Kind: captions
Language: en
so we've gotten over our skis on debt uh
the FED is going to try to print their
way out of this all that does is create
inflation they try to break the back of
inflation with high interest rates but
so many people got themselves into debt
in the good times on variable interest
rates or that they bought a they bought
long on something like a bond where it
devalues uh based on what happens with
the interest rates so is the interest
rates go up either people just can't
make their interest rates payments or
the debt that they were holding goes
down in value okay so you've got this
moment where a lot of people are about
to lose money and a lot of people are
going to be very uneasy and you've got
the the political divide that's
continuing to escalate escalate we saw
the last uh election cycle here in the
US where people stormed the capital it
was a very sort of unnerving moment and
now it's like well things weren't nearly
as bad then as they are coming into the
2024 election so I start thinking okay
what what is the safe move and if I'm
honest
Ry I start looking
at where do I live so is there a move to
be made within the us or I start
thinking do I become a more globally
mobile citizen is there uh something
that I should be thinking about there
I've got a lot of my money in cash and
then one thing that we didn't talk about
which we probably should you you
mentioned the word hard money and so
hard money
um I'll give my lay person's definition
and then if any of this is inaccurate
please let me know but uh hard money
being something that has intrinsic value
so uh gold precious metals become
something that I start thinking more
seriously about now I'm a what I'll call
a digital native so I think about uh
Bitcoin is something on my radar I know
that you're maybe not a fan um but
anyway that's how I'm thinking about the
world I'm trying to be cash I'm not
trying to be in anything long I'm I have
Ray doio I have zero leverage I don't
play with leverage even when the money
was free I would basically I didn't take
on any leverage because that's the one
thing that scares me um so safety safety
safety is how I'm thinking about things
now I don't exactly know how to
diversify well but that becomes another
part of how I look at this and you've
got the all- weather strategy um that I
know you've tried to articulate for
people so safety first if I had to to
sum up my stance everything you said is
beautiful and very similar to the way I
think and I'm I'll add a couple of
things to it but when we think about
safety we have to think about that as
purchasing power because a lot of people
think if I put my money into a treasury
bill I get safety well Al look at
whether that's giving you a return
that's compensating for inflation so I
just wanted to tweak what you said
that's that's very important tweak and
now you're getting into where I feel uh
undereducated so how do we then think
through that before I go there I want to
say um and also take here's the other
advice and and maybe we're all wrong
maybe there's nothing to worry
about okay so how do I deal with that
like I like what this guy diio is saying
is very crazy and it and and you know
who knows he whether he's right or wrong
and you know he's been wrong in the past
and who knows if it's right and I okay
and
simultaneously so okay that's the
exactly what you said is the way pretty
much I look at it that you said and if I
was to paint the world I painted the
world the way I did okay and I have
those questions and then beyond that I
say um you as an individual should think
about the Total Safety including maybe
that terrible scenario doesn't happen
Okay that's what I'd like you to do
that's what I'd like you to do and if
you do that you will come to a better
balanced better balanced position I want
you to get
balance okay I want you to do certain
things I want you to have
enough um savings whatever you know that
okay to have security to build the first
level of I think investing and S
investing which is the same as savings
comes in
tiers tier one tier two tier two three
on risk and the first
tier
is if everything goes
wrong I'm
okay and everything could be inflation
def depression anything whatever it is I
lose my job I I I you know whatever it
is I got that thing covered then your
next level is okay what am I going to
get the highest Returns what is my best
bet
okay but but start at that level and
then you said the other thing TR
too that it's it's not just the
investment it's where am I am I in the
middle of a
fight like I don't want to be in the
middle of a fight okay what's it going
to be like so it it does have Geographic
implications you know I don't know maybe
it's the state or the the state you go
to or the city you go to or the country
you go to or whatever it is you know
like um and there are certain things you
can do to say this one's going to be
better than that one um let me give you
an example of that there are three
things you could do on based on these
three
influences are you going to be in a
place and and around people in
circumstances that are financially
strong in other words they they income
better is the are they earning more than
their spending and they have a good uh
balance sheet because that means
stability if you can go through that and
you have
stability places that are like that are
better off number two do they have
internal
conflict um Country Place and is you
know and is it a hospitable environment
for
me okay that's the
second and then third are they in the
risk of an international
War um like I don't want to be where the
fighting is I really
don't um you know and I want to be safe
and stable and so on so this is a time
for looking for such things
yeah okay uh while deeply unnerving I
think incredibly important to think
through that let's talk about
diversification doing that well you talk
about uncorrelated
assets and I don't know how much you
talk about this publicly but I'd love to
understand it seemed like the for for
people that that don't know your
background uh you have a a meteoric rise
you're in your 30s on top of the world
unbelievable success you make a huge bet
on something to your point earlier about
