Dividends and Bob Prince interview

One of the most successful hedge funds in the US is Bridgewater Associates, most of the time you hear from the President Ray Dalio and he is worth listening to. At Davos, Switzerland, Bob Prince who is the co-chief investment officer of Bridgewater was interviewed.

One of the most important things he said was if you want to sleep well at night, be diversified. Good asset allocation is important.

When Mr. Prince looks at the world to invest in he sees what is priced is discounted. The markets relationship to what is discounted?

For example:

In the US, optimistic earnings are priced in the stocks, which means you need to ask what if earnings are lower? what if expenses are higher – how have executives cut expenses?

Mr. Prince there is always opportunity, if you understand how the system is suppose to work. What are the natural ebbs and flows?

Linking to dividend paying stocks, everyone looks at stocks a little differently which is why stocks go up and down. Generally there tends to be a reason because many people are using the same formulas to calculate the values to buy and sell. There is always some opportunity because some are right and some are wrong. If you buy, buy for a reason for example as long as the company pays a dividend and ideally can increase it, then you do not have to sell. You will earn money and allow others to push up the value of your shares and your total return will make you contented.

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

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