Kind: captions
Language: en
new york city's becoming more dangerous
chicago's becoming more dangerous places
chica san francisco is becoming more
dangerous
you're seeing people leave some places
for other places the greatest danger for
most people is failing to look at
the things that could be harmful to them
[Music]
ray dalio welcome back to the show
great to be on your show again
dude i'm always excited to talk to you
this is an incredible phase that you're
going through in your life where you're
taking all of this incredible
information that you've gleaned through
your years in the financial markets
we're living through a truly
unprecedented time of uncertainty
disruption i think a lot of people are
really afraid in terms of what's going
to happen to their money with inflation
are we headed towards hyperinflation
and in your book the changing world
order principles for dealing with the
changing world order and the video by
the same name which is blown up
um
i think the reason people are reacting
to that is everybody has a sense that
something is happening something that
they don't understand how to navigate
and then along comes your book your
video which really gives a lot of
context to that
and so while in by the end of this
talk i really want to give people a
sense of what they can do and what we
can all do to forestall the essential
decline of an empire which is what we're
living through right now
and but first to get to that i think we
have to understand your concept of this
is just another one of these and by
looking back over the last 500 years of
history we can see this cycle that
empires go through and the us is just
the most recent one to go through it
if you don't mind walking us through
a thumbnail sketch of the six stages um
of a an empire and then we'll talk about
where we're at now and what we can do
okay um
let's start
by describing it's something like the
new water to the next new water
and what i mean a new order i mean the
new system right like
um the world order was made in 1945 at
the end of a war
and um a
uh civil war can begin a new order in
turn inside of a country like the
chinese civil war began their new order
inside the country 1949
and so that's like a new beginning and
what they always come out of wars
and a war is a fight for how the system
works
so we'll begin there um after the fight
of how the system works it's a it's a
great leveler it gets rid of a lot of
the debts
um and it starts over and then there's a
new power
um in the united states the new world
order it was an american world order
because the united states won world war
ii it had 80 of the world's gold gold
was money it had the dominant uh
military power it had nuclear weapons
and because of that
we began the american world order we
literally got people together in a room
and said hey we're going to be entering
literally a new order and they lay
things out was in bretton woods if i'm
not mistaken yeah so i want people to
understand like this is people they get
together and they actually decide this
stuff that's right they carve up the
world here are the borders
this one this group gets this piece and
so on so forth and then they begin
and during and by the way this has
happened repeatedly throughout history
and so they start off with those new
rules of the game and you enter a period
of peace and prosperity and it's peace
because nobody wants to fight the
dominant power the dominant power won
and you don't want to fight the dominant
power and so you're exhausted i i mean
and this is one thing you're careful to
point out in the book is like war is
horrendous
and so part of what creates that period
of stability is just we've seen so many
people die there's so much destruction
of life wealth which is why you know the
stakes are high when you're talking
about this that's right and there's a
change in psychology really that you're
dealing with because quite often
these things take place they take a
generation or more to take place a
lifetime
and the people who enter the war do so
so boldly but everybody who enters the
war and then goes through the war wish
they never went through the war because
it's so terrible but they come out as
you point out and then they're the war
is over they want peace they want
productivity and so on and then they and
it's a great leveler less wealth gaps
and so on and they work well together
and they build a period of peace and
prosperity that is a long period of
peace and prosperity but during that
peace and prosperity
more and more prosperity takes place and
they increasingly bet on that prosperity
and people get more in debt and so you
see the debt levels rise
and you see the um naturally as
prosperity comes it comes in
unequal ways and some get richer than
others and so wealth gaps rise and then
those wealth gaps increasingly create
opportunity gaps because the rich people
have more resources to educate their
children and give them the benefits and
so that happens over a period of time
while the economy gets more uh indebted
and of course as time progresses
other countries um also rise those maybe
they've even lost the war like germany
and japan they rebuild and they become
competitors and so
what was a unique power of having won
the war becomes less unique as there are
more as there was more competition
and then you get a new generation of uh
people who have a different mentality
they get used to those those
benefits and so on and they are um let's
say less cautious less cautious in their
financial behavior and so on and so the
classic ingredient also is that that
country that wins the war
also has the world's reserve currency
because okay
you need a currency to transact
internationally it's like a language you
need a language to transact
internationally and the winner of the
war gets the world's reserve currency
because everybody thinks that's the most
stable and they also want to save in it
and so when you have a world i think
that's important to really double click
on there's two things here that i want
to go a little bit deeper so one of the
most profound things i've ever heard you
say and this really hit me is that