have the humility to know that you may
be wrong you made a huge bet on a
collapse um and it didn't play out and
it ended up that the market went up and
you lost a lot of money uh almost lose
Bridgewater manag to keep it together
you come up with a new strategy that I
believe is known as pure Alpha uh it
ends up getting tested multiple times in
the market and you guys Crush when other
people
struggle which leads you to be for
people that don't know the largest hedge
fund we made we made money in 28 of the
last 32 years we uh um uh never had a
really bad
year um you know we made um I think it
was uh during my time there uh running
it um
11.8% a year with no with the worst year
being I think it was down I don't I
don't know 10 or 12% sort of thing and
and that and the next worth year Le like
down
1% and um um and we did that
by um simultaneously looking for
opportunities and looking for good
returning assets that were not
correlated
diversification of good you know and
just as you point out what happened was
um and by the way those returns are not
correlated with the stock market or
whatever so they were fend stock market
bond market they're uncorrelated so they
were effect effective diversifiers in
portfolios which almost all go up and
down together this would verification
and so it was loved by investors
institutional investors and so on and
the thing and as you point out what I
learned from uh you know basically this
punch in the face
mistake okay this painful
mistake um is I learned how to make good
money without
having big loss I knew I learned how to
improve my return relative to my risk
and I learned that the Holy Grail of
investing is 10 or 15 good uncorrelated
return streams I okay you get that and
you will I don't know have a similar
path to the path I've been fortunate
enough to have and so that's what I want
to pass along to people you know like uh
you go into the coid year the one year
that I that we lost I don't know it's 10
to 13% or something was 2022 because
coid came
along I didn't have coid in our system
we had other things that so that was it
and um and so um there's uh you know
something comes along all the time for
for anything there everything has its
time and so you put your money in any
one thing you know you could think okay
movie theaters are good and then you get
Co or you cruise lines are good and then
you get Co and you know oh whatever it
is is good well it's good sometimes but
there's always something that always is
going to mess up the one thing so you
don't want like in my opinion you don't
want more than 10% of your money and
anything and you want you know probably
you don't want more than seven and a
half percent of your money in anything
and they want to be good different
things and that's the message I'm trying
to convey right now one of the things
that has me um the most unnerved is the
attack on the dollar uh so you've got
the brics Nations uh for people that
haven't heard that acronym before Brazil
Russia India China and South Africa uh
are getting together and I know this has
been going on for quite some time so I
don't know if I should be overly
paranoid about that in this moment or
not but again going back to those
indicators that point to a transition
from phase five to phase six um do you
think there's
anything that we can prepare for as we
look at the big cycle as we see this
particular moment with the assault on
the dollar is is there anything in the
big cycle that can educate us on how to
deal with this moment just all happens
over and over the decline of the British
pound as a reserve
currency and before that the decline of
the Dutch Gilder as as a reserve
currency all happened for the same
reasons uh which is um you know two
things are going on first of all they're
holding all of this dollars and the
stuff that we talked about is going on
and then also there's the weaponization
through
sanctions of uh the uh dollar um in
other words um the United States's
greatest weapon to use as distinct from
its military weapon is is sanctions and
so sanctions means you freeze other
assets you freeze assets those assets
are the bonds and um
so um that happened with Russia and
there are threats of it with other
countries China and so on and there's
kind of the thinking well if I hold the
bonds can I uh be can that happen to
me and and then why am I
transacting in this other third currency
rather than transacting directly so for
example uh the United
States uh share of World Trade has
declined and China's share of World
Trade has increased to become
greater and um so um if two countries
are
trading let's say Saudi Arabia is
trading with um
China um why do they buy B why why do
they go to the dollars in order to do
that um you know uh no good reason to go
to the dollars and you know they don't
then they're worried about holding the
dollars because they might get
sanctioned and so you see more of those
transactions taking place in other
currencies and then the usefulness of
the dollar as a storeold of wealth
changes it's like think about it in um
you know the the most fundamental way um
everybody wants uh a medium of exchange
and a storeold of wealth so in other
words if if everybody's
using the dollar in World Trade then you
want to save in dollars because you say
okay now that's the thing I spend in and
I and I save in the
dollars um but over time as the share of
World Trade goes
down why aren't they denominating in who
like China has a larger share of World
Trade
traditionally the countries that have
the world's Reserve currency have the
largest share of World Trade and the
largest share of world Capital flows and
because the United States has declined
and also there's a worry about that um
holding it because of sanctions I mean
just imagine how the Chinese must feel
about having a lot of money in treasury
bonds you know like I would be worried
that I would like be treated like Russia
would be treated I'm it's not something
I would want to hold uh as you know a
safe asset and and other countries like
who might feel that they can get
sanctioned and for all those
reasons um they're less inclined to
hold um and when we when we call dollars
what we're really calling is dollar debt
because you don't hold you hold dollar
