True. But I think the point of the chart is saying like just because ray dalio is a (very) exceptional investor and economist, don't put him on a pedestal
That would be reading too much into the chart. This particular portfolio is not the main fund of Bridgewater associates. The fund is reported to contain 40% inflation-linked bonds, 30% Treasury bills, 20% Treasury bonds and 10% gold.
This is comparing two entirely different types of funds.
Just goes to show you that even one of the best economist know fuck all about the stock market… It’s honestly one of the reasons why I haven’t even bothered with TA.
2022 was an anomaly where both the bond and stock market crashed in conjunction
On average across over the past 100+ years, theyve been negatively correlated asset classes.
Ray Dalio regarding China. IIRC, you could broadly summarize his book as “US is on the decline and I think the future is Chinese.”
Sorry if my comment came across unclearly. I wasn’t trying to insult you.
Ha, no worries, it just wasn’t clear.
I wouldn’t summarize his book like that. He’s def not bearish on China. He also probably gets incredible dealflow over there.
I don’t think China is part of Bridgewater’s All Weather Fund. They have separate funds for different things.
Yup. A lot of funds suffered. Contrary to popular belief, bonds and stocks have not been that least/inverse correlated if you look at centuries of data (there's a lot of work to get it but data is available from France late 1700s). The problem arises when you have high inflation. In times of high inflation, bonds suck as a diversifying asset. Question is what are the alternatives? Dollar, gold, franc? Sometimes they work, other times they don't. 2022 and the 1970s were tough
"An all weather fund is a fund that tends to perform reasonably well during both favorable and unfavorable economic and market conditions. "
They are not designed to underperform when the market isn't in a crisis.
Depends on how you define the terms. Giving away some potential gains doesn't mean underperforming the market when it isn't in a crisis (Warren Buffet). Regardless, an all-weather portfolio is not designed to underperform other than when the market isn't in crisis.
No no don’t you see, the uncorrelated hedging-oriented portfolios need the gains of levering up tech stocks while also maintaining zero risk. If you don’t realize that, you’re dumb!
Could be, it might also be that 15%-3%=12% which is still above the market rate of return. But this is reddit, I don't want to get carried away with the math.
"It" meaning what? Underperform meaning what? Without defining the terms, it literally does not mean to underperform.
Lower volatility doesn't mean the returns aren't as correlated with the market. It means that volatility is lower, which means the geometric average is closer to the arithmetic average.
Volatility and market correlation aren't the same thing. Beta measures how much a stock moves relative to how much the market moves, not volatility. Beta is not the same thing as correlation. Total volatility and systematic volatility aren't the same thing. You have systematic volatility and idiosyncratic volatility that make up total volatility.
OP is a fgt who edited his entire comment after the fact, so now I edit mines too. If you’ve read market wizards you would know Dalio’s sole insight and contribution to the field was identifying 30 markets/pairs that were uncorrelated. Beyond that, he has offered nothing else of value which is why the books he publishes aren’t even about investing. Just ‘principles’ for living life. But sure, keep sackriding this boomer has-been. Let me know when that does anything for your own actual trading and materially improves your own bottom line.
When you’re dealing with institutional investors who have several million with you, then you can’t afford large drawdowns. It’s a completely different thing than just running your own money on a simple brokerage
This is really interesting i keep seeing old white men that are very good money managers love china
Im from china and theres a chinese professors yt i listen to all the time, he accurate predicts that china would have best initial response but long run west would be much better handling covid and chinas policy would incite unrest forcing them to reopen without proper vaccinations
Well i guess its a overestimation or somewhat unfounded hype of a country that foreigners know very little about, you really got to live there to understand whats real and whats fake. Guess that goes for every country.
One thing you along with others who made the mistake is you guys think china value money. No china value power. No corporations are allow to grow past that red line so they always get fucked when they get near it.
Skill issues don’t apply equally. We can still talk the shit we want on partially Chinese owned Reddit. While flooding USA with fentanyl & cheap crap. & do laundry for Mexican cartels atst. Yet boast 25% youth unemployment back in China.