there's a reason this repeats over and
over and that reason is there's only so
many personality types
and so people just are the way they are
and so if you put them into these
predictable situations they're going to
react in predictable ways which makes
this whole cycle incredibly predictable
you can go
back you know you did a detailed
analysis of the previous 500 years and
you just see this same thing happening
over and over because hey the money's
coming in it's the roaring 20s but the
roaring 20s are going to lead to the 30s
style depression basically every time
because people are over extending
themselves because they're they are
making the faulty prediction that if i
look back at the history of my life
because it has always been this way it's
always going to be this way not zooming
out and seeing no no you're in a bigger
cycle that repeats over and over and
over and the reason i want to hammer
this home is since by the end of this
everybody watching i want you guys to
know what to do
uh to
prepare yourselves for this this is
ray's whole point is to make sure that
people are actually prepared but you
have to buy into the fact that this is
predictable otherwise you're going to
ignore the advice
and so for me recognizing that people
just are a certain way
and that thusly given similar
circumstances they will react in similar
ways and so that was
i think really important for me to
acknowledge
yes and and you could see it
not just in the cycle taking place over
and over
but if you deal with the cause effect
relationships
they're logical
so for example
if you have
bad financial conditions as measured by
if you're spending a lot more than
you're earning
and you don't have a lot of savings you
have more debt or liabilities than
savings
you're not in a good financial position
that's a fact
and if you have a downturn
if the country as a whole experiences
that problem
and you have a lot a large wealth gap
you are likely to have a fight
i mean
so these cycles
don't just take place as cycles
they take place as conditions that are
measurable
and so in the book it was very important
to me not to just use words and theories
of how this thing works
but to actually show the measures
what is the wealth gap what is the
amount of debt
what is the amount of printing
what are the conflicts that are taking
place because then you can monitor those
things
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[Music]
yeah so this is where it starts to get a
little unnerving so okay you recognize
these are patterns they happen all over
history and they repeat and then because
you're plotting all of this and you can
look at these leading indicators that
you talk about pretty extensively in the
book there's 18 that you go into detail
a couple times you break them down and
the ones that maybe are more important
than others but
as you peg so if there's six stages to
this arc
um
you've said that the us is in stage five
and to give everybody an idea stage six
is basically
revolution war it's the the violent
restructuring of the economy and
whether we're in the seventh inning of
stage five or the third inning i don't
know but the fact that we're in stage
five which is obviously
where there's massive internal conflict
which
rings way too true
and
the massive disparities which you did a
really cool graph in your video where
you show income inequality and that gap
between the lines you filled in with
resentment
and so you have growing resentment you
get populous on the left and the right
you get internal conflict people
fighting and then
you get a potential external power
looking at you going they're weakened by
their internal conflict and that
historically is when a rising power
makes its move
yeah so i think there are
three things three big forces to keep
your eye on and when you see them in
their cycle then it's clear
first
are you earning more than you are
spending
and do you want people to look at this
at an individual level or at a country
level
well you can have both
i want them to look at it as the country
but the country's nothing more than the
aggregate of the people
and so
um when you look at those three forces i
want to make sure that they're clear and
you could align them up and you could
see where you are
is the country earning more than its
spending and building savings
or is it spending more than it is
earning and creating debt
because
one man's debts or another man's assets
and when
somebody is holding those assets and
they're producing a lot more of that
money in debt
they go down in value money goes down in
value as they produce it to produce that
buying power
and then that gets people um bad returns
bad and it produces a higher amount of
inflation
and it produces bad returns for holding
debt or so in other words cash or bonds
and then people get out of cash and
bonds
and that produces rising interest rates
while there's rising inflation and that
produces stagflation so i want them to
get the mechanics of that because that's
happening now you could see it this is
not controversial we are producing a lot
of debt we're spending a lot more than
we're earning and as a result they're
printing a lot of money and the printing
of a lot of money creates a lot of
inflation and with that inflation then
nobody wants to you know cash is trash
you don't want to hold cash
and you get out of that and that causes
rates to rise and that's one of those
three factors so you can see it
happening and you could also see the
cycle of it as shown in the book
the second force that is dealing with is
the internal conflict force how you are
with each other are you operating
cohesively common mission and moving in
the right direction the system working
or or are you at each other's throats
on is the system threatened because
history's shown when the causes that
people are behind are more important to
them than the system the system is in
jeopardy and that is a risky situation
it's a risky situation because it
produces
disorder and it can produces a form of
civil war and yet those times when you
have that you see greater and greater
polarity in politics it shows up at
