Ray Dalio: We’re Heading Into Very, Very Dark Times! America & The UK’s Decline Is Coming!

0:00 Pay attention. Pain plus reflection equals progress. And from that principle, my company became the largest hedge fund in the world. Managing how much? $150 billion. But I learned that history of things that never happened in my lifetime before were important things to understand in order to predict the future. And we can get into that if you want. Peace. So Ray Dallio is the legendary billionaire investor who decoded the cycles of human history to predict financial crashes. build the world's largest hedge fund. And now to warn us about what lies ahead. Are you optimistic about the future of the UK? No. What about the United States? No. Why? Okay. In order to bet on what's going to happen on the global economy, I learned that there's five big forces that create a big cycle that's repeated through

0:46 history which lasts about 80 years. The first is the money debt force that creates wealth and opportunities gaps and it's connected to the second force, the internal conflict where you don't trust the system causing wars between the left and the right and it's not easy answers like tax the rich and we can get into that. But the third is geopolitical force. In other words, international conflict. Then there's acts of nature. And then number five is man's inventiveness particularly of new technologies. Now the question is who wins the technology war because the winner of that determine how the new world order works. Is it something to be concerned about? No. The question is how you as an individual handle it. How do I as an individual handle it?

1:31 So there's building your financial strength, flexibility, the importance of being open-minded and how to get more out of the minute, not how to work harder. And I really urge your audience to learn all of this. So, first of all, I see messages all the time in the comment section that some of you didn't realize you didn't subscribe. So, if you could do me a favor and double check if you're a subscriber to this channel, that would be tremendously appreciated. It's the simple, it's the free thing that anybody that watches this show frequently can do to help us here to keep everything going in this show in the trajectory it's on. So, please do double check if you've subscribed and uh thank you so much because in a strange way, you are you're part of our history and you're on this journey with us and I appreciate you for that. So, yeah, thank you. [Music] Ray,

2:18 I I want to describe to you who's listening right now. And the question I have for you is what is the most important thing that this persona of person should be thinking about at the highest level right now. So the person that's listening is someone who is intent on improving their life. They're they're really interested in business, potentially starting their own business. They they care about where they're investing their their time and energy and also where they're setting up their home based on in terms of geography. They are aspiring to accomplish some goal. They're probably between the age of 18 and 50 predominantly and they are very very interested in understanding what's happening in a world that feels incredibly

3:03 scary, fast-paced and uncertain at the moment. This is a very difficult question, but if anyone I was going to ask anyone, it would have to be you. What What's one of the first things they should be considering at this moment to safeguard their future, their family, their finances? I don't think it's a difficult question. I um I think it's it's very clear. They have to understand how the life cycle works. Okay? They have to understand it how it works. We were just talking before, you know, in the book and there was the arc of the life cycle, right? And you have to understand that you're on an adventurous journey. Okay? And you have a certain nature. You know, those qualities that ma make you have your preferences and so on. And

3:49 then you're going after the things that you like and you're learning and it's going to have the ups and downs and so on and how you approach that. So you asked from the higher level if I'm looking down you know like that life cycle that arc what's that journey like how do you approach it you know what are your principles how do you even learn how to approach it that's why we're having these conversations right y so that's clear you know what's your nature how's the journey how do you find the path that's suitable to your nature and then you'll go down that path and you'll discover and you'll evolve. What's that like? That's what they need to know.

4:34 You said what's your nature? What do you mean by nature? People are born with and then also their environment creates their different nature. You know, we have our preferences, our inclinations. We think in a certain way. You chose to be entrepreneurial. Okay? You're living out your nature. Okay? This isn't for somebody else. You know, some people have a different nature. Okay? They would like to have the stability of a job and clarity and so on. So when you have your nature, you want to know that and then find the path that is going to be good for your nature. Then there's the particular tactical stuff. So if you would ask me, should I be in the UK or should I be in the US? Well, that depends on a lot of things, but that's a

5:20 tactical question. So if I want to be an entrepreneur and I want to build a technology company, do you think I should be in the UK or the US? I think you should be in the US. Why? The US has a culture of um entrepreneurship, inventiveness. There's a whole different culture like in Europe generally speaking and in and in the UK there's an establishment culture, right? And here um you could be 25, have a blue streak in your hair and have the talent, but if you got the talent to pull it off, you can get the resources and you can be an entrepreneur. It's there's a culture of that. That means that it's happening more. That's why you even see the differences in the economies. Okay, where is the inventiveness really