debt and that's a pro what is a debt
it's a promise to Rel receive
currency so okay so now getting out of
those things and transacting in other
currencies seems to be the safer thing
to do for those countries and so that's
the dynamic that's taking place so it's
it's um it's not an attack on the dollar
it's like I don't want to hold those
things and um so very similar to on the
British pound you know what happened is
the
British had the war and they were the
most powerful empire ever in the world
and they had World War II and they came
out of World War to uh financially in
debt a lot of
debt and who hold the who held the debt
all these countries held the debt
because that was the residual from them
but they had a problem they had a debt
problem and so they needed to print more
money because it was too much of a
squeeze and then you had so it
deteriorated and then they you know they
sort of said please hold my debt please
hold my DBT they went to Common wealth
countries the part of those that were in
the former British Empire and then you
had the Suez Canal incident where um
there's sort of a a war and everybody
realizes well hey wait a second that
British Empire ain't the British Empire
and they're heavily in debt and then
they say I don't want to own that debt
and there went the British
pound so that's just how the Mechanics
Work
okay so looking at the US and um I don't
want to be cheeky and say speaking
directly to uh the you know the US
government but if I were to be so bold
so if this is that predictable moment
where okay there are actions that we can
take as a country that will either um
help us keep um the world Reserve
currency status and there are actions
that we can take that will cause us to
lose that status more quickly it seems
like okay uh you've got the brics
Nations they are moving away from the
dollar it seems like that has already
that card has already been played I
don't know if you think there's anything
that we can do to to make that easier um
but certainly speaking to printing so
one thing that I've I've heard recently
and this is a really fascinating concept
that when you have other nations that
are holding your currency holding debt
as you said uh they're not like hoarding
cash but they're they're holding a lot
of debt if we print money what we're
essentially doing is um externalizing
inflation so we are uh causing a
devaluation of that debt for all the
countries that hold us now we're in a
moment with Rising interest rates that's
causing us to need to print uh but
creating this really weird difficult
moment where as we print then we have a
a need to raise interest rates but the
reason we're having to print is because
we're raising interest rates so it's
it's a very difficult moment um but if
if we could going back to your idea it's
how we are with each other if we could
get people to come together in the
middle would one of the things we would
want to convince the US government to do
is to be very cautious about devaluing
the dollar is is that an important idea
it's more basic than that and it's um
more simple but it's also more difficult
um what the reason Cycles exist is that
the next stage has been determined by
what has already happened in the prior
stage
so we are in debt a
lot you you can't change that we got a
lot of
debt and if you say what could you do I
mean two things come to in mind what you
could do is you could be financially
strong and you can not
use um Financial sanctions as a weapon
to scare the holders of those bonds but
to be financially
strong requires you to not spend more
than you
earn that means you either have to cut
your spending or raise your
earnings okay that's okay that ain't
easy okay okay so are we going to cut
our
spending um uh o um okay now you look at
it what are you g to uh infrastructure
programs I don't know poverty transfers
defense spending okay what what are we
going to cut um the
world
governments have the same basic
economics as um people except for the
fact that they could take money from one
person and Sh give it to another and
they can print
money that's it and so when you look at
this um okay you have that Gap you can
eliminate the Gap by taking money from
some and eliminating another and not
spending
much okay okay that's not easy right
okay okay what do you going to the most
governments now uh don't think how much
money do I have to spend and then how do
I prioritize
that they
think I need to spend on this I need to
spend on that and I need to spend on
that and they spend on it and then they
either produce a they produce a
deficit and then you either have to pay
it back with hard money or printed money
and that's situation so when you say
what could we do well you've got to get
financially strong in a politically
fragmented environment in which
everybody wants
more and you and you have to um you know
like
be a higher percentage of World Trade so
that everybody wants to use your
currency and um be um and not threaten
the holders of that bonds with freezing
their assets it is uh it's a tall order
in this moment um I it has become so
clear to me in the last month since you
and I uh saw each other how important
the reason that you keep coming back to
it all comes down to how people treat
each other so in this moment um I don't
want to be a Debbie Downer but it does
feel like the die is cast a little bit I
don't see how we pull ourselves back
from the precipice because to your point
about being um fiscally responsible like
we'd have to get into a position where
we're making more than we spend I want
to circle around to something as you
were talking you mentioned
infrastructure and it got me thinking
about okay what are things that uh we
would need to go right so I think
everybody is aware and I've heard you
say that there there are changes that
are going to need to be made to
capitalism in order to bring back a
thriving middle class and the importance
of the thriving middle class and you've
defined the things you know again
staying to the theme of principles here
of uh the three things that we need to
do to be strong as a country or for any
country to be strong uh and you said two
parents in the home uh great public educ
education and then equal