greater and greater populism of the left
and populism of the right and populists
want to fight for their side they're not
moderates moderates want to work
together to try to find a compromise
that's best for the whole populists
appeal to their crowd by saying i am
fighting for you and they will fight
each other and that fight can be at the
threat of the system so in history for
example we saw four democracies in the
1930s choose to become dictatorships as
one side fights to the other because
they become so disorderly and we have a
system right now that you could see
that it is possible in elections that
one side
neither side might accept losing
and so the system becomes in jeopardy
and you see that the moderates
leave the system they you can't be
moderate you have to pick a side and
fight
and so you see this in the french
revolution there were moderates in the
early part of it that recognizing that
there were problems and and wanting to
work together the moderates got guilty
the the polarity began the same was true
in the russian revolution the same was
true in the chinese revolution the cuban
revolution and so on those polarity gets
greater and greater as there's a greater
intensity to fight and that is the
internal piece and so you could see
where we are in that internal piece
right now we see
that moderates are
dropping out of
choosing not to run for re-election
and you're seeing in the primary system
that the fight is who's over most
extreme in representing that and you're
seeing this greater polarity and you see
it reflected in many statistics the um
something like 10 or 15 percent i forgot
if it's ten percent of the democrats or
seven percent of the republicans that'll
remember versus fifth um 15 percent wish
the members of the other party would die
they don't want the measure there um
they don't want them to marry their
uh children i mean there is a great
polarity and you're seeing that um lead
to changes in where people live they're
moving to different areas not just
because of tax reasons but because of
differences in values and so that kind
of you can see it today
happening these things but you also can
see the arc of them in the book because
that it measures statistics it shows
these things happening so when you have
a
financial problems and you have this
kind of polarity and you have a bad time
you have a lot of fighting internally so
imagine where we are in the economic
cycle we're in the part of the economic
cycle
where they have given the the government
has given a lot of money and credit to
people they've put put it out well no
surprise that's leading to a lot of
inflation okay inflation takes buying
power away from people and it also means
that then there's going to be higher
interest rates and that's going to
squeeze people
and so that makes that wealth gap and
that wealth issue
more difficult so that's the second
force and the third force is the rise of
a great power the geopolitical
force that's going on that we're seeing
today with china and russia and so on
and how that's changing because when the
country when the power of a country
diminishes okay when we get weaker
financially or how we are with each
other and so on there are greater
vulnerabilities and there's always the
competitive power that learns how to
become stronger and competition always
happens there's the establishment and
then there's the new competition and as
they get stronger they get stronger in
all ways militarily and commercially and
so on and that's the dynamic that we're
seeing
yeah so we've got taiwan looming in the
the sort of political background you
said many times in the book that that's
a an indicator that you'd really be
looking at if there was a fourth
skirmish over taiwan that you would get
increasingly worried we definitely need
to talk about inflation in a minute so i
want to know what people should be doing
in that environment but first like the
and i don't know if people are like me
but the thing that got me to stop and
really start paying attention to this
was how far into stage five we are that
was the thing that compelled me that i
have to slow down i really have to look
at this because i actually don't like
thinking about money despite my
long-standing pursuit of success that's
really been about something else for me
money has been a byproduct of that um
and that's in the book and i don't know
if your number has changed but in the
book you say that you give a 30 chance
of the us falling into civil war i think
in the next
five to 10 years and that
a major conflict with china at 35 in the
next 10 years and you said look it's a
guess but
you lay out a lot of data before you say
that it's just a guess so it's obviously
a very well informed guess one do those
numbers roughly hold for you still
and if they do
how do we pump the brakes on this
um
i i would say those numbers probably are
a little bit higher now i would say i
was afraid you'd say that strings are
progressing a little bit quicker
um the do you mind ballparking me if if
we're not at 30 are we
31 are we 40
yeah let's say um
let's say 35 to 40 percent
um
on on each let's say and who and i'm not
i'm not being precise but
the events that happened in the ukraine
um and that is is uh bringing all this
up development internationally up um at
a little bit quicker pace it's the same
dynamic there is there are two sides and
there'll be neutral countries just like
in the war there was the allies and the
axis powers and then there would be
neutral countries and so that part is
developing
um the u.s uh
conflict part
is probably progressing a little bit
quicker um so i mean let's say the odds
of that um
on the um on the you um on the world
order um the developments in the ukraine
maybe i should put those in perspective
would
you like me to please absolutely
okay
um
there is a a very close relationship
a common objective
of the russians and the chinese so
um there is a um
a competition in the world
and there's a dominant world power
which um
is perceived as being overly controlling
so the chinese believe that the policy
of containment
of the united states um in other words
