Dividends and Ray Dalio of Bridgewater Associates

There are number of  videos from Ray Dalio of Bridgewater Associates for he is successful hedge fund and has a 30 minute video about credit and credit cycles. He made money on the downfall of 2008 stock collapse because of his views on credit cycles. His approach to investing and life are 5 aspects:

  1. Goals
  2. Encountering problems
  3. Diagnosis
  4. Design
  5. Follow through

1. Goals   – be passionate about them

2. Encountering problems – life is about encountering problems which means your life is how do you approach problems which come your way. Mr. Dalio believes all problems are a learning experience.

3. Diagnosis  – what is the root cause of the problem?

4. Design – what are you going to do about it? how are you learning from the problem because there is a very high probability you will see the problem again and need to react.

5. Follow through – if life is full of problems, and we all tend to go through cycles you will encounter problems again and you will be able to both anticipate them and deal with them.

The cycle continues throughout life.

Using the market as an example: in the market the consensus view is the price. In order to be different (this is where you make the greatest money), you maybe wrong. You must be able to or spend time and energy trying to understand alternative points of view because you maybe wrong.

You will be more wrong than right or you will mistakes. The issue is what do you learn from your mistakes. What Bridgewater tries to do is making sense of reality and try to foster independent thinking. What is ambiguous – this leads to discovery. The discovery leads to more learning which leads to mistakes and learning. The danger is not learning and The goal is not to be wrong but more right than wrong. You have to constantly ask what if I am wrong?  Why might something that is improbable be true? If it is then there will be a cause and effect.

Mr. Dalio has a 30 minute video about credit and the economic machine titled How does the economic machine work. Watch it – listen to the fed and make your decisions on what they can and can not do. You may be closer to where Mr. Dalio is thinking.

Linking to dividend paying stocks, investing in yourself and in the markets are similar. If you are constantly learning, you will approach life in a good way and in the end life is about being healthy. In terms of your investment account, the greatest wealth is built over time – when asset prices fall, you buy them for less money and wait till they go up in value to sell. The issue is what are the good buys, should you wait and what should you do; if you do not know ensure you are in dividend paying stocks to earn both income and capital gains until you have a clearer direction.

There are more questions than answers, till the next time – to raising questions.




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