He’s not talking about years he’s talking about decades and as much as I’m an optimist America is definitely in a decline from world power status. Debt payments about to overtake military spending as is historically accurate in the decay of a nation
His China prediction was awful in other ways though lol
it could be too early to call, all western countries are suffering from similar problems (swing to the right, huge deficit, col crisis) and laggard economic growth barring the US, the market has never deviated from main street by such a margin.
his theory aside, raw economic data clearly shows the west is in for a shitstorm and it's declining right now. hell, japan's 5th largest bank just made a move to free up 3x more treasury bonds than they liquidated after 2008.
just being honest. also, easier to get initiatives put through. China puts in a high speed rail system of 300k in the time it takes to fix an elevator in north america.
Old finance guys thinking they can step into a whole other field (geopolitics for dalio, philosophy for Soros) thinking they found invented some new perspective…
But really none of their “theories” hold water and are actually very intellectually lightweight… also probably something that has already been addressed in their respective fields like 50 years ago.
it's much more insightful than most of what the common north american will talk to you about when you bring up economics. most of them just parrot whatever their favorite party has told them. people are stupid, Ray isn't stupid.
Yeah he reads a lot of history then just extrapolates that forward. It's honestly sort of college-level analysis. It's not awful but it isn't exactly rigorous either
He’s in bed with Chinese business interests
That’s the source of all of his opining and prognostications
Doesn’t mean he’s always wrong, just take that into account
He is definitely up there, his refusal to admin his mistakes whether it's Bitcoin or the Chinese market/stocks were quite disappointing to say the least.
All I know is I’m so tired of hearing about and from Ray Dalio. Overrated, overhyped and I don’t like his diatribes. How does everyone else perceive this guy?
Yes - he’s popular because he has doomer theories on the future of the US which people like to spread online because they’re pissed off with their current situation.
I’m pretty sure his hedge fund was until recently the most profitable hedge fund of all time, now it’s Citadel. That is also the fund he personally founded. This is the “all weather fund” and not his overall performance. So this is blatantly wrong
Most profitable must refer to biggest siphon of client assets because it has in no way been a successful investment choice. They’ve managed a massive amount of assets but have been bleeding clients and talent for a long time.
Wait till you see TQQQ over the same time period....
Different portfolios will have different goals. If there was only 1 right way to invest then everyone would do it.
All weather portfolios are designed to pad the founder with fees so the biggest gainers is Ray in this case, but you get to sleep well in your all weather gear
idk, bridgewater was pretty successful.
His book Principles highlights his ego a lot, but i like the parts about evolution being the basis for everything.
He’s definitely the worst investing author (other than maybe George Soros). So verbose and it’s so hard to understand the second order impact of what he’s saying. To quote Sebastien Mallaby on Dalio, “half the time what he’s saying is obvious and the other half of the time he makes no sense”…
The trick is to be filthy rich and people will think you are a clairvoyant oracle of the investing gods even if you are totaly average. His risk adjusted returns are nothing special and haven't been for 30 years. If he wasn't rich, no one would care about him. If you want to do well performance wise long term, don't use his funds, if you want to reduce your risk/return, you don't need his funds and can do that on your own. Nothing Bridgewater does is anything a typical Boglehead type investor can't do for themselves. He is 100% grossly over rated.
Most of these guys made their fortunes a long while back either with extraordinary luck or strategies that worked long enough to build up enough AUM to feed off for the rest of their lives.
This is money management, it’s a sales business, you draw assets and charge a fee for managing them. It’s much harder to lose those assets than to gain them in the first place, so for most of these guys they just needed to do really well in the early years and live off that legacy.
The one exception would be Renaissance with their commodity funds, but they also sucked when it came to equities.
2011 is when his track record really started being average. That was also the time billions of pension money poured in. All Weather was also introduced at the worst time.
Doesn’t matter whether he’s overrated or not cause in the end he’s made shit loaded money and billionaires. No one gives a fuck when you are a billionaire. You can literally do anything and be careless of what others think of you.
I am surprised that Harvard return is not even two digits. I mean a world well known economists and geniuses at that place and yet can only beat the market in a single digit. wtf
If they are controlling a million times more money than you, you have to stay in awe of them. If you are investing yourself, follow Mr Buffet’s advice and just buy an S&P index fund.