opportunity where where do you see us on
those are we moving in the right
direction moving in the wrong direction
well again uh you know maybe I Aspire
too much to two parents in the home um
it's certainly better if you have two
loving parents raising a family that's
that's good but maybe that's too much to
ask for um but in other words good
Parental Guidance you know okay you're
raised well you're educated well you can
go to a public school that educates you
well and you have good guidance so
you're well raised in a healthy
environment and not only do you learn um
you know skills and and all that but you
learn how to behave well to with each
other so you learn
Civility and
um and um so you come out capable and
civil um to a land of opportunity
in which you can you know work and and
and have a good
environment um and really that's all you
need if a society does that right um and
I think you know where we you know the
things that are going on you know um
education in a lot of public
education is um a it's deteriorating
it's a real problem um my wife works to
help um the poorest school districts the
poorest people uh in the state of
Connecticut um and uh the state of
Connecticut is usually it's always one
two or three in terms of the highest per
capita income you can reboot your life
your health even your career anything
you want all you need is discipline I
can teach you that tactics that I
learned while growing a billion dooll
business that will allow you to see your
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programs in Impact Theory University
join the thousands of students who have
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today um and in the state of Connecticut
uh as of last survey 22% of the high
school students have either dropped out
of high school whoa or or have uh
absentee rates which are greater than
25% in our failing
classes so at they're
living
in po they're living in areas that don't
have the things I'm talking about about
parents nutrition and so on um and
there's not adequate resources for them
for example during
coid um we um we found that 60,000
students didn't have uh computers or
connectivities to take
classes and the government wasn't going
to provide it so philanthropically we we
bought 60,000 computers and give to the
kids and but we can't you know we can't
do the you know so our
society is um when you look at this um
you see
um drugs drug
problems um you
see how the cities are
changing
um you know the cleanliness of the
Cities the education levels of the
Cities mental
illness um crimes and so on um you're
not
seeing you know
you seen people fighting with each other
a
lot um not all the time there are
wonderful places in the United
States you
know education some of the best
universities their pockets some of the
that you know their neighborhoods but
there is this encroaching so you see
infrastructure breaking
down
um school shootings
you know like okay so you decide how are
we
doing I think we're doing pretty badly
um it I I don't
know look it's not going to be a popular
thing but I think going back to what you
were saying about the parents and maybe
asking for two people is too much look I
get it I think everybody's doing their
best and and God knows for any single
parents out there you have my love and
respect that it just seems Seems like a
hard job when there's two of you let
alone one so I'm not I'm not throwing
shade but in terms of cultural momentum
when I look at people not uh not getting
married before they have kids uh
incentives that end up leading people to
where it's actually more economically
advantageous to have a child when you're
single uh does not strike me as a great
idea uh and trying to reverse that Trend
I think is going to be really important
really putting a ton of time and energy
into making sure that we're we are
looking at ourselves on a global stage
from an educational standpoint and
understanding that we are competing
against I mean just to really make it
Stark we're competing against China now
I have employees that grew up in China I
actually have some contractors that are
in China currently and when I see the
the discrepancy of what demands the
educational system places on them when
they're young versus the demands that we
place on our our students when they're
young it creates a ripple effect as they
get into the workforce in terms of just
the the expectations that they have of
themselves the drive uh the desire to
excel um so these strike me as as really
really problematic things I'd love to
talk to you about Singapore so as we're
talking and I haven't studied Singapore
very closely but when I think about um
you know how they've created something
that seems really amazing very recently
and and sort of borne up out of
nothing is it though three principles uh
two parents in the home quality
education equal opportunity I mean is
that it or is there something else earn
more than you know earn more than you
spend be well educated to help you earn
more that you send be civil with each
other be
productive um you know when you come out
equal opportunity and and um it's not
just um like in Singapore uh but it's
true in other countries there's a level
Bel below which nobody should go
certainly children should not go right
how can you have an environment that
children there so there should be basics
of
housing um Health
Care um certain
Basics uh because otherwise you build a
cycle you you know I mean when they
become when the children become
adults you might say oh it's up to them
to do it but if you mess up the children
early they become the adults who can't
do it and so you have this
cycle you know in which you have to take
care of people you know you walk around
and look at it you can see the gaps the
opportunity gaps you can see the mental
illness gaps you know walk down the
street and you know downtown Manhattan
or lots of places and see the gaps okay
and some that adult who
is screaming uh you know and homeless
and whatever came from a place a reason
you know that was that made him that way
and um you know so I it's like the you
know why isn't the
computer given to the kid who doesn't
have a computer so he can have learning