just right within their borders that
there isn't a region
uh that's suitable for them
in much the same way as the united
states there's always a geographic
region that has an area of influence uh
the united states in the area
like the cuban missile crisis um cuba um
when there's a threatening power
um in cuba we reacted to that those that
kind of geopolitics
um they believe that the united states
is sort of containing them and they are
growing in power so that there's
that dynamic in russia
uh has the same kind of view and so that
there's a common
let's call it enemy uh competitor and
there are five types of wars
uh there's a trade war
there's a technology war
there's a
geopolitical influence war there is a
capital war
and then there's a military shooting war
um and we are in the first
four of those wars
um in
in this competition
china or with russia
with china
well we're not in a shooting war with
china
we are in um a shooting war of sorts
when rush with russia and the ukraine
we're providing arms and so they're
shooting and so there's a military war
going on
and uh and we're in it
in our way
so we're at those particular
spots
um
and the capital war
is sanctions
we hear the notion of sanctions and what
that means is they're economic
and the way they work is to shut off
um
to produce economic pain by either
[Music]
not letting them get at their money
or
um not letting them get to goods that
they can import
and these have happened through time
in japan that was what set us up for uh
the bombing of pearl harbor because the
united states cut off japan's oil supply
supply was in the process of doing that
and also confiscated its uh bonds
much the same way is happening now
and that put them into a corner that led
them to um bond pearl harbor and then we
went to a military war
so that's where we are now and that also
is risky because it threatens the value
of the dollar
because um the right
right now debt
is dollars
any currency the way you hold it is you
hold it in the form of debt you don't
hold it just in paper
and um uh because it there's a rising
inflation
and because there's a lot of printing of
money
and because there's also a greater fear
on a number of countries
that they too could be sanctioned
there is a selling of dollar denominated
debt so you're seeing that the bond
market is going down and interest
started escalating recently
yeah
that's right and so there is that
that dynamic that's going on the capital
wars
um are the ones that accelerate
immediately before um
the uh the military wars
usually the coffers are empty they're
printing a lot of money and then they're
trying to use uh economics as a weapon
so we're we're in that part of
the cycle now
um in terms of how this will transpire
i think there are um there are three big
questions that we're going to learn
about and get answers to pretty quickly
um the first is
does uh putin and russia uh win or lose
um i'll describe wynn as
um what he wanted at the outset which is
win
for russia would be to
have um the ukraine
um be some not non-threatening position
such as a neutrality a guaranteed
neutrality
and for russia to have control over
eastern provinces
and for russia not to be
economically devastated
instead to be maybe have it something
like a 10 or 12 percent decline in gdp
and for putin to be in power
if those four things happen
then
the
cost of his actions will have been worth
the uh what was it obtained from that
and that would be viewed as a win
um it would be then also a loss
from the western countries
the world is looking at the power of
american sanctions
um because american sanctions
are the greatest power the united states
has
if it was a military power
it the world has uh come to the position
that a number of countries have had um
an equal ability to do harm to the
united states militarily
as the united states have have to do to
them and so we don't have a dominant
military power anymore but we do
have a
dominant
sanctions power
so if we're still ahead of china
um
in the united states in the ability to
influence have economic sanctions as
much ahead because it controls the
world's reserve currency that's a
biggest asset
but in weaponizing the dollar
it is leading those to get around
and not want to hold dollars because
they get
worried that they're going to be
confiscated
so
so we will see
if that dollar
[Music]
sanctions power we'll see how powerful
it is
if it isn't very powerful that's going
to be a problem um because others will
perceive our weakness
well and they'll also realize then
um
then you only have military power i mean
think about this way
if
this war is not
a difficult war for the united states
and europe for the most important it
produces higher oil prices and like
but um while russia is throwing in
military
we are throwing in sanctions
and these sanctions don't cause law and
cost lives
um it's not a military war
uh so we're fighting it with sanctions
and they're fighting it with um with
military
if you didn't have that how would you
fight this war
it would be a much more difficult
situation
and the third thing that we're seeing is
how the world is lining up
the world is lining up on which you know
there are in wars
typically axon axis and exa
and allied powers
and you could see by the actions that
are taken by as to which are lining up
um who voted in favor of what at the
united nations who is
allowing
what rules
who was trading with the other party who
um and russia actually put out a list
um who are
friendly and adversarial countries
um you'll see at the next g20 meeting
uh who will be in favor of russia
attending that meeting and who will be
in favor of it not attending
and that's making clear how the sides
are lining up
so you're seeing those sides line up and
all sides are in preparation for war
okay so
all right we've got that escalating
things are moving faster um between us
and china than we thought escalating
tensions here in the u.s
[Music]
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
obviously for inflation reasons i have
since learned that that is a terrible
strategy
but what do you
do well first thing
is you realize that
holding cash