6:07 happening? Okay, it's happening here. So I would say if you want to be an entrepreneur, this is an environment that's particularly conducive to being an entrepreneur. So what is your honest perspective about the UK at the moment? The UK has a financial problem. Uh the government has a debt problem and it doesn't have enough money for what it wants to do and what it can do. And so what you see is the nondom problem, people moving and so on so forth. And throughout history, when you have these sorts of things, then there's great clashes in people. Okay? And the UK has been in decline since the war. Even the development of the capital markets, can you raise capital there? All of these

6:53 things are much worse than they are in the United States. And it leads to clashes. He said, "Of course, you know, there are five big forces that create a big cycle that lasts about 80 years, give or take 50, let's say. And the five big forces are there's a money, debt, economy force, okay? Debts are spending power. So what happens is when you give somebody credit they can spend and then but it also produces debt and debt has to be paid back and so what happens is if there's not enough income to pay back the debt then you have um

7:39 debt rising relative to income it squeezes out spending people don't want to hold the debt assets and so on the UK has gone through that and has gone through that and it's connected to the second force And we're all going through this in varying degrees. The second force is the internal political and social force. In other words, like between the left and the right with wealth gaps and opportunities gaps. We have big wealth and opportunities gaps. So when you have big wealth and opportunities gaps, there's conflict. Okay? Conflict between the left and the right. And when you get to the situation where you don't believe the system is working for you and you don't trust the system, then there are wars. There are internal conflicts over over that and so

8:27 on. So the third force is the geopolitical force. In other words, u there's a cycle that usually goes from one big war to another big war. So the last war ended in 194544 and we began a new order in 1945. And the way that works is that the winners of the war determine how the world order works. They draw borders. They say here's how it's going to work. And that's the new order. Okay? And that continues until there's a rising power challenging an existing power and the existing world order which typically is deteriorating at that time. And then you have international conflict. Okay, these orders, there's a monetary order, they

9:14 all break down. There's an in internal political order, they all break down. And and there's a geopolitical order. They all have this conflict and they work together. The fourth force throughout history has been acts of nature. Droughts, floods, and pandemics, for example, have killed more people than wars. And acts of nature, nature has a big effect. And then number five force is man's inventiveness particularly of new technologies. Okay, because if you see that inventiveness that has raised per capita incomes, GDP per capita, any measures of living standards over a period of time and and so on. But it is also related to the first four that I said those four

9:59 four forces interact. Now when we go back to your UK case, okay, they have a financial problem. they and almost every country now is dealing with more of that internal political problem for the same reasons. Wealth gaps, opportunities gaps, what do we do? Who's got the power? I don't trust the system kind of thing. Okay. Number three is we are certainly in an international great powers conflict, right? And it certainly affects Europe and the UK as we're dealing with not only the Ukraine situation but the Russian situation and what does that mean and that relates to the money thing because okay where's the money coming from to have defense or military expenditures and so on so

10:45 forth. So that matters right the geopolitical matters climate certainly matters and then of course technology man's inventiveness. So everything could be looked through at through that lens. And so what does this mean for the UK if all other countries are going through this as well? Doesn't that just mean that all countries are going to suffer equally? No. No. No. Because they're not all equal. Okay. Some are more in debt than others. Okay. Some people are more willing to hold their debt than others. Um some means they they have more resources. Some are bigger and more powerful. Some are less powerful. They're different. Okay. They're all go in different conditions. Some countries have surpluses. Some countries, you know, are not in the middle of where

11:31 there's having a war. Are you optimistic about the the future of the UK at the moment? No, no. Because it has high debt. It has the social internal conflict. It it's affected by the geopolitical factors. And in terms of inventiveness, it doesn't have the culture that other countries have like like the US. Is that Yes. The cult culture and the capital markets to support that at a scale that it needs to be supported to play seriously in the game. And for anyone that doesn't know capital markets mean basically the investor markets is way of saying well I mean it gets you the money. In other words, you're a guy with you know what happens is um we have to enable people. Okay. What