think about how difficult it is for the
for the kid who doesn't have learning
and they have one parent and that parent
might have in a poverty and might have
drug problems and all that I mean the
kid can't make it so the kid's going to
come up to be an adult okay what kind of
an adult it's going to be a
problem so I know that a lot of people
are going to say okay well raise taxes
we'll have money for all of that um that
doesn't seem to be how things work but
I'm open to being wrong about that
there's a book coming out I'm very
interested to read called taxes have
consequences which I don't think people
think a lot about but it is entirely
possible that I'm wrong so if we look at
someone like Singapore do they just have
really high tax rates and they
distribute it in a way that make sense
what they did was
um they required
savings they require
it require savings an
employee um I think an I think it works
like this um employee gives um 12% of
their incomes and employer gives 22% uh
10% of their income so they saved um um
something like 22% of their income is in
savings okay they do other things too
they have a tax balance but they have a
savings um and as a society they earn
more than they
spend okay so and then um on housing for
example they have um a public housing
that um is uh
subsidized that the person can take
their
savings uh with to use to buy that
public housing that is a s saving
through that saving so um everybody has
good housing good public housing um and
they own it so if it goes up in BR value
they can sell it and and so they have
that so the housing creates a good
environment they put a lot of money into
education equal
education it's not people there uh don't
have to go to a private school to get
good
education they so they have good
education and they so and then they have
uh the people who work hard and are
civil with each
other and and that's how it works and it
forget about
Singapore if you look through
history um these are these are basic
fundamental things so and so wherever
they've happened in
history um uh they've worked and you can
go
back through all history if you uh you
know these Basics earn more than
you than you has been um you know be
well
educated uh be civil um be
productive um you know those types of
things that uh those fundamentals
work what is it about the human
personality that makes it so common that
people don't deploy those things it's so
interesting to me because I found that
when people get richer the societies get
richer they typically get in more
debt which seems backwards like um so
for example I I watched uh the first
time it happened when the United States
started borrowing money from J from
China uh the United States had income
that was 4 per capita income 40 times
those from China and they're borrowing
money from China so I wonder like how
does that really
happen and there's um when you don't
have much money and you're in a stage of
life
where uh you you know you value money
you want to
save so there's a psychological thing
you don't have much money you get some
money and you want to save it and to
save it means you have to lend it to
somebody
then what happens is ironically when
everybody
earns more money and it's easy to
borrow people will get in in debt or
Society will get in debt or the
government will get in debt and also
then there become very big wealth
gaps
and people basically are interested in
taking care of their
themselves and so
um you don't have you have a fight over
taxes or something and so you have a
society that
borrows just even think the political
system
cycle people pay if you're um a new
politician and you run a state or you
run let's say a state
and it's before an
election it's in your interest to borrow
and
spend because nobody pays any attention
to the borrowing where the money comes
from they pay attention to the spending
so give them
stuff you know um go spend give them
stuff have a party it's like having a
party on
debt
and there's this
shortsightedness it's like the you know
raising kids they call it the
marshmallow test you know uh you know
you ask a kid in an early uh early early
age I can give you one marshmallow now
or I can give you two marshmallows in 15
minutes which would you
prefer and um okay the smart one says um
I can refer my gratification for 15
minutes and get two
marshmallows um we have a lot of society
who wants the mar it now so is it um
enjoyable to take your money and spend
it
on better
infrastructure um or let's take the
education system the education system
according to the Constitution is a state
decision so it's not federal not mostly
Federal money then you come down to um
the state and it's mostly a tax District
if you're in this neighborhood through
property taxes and so on you will get
the money to educate your children in
that tax District so naturally um richer
tax districts will have better money and
so like I'm in um Greenwich Connecticut
and um last numbers I looked I'm sure
they're higher than this now but it was
not that long ago is in Greenwich
Connecticut it was uh $24,000 per
student in um uh Bridgeport Connecticut
which is like 10 minutes up the road
it's $114,000 per student
whoa and they need more
money because they're they're
poor so if you just take it's not just
education how do you clothe the kid how
do you feed the kid how do you give them
the computer that doesn't come through
the school and all that they need more
not less
budget so those are the mechanics of it
first you have to go to
bipartisanship um like if I was
President I would have a bipartisan
cabinet and then if I was dealing with
the economic problems I'd get smart
people from the right and smart people
from the left who want to make this
thing work and I'd put them into like a
Manhattan project kind of thing in other
words put them into uh six months in
which they have to agree on a
system that's going to
work tie them together and force them to
agree and come out with that and have
them gain control over the extremists
who are going to
fight like I don't really care exactly
how it works just as long as you know
like if smart people from both sides can
get together and make it
work and then you come back to these
Basics you know okay how do you spend