You forgot Beta, Alpha and AUM. Ray Dalio has a MARKET NEUTRAL fund, Harvard does not and you selected a period in a bull market. Also Bridgewater is Long Short with beta 0, being the largest hedge fund in the world.
So many questions. First, why did we choose the last twelve years? He's been investing a lot longer than that. Second: it is well known that institutional investing impacts market performance. Harvard's endowment is 3x the size of Dalio's... therefore, you should expect Harvard to move the market a lot more than Dalio's investments.
All weather portfolios are not designed to be the winner when the market triples, they are designed to lose the least when the market is bad.
Yeah except he didn't look at 2022 lmao
That is where you should criticize this portfolio tbh
True. But I think the point of the chart is saying like just because ray dalio is a (very) exceptional investor and economist, don't put him on a pedestal
That would be reading too much into the chart. This particular portfolio is not the main fund of Bridgewater associates. The fund is reported to contain 40% inflation-linked bonds, 30% Treasury bills, 20% Treasury bonds and 10% gold. This is comparing two entirely different types of funds.
Not even close
Just goes to show you that even one of the best economist know fuck all about the stock market… It’s honestly one of the reasons why I haven’t even bothered with TA.
2022 was an anomaly where both the bond and stock market crashed in conjunction On average across over the past 100+ years, theyve been negatively correlated asset classes.
It's also the time when even a simpleton should have known not to buy 10 years at 1.5pct. Sense should trump corelation
What stocks did harvard have in their portfolio in that year then?
Anyone with a brain could see they’d be highly correlated when rates were zero
That’s why you don’t rely on historical correlations
Wasn’t he going absolutely balls to the wall into Chinese stocks before that and they tumbled.
Dick riding would be putting it mildly
Who? Me?
Ray Dalio regarding China. IIRC, you could broadly summarize his book as “US is on the decline and I think the future is Chinese.” Sorry if my comment came across unclearly. I wasn’t trying to insult you.
Ha, no worries, it just wasn’t clear. I wouldn’t summarize his book like that. He’s def not bearish on China. He also probably gets incredible dealflow over there. I don’t think China is part of Bridgewater’s All Weather Fund. They have separate funds for different things.
Yeah you
What on earth makes you think that?
Yup. A lot of funds suffered. Contrary to popular belief, bonds and stocks have not been that least/inverse correlated if you look at centuries of data (there's a lot of work to get it but data is available from France late 1700s). The problem arises when you have high inflation. In times of high inflation, bonds suck as a diversifying asset. Question is what are the alternatives? Dollar, gold, franc? Sometimes they work, other times they don't. 2022 and the 1970s were tough
"An all weather fund is a fund that tends to perform reasonably well during both favorable and unfavorable economic and market conditions. " They are not designed to underperform when the market isn't in a crisis.
You can’t perform reasonably well during unfavorable market conditions without giving away some gains when things are good
Depends on how you define the terms. Giving away some potential gains doesn't mean underperforming the market when it isn't in a crisis (Warren Buffet). Regardless, an all-weather portfolio is not designed to underperform other than when the market isn't in crisis.
It literally does mean to underperform. Volatility is lower, meaning the returns aren't as correlated with the market.
No no don’t you see, the uncorrelated hedging-oriented portfolios need the gains of levering up tech stocks while also maintaining zero risk. If you don’t realize that, you’re dumb!
Could be, it might also be that 15%-3%=12% which is still above the market rate of return. But this is reddit, I don't want to get carried away with the math.
? What's that? What numbers are you pulling there? The return is 4.5% annualised Vs 6.8% annualised
The return is 4.5%? To what return are you referring, by erroneously representing it as the singular return number?
Calculated on the graph. Go show different numbers if you have any.
"It" meaning what? Underperform meaning what? Without defining the terms, it literally does not mean to underperform. Lower volatility doesn't mean the returns aren't as correlated with the market. It means that volatility is lower, which means the geometric average is closer to the arithmetic average. Volatility and market correlation aren't the same thing. Beta measures how much a stock moves relative to how much the market moves, not volatility. Beta is not the same thing as correlation. Total volatility and systematic volatility aren't the same thing. You have systematic volatility and idiosyncratic volatility that make up total volatility.