12:18 what works is finding great people, talented people, and identifying those who you want to bet on and enabling them. And that works. That's the most important force, much more important than money. Okay? Because you could see who's got the money and power and where did they come from? Where did Nvidia come from? Where did where did they all come from? Okay? There are guys like you, entrepreneur in a sense, who's been enabled, okay, by you because you have the talent and people want to bet on you and that's the capital market. So they give you money to help enable you because they want to bet on you and then good things happen. But are you are you optimistic about the United States at the moment? The United States is very much a big

13:05 picture. No, I think it's very much in this issue there. So, if I go down my list, it definitely has this uh debt money economy problem. We can get into that. Okay. It definitely has the internal conflict power in which there's a fight between the left, you know, the hard left and the right due to wealth and values gaps and people not believing that the system will work for them. And so democracy is at risk because they don't believe this. They they're not going to follow the rules in the sense they don't believe the rules are going to uh number three it's of course the leading one side in this great power conflict of the world right in other words yes between the United States and

13:51 the one side let's say and China and the allies their allies on the other side. I mean in the news you just saw the meetings of Xi Putin Modi and that group over there walking down you know and okay so now it should be pretty clear how the sides are lining up okay you it's always better to be in a place that's not in one of those wars like stay out of wars um and of course climate has an effect and of course then we have technology the United States and China are in the big technology compet competitions. The others are really not in the game. They don't have the money that this innovation and talent in a sense to play at that scale and so on. So we have a great you know technology

14:39 war which can be used to create great advances but at the same time could be used for great conflicts. And so now the question is going to be who wins the technology war because the winner of the technology war is going to win all wars. Okay. In other words, they'll win the economic war. They'll win the geopolitical war because technology and I'm not saying anything that hasn't repeated through history. Give me that historical context if you can just for the technology for example nuclear. Yeah. Nuclear won World War II. And and does this cycle go back further than just Oh, no. It goes back I that book. Okay.

15:26 Um, in order to understand these things, cuz I have to bet on what's going to happen. I'm a global macro investor. I study the last 500 years of history and and it happens over and over again in all cases. So, I could take the British Empire, I could take you through all the empires, the Dutch Empire before that, and all this, and it it it happens uh all the time. I watched your I watched your videos about this and it was truly fascinating how predictable this stuff is and the work that you've done to uncover this trend throughout history. I mean, it's almost for me it was almost irrefutable watching the evidence in in I think it's like a 40-minute video on YouTube where you show how this played out through empires. And it begs the question, you know, because when you live in the United States, when you're when you're in the present time, you

16:11 almost never assume that the empire you're in could fall. You just don't you don't see how it could happen. We're so strong. We're so great, you know, we're so that doing AI over here, have money over here, everything's good, the sun's shining. It's inconceivable. Of course, people always think that the future would be a slightly modified version of the present, and it's not. Okay. Watch over decades, but it's like watching a person grow. Yeah. Okay. Yeah. You know, you watch your kid or you watch a person at your age, any age, and that's what you see. Yeah. Okay. And you don't see the life arc. Yeah. Okay. But the life arc is in irrefutable. But the U do you think it's conceivable that in the next 50 to 100 years the US could no longer be the dominant power

16:58 globally? Yeah. Yeah. More than conceivable. More than conceivable. What does what do you mean by more than conceivable? I mean that these evolutions always take place and they take place in a certain way and that um if you look at the probabilities um and the paths and the symptoms there is a challenge the United States is facing a number of those challenges and we're at a moment where Um it's a question of whether the system and

17:44 the people could can get control of the situations and deal with it strongly and well in a way where they are not fighting to the point of damaging each other and damaging managing the prospects for the future. But I mean, the United States is very innovative. Got all these great innovative companies here. So surely Yeah. But you you can't make generalizations about the United States. And you can't make generalizations, by the way, about the markets either. um what you see is um 1% a small percentage 1% of the

18:32 population if you're looking at the breakdown of incomes and also you're looking at the innovation the stock markets which stocks are doing well who owns those companies and all of that about three million people in a country of uh 330 million people are really unbelievably doing great and you could pick the neighborhoods they're in and what they're doing. And then there's the top 10%, let's say, which is the people around them. And they're really, really doing great in that world. At the same time, the bottom 60% 60% of Americans have below a sixth grade reading level. Wow. And that population