more earn more money than you spend how
do you educate your children well
whether or not you know and deal with
those project problems that way to in a
together
way um you'll get the best outcome if
you don't do that you won't get the best
outcome yeah I think this is this is
really brilliant inflation is one thing
I want to really touch on so what do you
do in an inflationary environment as
somebody who's not I don't consider
myself a Savvy investor and so I always
wanted I used to joke with my money
manager I want to be as close to my
money buried in the backyard as possible
and uh obviously for inflation reasons I
have since learned that that is a
terrible strategy um but what do you
do well first thing is you realize that
uh holding cash and dead assets is a bad
thing so a lot of um
money uh
is in cash because people think that
cash is the safest
investment but they are measuring that
in the amount of money that they get
nominal returns and they say it doesn't
wiggle much but think about it um it's
lost as of the most recent statistics 8
and a half% over the last um inflation
is 8 and a half% and they received
virtually no interest tra in cash and so
there was an 8 and half% loss of buying
power as a result of
inflation and so psychology should
change and is in the process of changing
to realize that you have to think in
terms of buying power not the number of
dollars you have and you have to think
um how much uh are your is your buying
power and so the worst thing is to be
cash like I say cash is trash and to be
into and to be out of of the bonds um
the next thing is to have a diversified
portfolio of assets um the
diversification um means um some assets
that are um uh inflation hedge prone for
example you're better off to own an
inflation index Bond than a regular Bond
um what makes something an inflation
index like what what are the nature is
that going to be gold and precious
metals tangible things like what are the
things that are resistant to
inflation um yes and inflation index
bonds because their returns are tied to
inflation
interesting I don't I don't understand
that well enough to know what how one
would do that is that worth going into I
don't know what the punchline is going
to be yeah um I think the punchline is
if you take a look at it uh it's it's
simple it's uh like a regular Bond
except um its payments are linked to the
inflation so they compensate you for
inflation so the is this a Government
Bond yeah Government Bond okay and there
are some tax advantages to them too so
look into them okay why don't people
just flood into that well I'm I think
it's it's one type of asset the flooding
into any one thing is a is an issue but
the but moving from the nominal Bonds in
which the government just says I'll give
you this amount of money and it has the
unbel UN unbelievable and unlimited
ability to print the money it gives you
um it would favor inflation index bonds
um and it can be other assets uh you
know some people would say something in
terms of cryptocurrencies or might be um
uh th those other assets um I think
what's your take on crypto so crypto is
a huge part of my portfolio I think
you'd be mortified to see uh just how
much so but yeah what are your thoughts
on crypto um I
think I think that too much PE people
pay too much attention to one uh at at
the extreme of the other you know um
that either somebody is all
crypto um or they're all gold or they're
all something and I uh I believe that
that's a challenge I think that um
crypto like gold is not a productivity
earning asset and it can be controlled
by governments uh in lots of ways it's
been outlawed in a number of places and
it also can be monitored the Privacy um
element is not not uh secure from
governments doing monitoring and and so
um and the size of crypto is about the
size of um Microsoft you know it's all
crypto combined and so to um be overly
concentrated in it in my opinion is a
mistake um but to have some of it uh is
a good is a good thing so the question
is always uh what amount of it so that's
um you know I have a little bit about it
I'd probably shock you about how little
I have you chock me about how much how
much you have uh but having some of it
um so the um and other things I would
say is that geographic location is
important in other words not just all in
us and US dollar assets um I would say
that the three things that that again
I'm looking at if I go down countries is
first um are they earning more than
they're spending do they have a good
income statement in balance sheet this
is going to be very important in the
period ahead ahead because the amount of
credit that's going to be available to
bridge the gap between spending and
earning uh cash flows and so on is going
to be quite narrower so a lot of
companies even that were were able to
raise cash um and not have good cash
flow because of maybe growth
expectations in the future we'll find it
more difficult that'll be true for
individuals it'll be true for um
countries so is it does it have a good
income statement and balance sheet will
be important the second is um places how
are they working with each other is
there civil civility or is there Civil
War on the brink of Civil War because
countries where they work well together
they're productive are going to have a
real competitive Advantage orderly
places safe places to be um are what are
countries on the rise in that so
obviously I I'm shocked to say this out
loud but the US would be in a bad place
in terms of that um what are places that
have great stability
there well um
there are Parts in the United States
that are wor better than Parts other
parts of the United States meaning like
local government bonds or something like
that well I'm I'm out talking about the
uh like where you want to be and then
that'll be but yes the it could be bonds
it could be places I'm talking now the
places the um uh for example we just had
the shooting in New York
City um on the subway
and and New York City is becoming more
dangerous Chicago is becoming more
dangerous places Chic San Francisco is
becoming more dangerous um you're seeing
people leave some places for other
places um you're seeing them leave I
don't know to Texas Texas is Austin or