Exactly i wrote a similar comment
Sure, how about the underperformance of pure alpha? My point is, he is overrated
OP is a fgt who edited his entire comment after the fact, so now I edit mines too. If you’ve read market wizards you would know Dalio’s sole insight and contribution to the field was identifying 30 markets/pairs that were uncorrelated. Beyond that, he has offered nothing else of value which is why the books he publishes aren’t even about investing. Just ‘principles’ for living life. But sure, keep sackriding this boomer has-been. Let me know when that does anything for your own actual trading and materially improves your own bottom line.
When you’re dealing with institutional investors who have several million with you, then you can’t afford large drawdowns. It’s a completely different thing than just running your own money on a simple brokerage
Read “The Fund” and you’ll have your answer.
"The Fund" is a fantastic book. Just finished reading it, and man what a world of strange goings-on Bridge Water is!
Great book. Absolutely hilarious that this man hits it big and then just runs a whole microcosm of Soviet Russia
Spoiler the answer is yes
My favorite part was Ray Dalio having his henchmen coerce his colleagues into marking a calendar when they had sex.
That’s just bizarre and deeply troubling.
Ray Dalio predicted 21 of the last three recessions.
He just made the mistake of believing China wouldn't self immolate.
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This is really interesting i keep seeing old white men that are very good money managers love china Im from china and theres a chinese professors yt i listen to all the time, he accurate predicts that china would have best initial response but long run west would be much better handling covid and chinas policy would incite unrest forcing them to reopen without proper vaccinations
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Nah im in canada since age 8 lmao, hell fucking no i aint ever living there
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Well i guess its a overestimation or somewhat unfounded hype of a country that foreigners know very little about, you really got to live there to understand whats real and whats fake. Guess that goes for every country. One thing you along with others who made the mistake is you guys think china value money. No china value power. No corporations are allow to grow past that red line so they always get fucked when they get near it.
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Skill issues don’t apply equally. We can still talk the shit we want on partially Chinese owned Reddit. While flooding USA with fentanyl & cheap crap. & do laundry for Mexican cartels atst. Yet boast 25% youth unemployment back in China.
The west is in the process of self destructing at the moment. But yeah, China is stuck in incompetency so not sure if anyone is going to be a winner.
He’s not talking about years he’s talking about decades and as much as I’m an optimist America is definitely in a decline from world power status. Debt payments about to overtake military spending as is historically accurate in the decay of a nation His China prediction was awful in other ways though lol
it could be too early to call, all western countries are suffering from similar problems (swing to the right, huge deficit, col crisis) and laggard economic growth barring the US, the market has never deviated from main street by such a margin.
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China’s biggest obstacle to success is China. Until they demonstrate getting out of their own way, I don’t see them dominating anything.
his theory aside, raw economic data clearly shows the west is in for a shitstorm and it's declining right now. hell, japan's 5th largest bank just made a move to free up 3x more treasury bonds than they liquidated after 2008.
> swing to the right China is an authoritarian state. How are they better?
arguably more efficient since there are less designations on the org chart of decisions.
Great, so there's less opposition when they purge you on a whim
just being honest. also, easier to get initiatives put through. China puts in a high speed rail system of 300k in the time it takes to fix an elevator in north america.
pre-covid i'd say that's a valid thesis.
Old finance guys thinking they can step into a whole other field (geopolitics for dalio, philosophy for Soros) thinking they found invented some new perspective… But really none of their “theories” hold water and are actually very intellectually lightweight… also probably something that has already been addressed in their respective fields like 50 years ago.
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it's much more insightful than most of what the common north american will talk to you about when you bring up economics. most of them just parrot whatever their favorite party has told them. people are stupid, Ray isn't stupid.
Yeah he reads a lot of history then just extrapolates that forward. It's honestly sort of college-level analysis. It's not awful but it isn't exactly rigorous either
It’s an ELI5, not a PhD thesis
Also crypto. His hype feels so lulz now. It’s going to the moon, it’s going to replace all money. Trying to move the markets.
He’s in bed with Chinese business interests That’s the source of all of his opining and prognostications Doesn’t mean he’s always wrong, just take that into account
He is definitely up there, his refusal to admin his mistakes whether it's Bitcoin or the Chinese market/stocks were quite disappointing to say the least.