19:19 in terms of um the basics being productive, you have to be productive and be prosperous. So what what you need to have a su successful society is to have broadbased productivity and prosperity. Okay? And that's a problem. Okay? So, which America are you looking at? And are you watching the war that's happening between these? It's a little bit complicated for me as a as a bit of an outsider because I see Trump saying he represents those people, but obviously Trump is a from the billionaire class himself. So, I mean,

20:04 is he is he a savior for inequality? Is he correcting? I think I think he sees a lot of the problem and he uh I think he sees the debt problem. I think he sees the internal conflict disorder problem and I think he represents uh the red, let's call it the red states. I mean, you look at a map and there's red and blue and you see where they are, okay? And he represents that and they're united behind him in terms of doing some things. Okay? So he represents let's call it the red side which is located where the maps shows red and then there are the blue and and he's um he views himself as somebody who

20:50 needs to take charge and to do certain things. Others in that population would say those who let's say are not getting are having the food stamp program cut off or having other programs cut off that they're dependent on would say uh wait a second that's not representing me. And so we have gone that population has gone to significant number behind him that are devotees. They're all in. Okay. At the same time as we have the other side which will have their devotees if you know we're in New York City. Okay. And the up upcoming

21:37 mayoral uh election will be an example of the two sides. Okay. And they will try to use the system but there's a question will the system have enough support to work. Okay. But that's what we have. Just just to close off on this point of the UK in particular, if if you were to try and fix it, what would you be aiming at? I say this because we do have a millionaire exodus that's widely reported in the UK where I think this year we're set to lose 16,000 roughly 16,000 millionaires. Um, when you look at the big big countries like China, America, the UAE, the UK, we're losing more millionaires than anybody else. And I was wondering if you think it's fixable and if you were in charge of the UK, what you might aim at first.

22:23 It's diff, you know, first of all, if you go back to the basic problem, which is there's too much debt, there are deficits, there's differences in education and opportunity levels and so on. The most important thing that you can have is a strong middle. Political middle. Political middle to be analytically strong and also strong enough to get the people to do what needs to be done even if they don't want to do it to get to be productive. Now that's an easy thing to say.

23:11 It's not an easy thing to do. But you do need that strong middle and you do need to convey to people that you need to have the strong middle to change productivity and you know and are you in it? Are are you in it? Are you patriotic and in it and you know but you look at history how did the United States come to be the United States? People will go to the places that are better than them then stay in the places that worse for them. This is fundamental right incentives. Okay. So you have to make the place better. Okay. Now I would say also you can take

23:57 pockets and they go into the pocket and let it spread out. But you also have to have this equal education or you know you've got to strive for equal opportunity. But anyway, it's a difficult question that I'm afraid I'm incapable of um solving. It was unnerving to hear the tone of your voice drop when I asked it. You seemed slightly um as if you you've kind of given up on the UK a little bit. Your facial reaction? Well, I'm I'm just a I'm just a I'm a practical guy. I'm a realistic guy. I made my money. I'm in the business and it's my nature to try to be realistic

24:44 and to bet on how things will transpire. And that's not healthy. The situation in the UK is not healthy. And the situation in the United States is very risky in many ways. It's what we're describing. So, you know, and then if you look where are people going then then you see the places that have the qualities we're talking about. They're civil. They're creative. The people aren't at war with each other. What happens next in history? Well, usually there's a a big fight for control, political revolutions and things like that. the system breaks down

25:31 because they don't trust the system. So will the legal system resolve that? Will the parliamentary system resolve that these disputes satisfactorily to the satisfaction of those people and the other people who have different points of view and the sides won't believe it. And this goes back this goes back to Rome. It goes back to Caesar, you know, the Senate. And you know this goes back through history all the time, right? And in in the 30s, four major democracies chose to be autocracies. Okay, that

26:18 happened in Italy, Germany, Spain, and Japan. What's autocracy for anyone that doesn't know the word? Well, it's it means a dictatorship essentially of a limited number of people at the top who are autocratic, which means that they are directing things rather than a democracy in which um there's representatives of all different points of view that get together and follow rules to make decisions. So the UK could become an autocracy as could the US. I guess um you're going to see a lot of pressure for that strong leader who will get