uh to Florida and so on so there are
differences in um in within the United
States and differences from the United
States me people need to think about
picking up and moving and actually going
and being in a different place yeah and
those are also the better places
economically because when when um people
do leave and they do that uh those who
leave um are higher income and higher
taxpayers and as a result there's more
of a hollowing out that takes place in
that so which creates an economic
problem as well as you know a lifestyle
problem so I think you're going to
greater differentiation in places which
affects where you want to be and where
people um who can afford to be there
Wann to be and also affects what their
economies and markets are like and
that's so then the United States um so
um yeah and the third element is um so
um are they financially strong in other
words income more than expenses and good
balance sheet are they civil with each
other other so they're working together
rather than hurting each other and
number three is are they um um in a
position where they're likely to be in a
war or are they likely to be out of a
war um you know you don't want to be in
a war so and those places investing wise
history is shown um do worse because
they have to spend more money there's
more uh problems more pain that's being
exchanged neutral countries in Wars uh
do very well as it turns out uh so
elements of diversification so it's a
long-winded answer to your question but
I would not want to be in debt or cash
and and those instruments I would want
to diversify well with a bias toward uh
inflation protected assets and I would
want to uh diversify between location
countries um in terms of the investment
based on the criteria I've just
mentioned okay that all makes sense now
you've said that competing in the
markets is harder than competing in the
Olympics uh which I found funny and
distressing all at the same time you
said that you guys at Bridgewater spend
hundreds of millions of dollars on
Research alone and that somebody like me
is going to have to compete with that so
what's the advice for the average person
that isn't going to be doing that and
how often should people be reassessing I
feel like in a turbulent environment
should I be looking at this like every
week like how often and do you like if
you were managing your personal account
without
computers at least with the the you know
sort of hyper auto trading um how often
are you looking at it and how do you
avoid trying to compete against the best
of the best of the best I I think that
you have to understand what a good
strategic asset alloc ation mix is that
is how to create a good well Diversified
portfolio assuming that you don't know
how to make these buy and sell decisions
BEC uh because what happens is think of
it it's it's it's like a poker game and
you're playing against others and those
others are putting in most lose most
most buy at the highs and sell at the
lows most behave emotionally most don't
have the same
information it so it's it's a very
difficult game like I say you know you
wouldn't think I'm going to go try to
compete in the Olympics but more people
think that they can compete in the
markets they think I think the markets
are going to go up or down and the track
records there are terrible for most
people okay because of those handicaps
relative to others um so for that reason
you start off with a well Diversified
balanced portfolio because
diversification can reduce your risk
without reducing your
return if you understand how to get
equally attractive
Investments that are not correlated with
each other that diversify each other you
can build a diversified P portfolio it
would take too long for me to explain
you know how to do that right now but uh
that becomes the headline um and um I um
um I described it um in my book um uh
principles for life and work um also uh
Tony Robbins described it and uh he
asked me about it and and then described
it in um his book I forgot the name of
it money Master the game okay and and he
describes it pretty well and for the
that I'm you know I direct you there um
I'm going to be writing a book um I'm in
the process of doing it about economic
and investment principles and then I'll
describe it more completely but right
now that's the best I can do in this
interview no for sure that that already
is really helpful let's talk about um
day trading for lack of a better word so
I think about this a lot because I'm I'm
in the world of nfts as a Creator far
more than as somebody who's buying them
and as I look at web 3 the reason I
don't treat it as an investment I don't
think of nfts as an invest class even
though people are treating it like that
they're treating it like a hedge against
inflation some people treating it like a
get-rich quick scheme it's that same
idea that the vast majority of the money
is being made by I think less than 5% of
the wallets and so 95% of people are
getting beaten to death while 5% of
people make all the money and it feels
like that's a similar idea to how
somebody like myself who I know enough
to like get moving to do the research
and things like that but I don't want
want to be in there trying to day trade
so is this in some ways you you
definitely want to be thoughtful about
your mix diversifying making sure you're
going for uncorrelated asset classes uh
following the guidance that you just
gave us but is there also an element of
don't try to time the market it's time
in the market and so get my Diversified
portfolio set and forget or do I need to
be in there like constantly re-upping
rebalancing that kind of
thing um it's a little bit like um you
can start off with and I and I think
this is most important what's your
strategic asset allocation
mix and then it's like going to the
poker table and then you say what is my
angle where's my e where do I get to
take money away from others because I'm
better at it okay but you start
everybody should start with a balanced
portfolio Okay most everybody they have
careers to do and and and I think
they're arrogant they think they can go
in there and they can take money away
maybe some can but if you're going to