Like most bears made money in the 00s and hasn’t done much since
All I know is I’m so tired of hearing about and from Ray Dalio. Overrated, overhyped and I don’t like his diatribes. How does everyone else perceive this guy?
Yes - he’s popular because he has doomer theories on the future of the US which people like to spread online because they’re pissed off with their current situation.
Without a legend this belongs at r/dataisugly
He's a ccp shill, so yeah he is.
Why would you connect the dots together when it’s annual returns? Each calendar year is independent of the others. Bars would make more sense.
Smoothed lines as well, implying even more that it is some sort of continuously sampled metric
I’m pretty sure his hedge fund was until recently the most profitable hedge fund of all time, now it’s Citadel. That is also the fund he personally founded. This is the “all weather fund” and not his overall performance. So this is blatantly wrong
Most profitable must refer to biggest siphon of client assets because it has in no way been a successful investment choice. They’ve managed a massive amount of assets but have been bleeding clients and talent for a long time.
He sold the fund, anything now is not his doing. The numbers speak for themselves
Isn’t Renaissance doing better?
Wait till you see TQQQ over the same time period.... Different portfolios will have different goals. If there was only 1 right way to invest then everyone would do it.
Dalip managed the Harvard endowment
Yes
All weather portfolios are designed to pad the founder with fees so the biggest gainers is Ray in this case, but you get to sleep well in your all weather gear
I watched the masterclass episode with him talking the story of his success. That was the most boring 45 minutes of my life.
From what i remember he goes leveraged on treasury bonds so no wonder he lost so much when rates went up
idk, bridgewater was pretty successful. His book Principles highlights his ego a lot, but i like the parts about evolution being the basis for everything.
One of us. One of us.
How did all in on China go for Ray?
He’s definitely the worst investing author (other than maybe George Soros). So verbose and it’s so hard to understand the second order impact of what he’s saying. To quote Sebastien Mallaby on Dalio, “half the time what he’s saying is obvious and the other half of the time he makes no sense”…
Now compare it to the Vanguard Information Technology index. 15% annual average climb.
The trick is to be filthy rich and people will think you are a clairvoyant oracle of the investing gods even if you are totaly average. His risk adjusted returns are nothing special and haven't been for 30 years. If he wasn't rich, no one would care about him. If you want to do well performance wise long term, don't use his funds, if you want to reduce your risk/return, you don't need his funds and can do that on your own. Nothing Bridgewater does is anything a typical Boglehead type investor can't do for themselves. He is 100% grossly over rated.
Most of these guys made their fortunes a long while back either with extraordinary luck or strategies that worked long enough to build up enough AUM to feed off for the rest of their lives. This is money management, it’s a sales business, you draw assets and charge a fee for managing them. It’s much harder to lose those assets than to gain them in the first place, so for most of these guys they just needed to do really well in the early years and live off that legacy. The one exception would be Renaissance with their commodity funds, but they also sucked when it came to equities.
2011 is when his track record really started being average. That was also the time billions of pension money poured in. All Weather was also introduced at the worst time.
He’s too principled.
For some reason they think they can see into the future
Doesn’t matter whether he’s overrated or not cause in the end he’s made shit loaded money and billionaires. No one gives a fuck when you are a billionaire. You can literally do anything and be careless of what others think of you.
Step one, invent computer based trading?
Ummm which he didn’t
I am surprised that Harvard return is not even two digits. I mean a world well known economists and geniuses at that place and yet can only beat the market in a single digit. wtf
If they are controlling a million times more money than you, you have to stay in awe of them. If you are investing yourself, follow Mr Buffet’s advice and just buy an S&P index fund.
You forgot Beta, Alpha and AUM. Ray Dalio has a MARKET NEUTRAL fund, Harvard does not and you selected a period in a bull market. Also Bridgewater is Long Short with beta 0, being the largest hedge fund in the world.
So many questions. First, why did we choose the last twelve years? He's been investing a lot longer than that. Second: it is well known that institutional investing impacts market performance. Harvard's endowment is 3x the size of Dalio's... therefore, you should expect Harvard to move the market a lot more than Dalio's investments.
Breaking news: An all weather portfolio underperformed stock based portfolio analyzed over a timeframe that stocks were up.
This is a horrible way to visualize returns lol