27:05 control of things and make it work well and will and you're likely to see two different views as to which side, you know, the red and the blue sides, so to speak. You're likely to see that type of clash. You said the US is playing a risky game itself. Is that from a de debt perspective or otherwise from these things? Okay. From the debt, from the internal conflict, from the changing world order, the geopolitical world conflict, you know, I don't know. We're playing with nuclear weapons and, you know, in wars and different places and then of course climate and then the technology war. How we're doing that. Yeah, I saw that image the other day of Putin

27:52 and um President Xi and China together walking together. If China does become the dominant force in the world, the dominant power does is that a smooth transition? First of all, I don't think either side is going to be the clearly dominant power for for a very long time and and the the quickest way to have it is some kind of a war and that's a dangerous thing and but maybe it evolves hopefully the way the Soviet Union evolved that the the worry of mutually assured destruction keeps everybody not having that kind of war and then what then then the systems one system or another system wins

28:40 but that's an evolutionary process and you know I can't say and um do you think much about time frames because when I was watching when I was going through the changing world order there seems to be somewhat consistent or predictable time frames when these these transitions happen. Do you think about where we are? Well, they're long-term big cycles. Yeah. Right. It's it's like a life cycle on average they are about a life cycle about 80 years but it's not predetermined just like your life cycle is not predetermined like if you take care of yourself and you you know I don't know smoke eat well exercise and so on so forth then you will probably have a longer life cycle than if you don't take care of yourself and it's um

29:28 kind of like that you know and so you see them in industry they evolve but you can see the symptoms. Okay, you can see the actions and the symptoms which like taking a physical uh then gives you a sense of where they are in their life cycles. We're 80 years from World War II. 80 years from World War II. Yeah. And you're seeing the symptoms. Yeah. Symptoms are clear. They're all in that book. You can see the charts of all the systems. Is it something to be worried about or concerned about if you're in the United States? No I mean, yes. And then the question is how you as an individual handle it. How do I as an individual handle it? Well, first of all, I think I think you

30:16 have to be aware of the situation and the risks for me and my family though in terms of risks and how I should um counteract those risks. Is it a case of me saving for a rainy day? Is it a That's part of it. Yeah. Um there's a there's a saying in Hong Kong um a Chinese saying which is a smart rabbit has three holes. And what that means is you can see is it the UK or the US and and I can then move to the better place and get out of the place that's a terrible place. So can I successfully be an immigrant or whatever and change my location? throughout history that's been important. So the ability to go to good places and away

31:05 from bad places. Um so that's part of it. Um secondly, building your financial strength is important which has to do with how you earn, spend and save. That will determine the amount. And then what you do with that amount is invest. And so how you invest uh is also important. So if you have your financial ability and you can make the move and then you have knowledge you know about what's happening so that you can change things. Those are the things you need. So on that first

31:51 point about a smart rabbit having three holes, is it therefore a better decision at this point in time to not to not buy a house? Because a lot of people end up buying a house and anchors them to to a place and it means that they then have to pay into a mortgage. So a lot of lot of the financial advice most of us have growing up is when you get enough money to buy a house, move in, pay that mortgage for 25 years. But if I'm in a new economy, in a new world, and flexibility and the ability to get up and go and move is there's there's uh value to that. The ability to move capital matters. And if you look at history, this has been an important consideration. Yes. So it matters. So if you're nailing yourself down and that's your primary capital and it's nailed down there, then that's does

32:38 limit your flexibility. And on the point of earning, spending, and saving, wonder what you you're a you're a a father, aren't you? Yeah. What what advice are you giving to your children about earning money in the in the current world, where where they should set up their shop, the skills that are most valuable to acquire, the technologies, the we talked about the US being a place to one of the better places to build your career for all the reasons you described. Well, that's, you know, that's kind of like the particular that you asked me for. That's below the level of the higher level. Okay. The higher level is I have a principle. Make your work and your passion the same thing. And don't forget about the money part.