play that game um the first thing is um
also test your decision
rules um don't just go in and then you
say I'm G to wing it and and and and do
it and um because you won't even have
enough sample size in your decision
rules to know whether you're good at it
or bad at it what after the first five
times you're going to pronounce how you
are it's a learning experience just like
any other learning experience to develop
your expertise what I find is really
important is to take my decision rules
and test how they would have performed
in the past to at least give me my some
perspective of what might I might expect
in the future but you have to think
through a game plan and operate that way
so I buy and llarge would say first the
um the most important things you could
do are actually the simplest thing you
could do to build that strategic asset
allocation mix not to be out in there
day trading your life's Fortune
away that makes sense to me I want to go
back to the idea
of we've got the Cycles it's so far
every Global Reserve currency ever has
collapsed and been replaced and so it
would certainly be huous to think that
the US's time as uh that Reserve
currency is going to last forever but in
your video you showed a guy like holding
up the the falling line and and trying
to Forstall that effect and hopefully
you know carry it out longer or at least
make it a more gentle tapering out um
what can we be doing to Forstall some of
the internal conflict um how do we get
there's I know there's a lot of momentum
going that stops people from making more
than they spend at the government govern
level um but are there techniques like
if if I could convince you to run for
office and you got elected um what would
you do to Forstall that
inevitability well again there's those
who control the system and what should
be done and then there's what the
individuals should do to assuming that
they can control the system so your
question really is I view it and terms
of those two parts um what's necessary
is um you have to earn more than you
spend as a society and so we look at our
country as a whole um and so you have to
get financially sound this is what
people talk about with austerity right
well or
productivity in one way or
another you have it's the same thing so
productivity would be make more money so
keep spending what you're spending but
make more money that's right
okay um
and that that
opportunity has got to
be uh as much equal
opportunity across the
population
because um if it is for the averages may
be very
misleading um and if if most people are
not benefiting or have that
opportunity it is something that is um
suboptimal for the development of the
country because you don't know where the
talent comes from what's the lever we
pull to do that though well let me get
it out and then I'll get to the Le to
how I would do it okay but I'm just
saying okay what you have to do is two
basic things you've got to be um you've
got to be financially strong so you've
got to get you have to be productive so
that your income um is greater than your
expenditures and you've got to be good
with each
other you work well together you're not
destructive with each other if and
compromise if you do those two things
like you're good with each other and
you're you know so you're productive and
you're financially sound you've got to
do those things now under those things
there are a number of things you have to
end you have to
educate your population well they have
to learn how to be civil with each other
you have to provide a A system that
produces that allows productivity to be
good blah blah blah but to answer your
question and really get to the punchline
because that's what I need to do you
need to create a system that both
increases the size of the pi and divides
it well okay and most importantly
divides opportunity well not just the
output well but opportunity but also uh
the wealth well so you have to increase
the size of the pine divid well um and
the way that I would uh do that is I
would start by having a bipartisan
cabinet uh and bring together smart
moderates people who can work on both
sides because I think that the first
thing is that the P polarity is going to
kill us I I think we're going to fight
before we're going to resolve smartly
what we should do so I would want to
have a bipartisan cabinet and I would
also want to have um um a program that's
like a m Manhattan Project in which I
take the smartest from both sides and
work um to engineer a program that is
like that so that when they come out
with the program there's the moderate
left and the moderate right in a sense
who are who who are agreeing because uh
we each have our own ways of doing this
thing you know and but what what we'll
do is we'll kill each other over which
exact way we do it and I think that to
have a common uh
bipartisan program that is Raising
productivity and redistributes
opportunity and wealth well is the most
fundamentally important thing so I would
have that bipartisan cabinet and then I
would have those moderates have to deal
with the extremists on their part um
their parties because I believe that
more than likely it's going to be the
extremists who are going to um destroy
the system threaten the system um
because they won't be able to compromise
the fight will be so bad and the answers
do not lie in the
extremism
yep I would agree with that very much um
so if you were to guess what were what
are going to be some of the elements to
create that are going to come out of
that Manhattan Project like if you had
to throw some of your own ideas in the
ring uh I'm sure you've thought through
this it it you know it's it's it's kind
of like very easy you could see what
happens before um education and
infrastructure are two areas that are
fabulous in terms of um being great
Investments and not are not treated in
as great Investments I um my wife
particularly and me um peripherally uh
work in the state of educ in uh
Connecticut for education I going to
give you a picture um uh Connecticut is
usually per average per capita income
number one two or three in the country
and in
Connecticut um in high high school
students
22% of the high school students are
disengaged which means that they have an
ab