and debt assets
is a bad thing
so a lot of
money
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 eight and a half percent over
the last
um inflation is eight and a half percent
and they received virtually no interest
rate in cash and so there was an eight
and a half percent 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 as your buying power and so the
worst thing
is to be in cash like i say cash is
trash
and to be in to and to be out of the
bonds the next thing is to have a
diversified portfolio of assets
the diversification
means
some assets
that are
[Music]
inflation hedge prone for example you're
better off to own
an inflation index bonds than a regular
bond
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 punch line is going to be
yeah um i think the punch line is if you
take a look at it
uh it's in 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
yep 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 so flooding into any one thing is
a is an issue but but
moving from the nominal bonds in which
the government just says i'll give you
this amount of money and it has the
unbelief
unbelievable and unlimited ability to
print the money it gives you um it would
favor inflation index bonds
um and it could be other assets uh you
know some people would say something in
terms of cryptocurrencies or it might be
um
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 peop people pay
too much
attention to one
at the extreme of the other you know um
that
either somebody's 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
uh secure from governments doing
monitoring 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 it 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 shocked me
about how much how much you have
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 u.s and
u.s 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 their
spending do they have a good income
statement and balance sheet
this is going to be very important in
the period of head ahead because the
amount of credit that's going to be
available to bridge the gap
between spending
and earning
cash flows and so on is going to be
quite narrower so a lot of companies
even that were able to raise cash
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 but our country is on the rise in
that so obviously i'm shocked to say
this out loud but the u.s 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 work 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
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's becoming more
dangerous chicago's becoming more
dangerous places chica 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 texan texas
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
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 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 see greater
differentiation in places which affects
where you want to be and where people um
who can afford to be there want to be
and also affects what their economies
and markets are like
and that's sown 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 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
has 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
diversify between locations 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 without 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 allocation
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
because 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
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
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 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
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
now for sure that that already is really
helpful hello my friend you know that i
believe success requires you to see
failure as the ultimate learning tool
success requires you to be disciplined
and gritty and to never ever quit on
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slide 10 steps back and that's why
success also requires you to know how to
pull yourself out of a rut and get
unstuck fast life is short you can't be
messing around with your goals you've
got to make progress every single day so
i've pulled a class from impact theory
university called how to get unstuck
which you can watch for free with the
link on your screen or by clicking below
when you join me for that free preview
of that workshop from impact theory
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i'll see you on the inside
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 investment class
even though people are treating it like
that they're treating it like a hedge
against inflation and 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 five percent of the
wallets and so 95 percent of people are
getting beaten to death while five
percent 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 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 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
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 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
gonna 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 giving you my
some perspective of what my i might
expect in the future but you have to
think through a game plan and operate
that way so i by and large would say
first the um the most important things
you could do are actually the simplest
things you could do to build that
strategic asset allocation mix not to be
out in their 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 hubris 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
trying to forestall 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
forestall 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 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 forestall that
well
again
there's those who control the system and
what should be done
and then there's what the individual
should do
to assuming that they can't control the
system so your question really is i view
it in 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 yeah and this is what people talk
