the past hundred years of debt crises. It's also incredibly dry, but the first several (summary) chapters are truly informative. The other chapters give all the details of the big debt crises. It's interesting history -- stuff that's sure to repeat in a variety of ways. I'll go back and re-read what the equities markets did in Lat Am -- I honestly don't recall. I suspect equities probably did ok after the initial crushing of the devaluation (but I doubt they look good in real terms as measured pre-crisis). I think Dalio's recent article is suggesting that positioning to avoid being over-exposed to a likely future repricing of debt and equities is warranted. What happens after that repricing would be a new economic paradigm and subject to repositioning...

Disclaimer: I'm an idiot and have no affiliation with any of the above. This is not investment advice; merely economic discussion/speculation.

There is no easy outline on this black hole topic.
When debt goes unpaid, it extinguishes itself and disappears back to money heaven where it came from. Depending on timelines, seek residual collateral; real assets. There is still plenty of time to go. No worry in the near term.

[brainz01]

Agree with both comments above.

[Clint Lando]

good secrets not free
better secret
more $$$$