about with austerity right
well or productivity
in one way or another
you have it's the same thing yeah so
productivity would be make more
money so you keep spending what you're
spending but make more money
that's right
okay
and
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
and if most people are not benefiting or
have that opportunity
it is
something that is
suboptimal for the development of the
country because you don't know where the
talent comes from what's the lever we
pulled to do that though
well let me get it out and then i'll get
to the l
to how i would do it okay 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 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 engineer educate your population
well they have to learn how to be civil
with each other you have to provide a
system that produces that allows
productivity to be good blah blah blah
but to answer your question and really
get to the punch line
because that's what i need to do you
need to create a system that both
increases the size of the pie
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 pint of iowa
um and the way that i would uh do that
is i would start by having a bipartisan
cabinet
and bring together smart moderates
people who can work on both sides
because i think that the first thing is
that the polarity is going to kill us 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
a program that's like a 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 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 body
their parties because i believe that
more likely
it's going to be the extremists
who are going to
destroy the system threaten the system
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 well
it you know it's it's it's kind of like
very easy you can 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 as great investments i um
my wife
particularly and me um peripherally uh
work in the state of edu
and uh connecticut for education i'm
gonna give you a picture
um
connecticut is usually average per
capita income number one two or three in
the country and in connecticut
um
in high high school students
of the high school students
are disengaged which means that they
have an absentee rate of greater than 25
and they're failing classes
and
or
disconnected means they've dropped out
of school and they don't know where they
are
so one in five students more than one in
five students
um
education system is failing they will be
on the streets they will be
not doing good things on the on the
streets they are likely to be
incarcerated
there are um gangs and gun shootings and
so on um uh that almost end
okay that almost end that there have to
be um
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there's a level of bottom to which
you can't let the society
go and um we've found through uh
largely her efforts and so on
um that for
um
seven to nine thousand dollars per
student we could get them through high
school and into jobs and then they'd be
productive
what is it about that money how do you
allocate that to break that cycle
um
there are things that you can do
at certain points in their life
particularly between 8th and 9th grade
that you can
help them
make that transition and understand how
they're doing and then work with
providing supports to make them
successful some cases putting them in a
direction where there's they go into
trade programs
so that they'll be prepared for jobs and
so on but there are my main point
is um that's only just one example uh as
i see
we're operating a lot philanthropically
in different areas
and we see so many cost benefit
um
to
creating
improvements in
great investments
that would have a big effect but it
starts with real education and because
you have to have an educated population
and a civility
it's a very difficult thing when the
children are raised children are raised
where um you know it's quite often a
single parent in a slum where there's
drugs where there's
guns where there's gangs who are you
going to relate to what what is your
best likelihood of an income it's
through drug dealing and it's with gangs
that's your community and so on that
cycle has got to be broken um and i'm
only giving that as as one
example but there are so many um
cost effective ways of putting in money
infrastructure like
to not have
laptops and connectivity
is
today the equivalent of not having
running water and electricity
or the telephone
and we see it with education
we were
again in connecticut we found
60 000 students didn't have computers
how are they going to get educated
so you know we we got them the computers
but uh and the society that would allow
that is something wrong and then
connectivity so certain basic
infrastructure i mean there
are a lot of good investments
that are not necessarily they don't
necessarily come from um
the business profit seeking world profit
is a good
but highly imperfect way of allocating
resources because in some cases
something you know building a road may
not be profitable
uh but it might
when the united states built roads and
it built railroads
and so on it uh dramatically increased
productivity so there's infrastructure
and changes that
that have to be made and there's great
advances on these things great advances
on how to educate
using
computer technology that also not only
helps the student learn but it also
helps the computer learn about the
student and how they think so there's a
lot of potential think about it this way
the world is richer today
we we have more
per capita income
we have more
um
technology and know-how
it just has to be redeployed in a way
where it maximizes the efficiency and
the
and essentially the equi equi
equality of opportunity so that we pull
together ins but now that's a dream you
know uh is it a likelihood it's not a
likelihood okay because people in these
cycles go to fight and and and you know
they're focused uh more on um them
winning
yeah i want to i want to put a point on
that so as you were talking about it i
was like okay how do we end up here how
do we get people out of this
there's a couple things that i see so as
a kid of the 80s um loving america