33:24 Okay? If you make your work and your passion the same thing so that you're really enjoying your work, you'll have an enjoyable satisfactory life and you'll probably be better at your career that um as a result probably advance and so on. So you have a happier life and you will have a more probably a more successful life. But it is true that the careers that you choose will have financial implications. Mhm. And if you say, "I want to be a poet or something along those lines." You better consider the financial implications of that. That doesn't mean that you have to go make a ton of money because I think that that's I think a lot of people fall into that trap that they think the money

34:10 is um like vast amounts of money is vast amounts of success. And that's not true. In other words, is your work and your passion the same thing? So, I think that what brings people happiness is meaningful work and meaningful relationships. Okay? If you have meaningful work, you know, that you're into and your, you know, your passion and your work's the same thing. And you have meaningful relationships, whether through that work or beyond, you're going to have probably a great life. Okay? And so, you have to keep that in mind. And it doesn't have much correlation past a certain level of money. Uh it doesn't have much correlation with um that well-being with the amount of money you have. And if you see studies

34:56 across societies and you'll see that past that certain basic level, there's no correlation between the amount of money they have and how much happiness they have or well-being. Okay? that the highest level of co correlation across societies and studies of happiness and well-being is community. Do you have a sense of community? Do you have those around you who are your community? You'll live longer that way. You'll have a more joyous life and it'll be a better outcome. But anyway, so thinking about those things I think is important based on your life cycle in this book principles your guided journey. create your own principles to get the work and life you want. Do you think you have to play different games in different seasons of your life cycle as it relates

35:43 to generating wealth? And what I'm talking about here is really like risk profile um or what I should be optimizing for. Should I be should I be trying to hang around with Ray Dalio or should I be focusing on the job that pays me the most? First of all, the answer is yes. And the second question you asked the answer is um that you should be around the the people who are the best people to teach you to operate by the the mentors and the learnings and so on. You should be around the best people and when I say best people I mean people of good character and good capabilities. Okay. And uh so you should be around the best not the job that pays you the most.

36:30 And I could explain why that is, but and yes, in terms of that arc, you will play it differently at different parts of your life cycle. So in the early part of your life cycle, what you're going to do is I mean the more learning and experiencing is the most important thing that you can do in the learning in the early part of your life cycle. It's like you're going to make your choices. what direction am I going to be in and so on so forth. So learn. Okay, that that's that's most important. And then what you're at the end of your life cycle, you're pretty much relieved from all of that. You're not going to be working to earn, okay? You're going to be free of all of that. You're going to have um and you have freedom of choices

37:18 and so on. And you're going to be thinking about transitioning. how do I transition well-being or how do I transition my wealth or how do I transition and so on you know that's that's where you are still learning is a joy but at the same time in terms of trying to accomplish it's not the same at your late part of your life cycle as it is in your early part of your life cycle so I want to ask about your early life cycle and what the most important strategic or wealth generating decisions you made that you would encourage encourage everybody to consider if their nature is aligned to yours. Okay. My nature was I hated school. I didn't like the whole thing of remembering this and remembering this

38:04 and then give it back to me and there were these uh you know history like there's William the Conquer in 1066 and what did he do and you know like all of that was what education represented. And when I was um 12, a kid, I earned money with odd jobs like um I had a paper route and um I mowed lawns and I caddied and I took my cadding money and when I was 12 I got everybody was talking about the stock market. So I put some money in the stock market. I didn't know what I was doing, of course, but I um I picked um the stock that was the only stock I ever heard of that was selling for less than $5 a share. And my reasoning was I

38:52 could buy more shares, so if it went up, I could make more money. Okay, that was a stupid criteria, but it was a company that was about to go bankrupt. And another company acquired it and it tripled in price. and I said, "I like this game." [Music] So, I got I got hooked on the game. I'm still hooked on the game, right? So, I liked it. Okay. That that affected me. So, I barely got into uh CW Post College and then I went to uh Harvard Business School and that opened my eyes to the world in in many ways because of who were there and what it was like and all that, you know, the best and the

39:38 brightest kind of thing. But I always still traded markets because I always played the game. I could tell you stories. You want a couple of quick stories? 100%. Okay. So, I'm clerking on the floor of the New York Stock Exchange between graduating from college and in the summer between graduating from college and going to uh Harvard Business School. And that is 197 the summer of 1971. Mhm. And on August 15th, 1971, Richard Nixon gets on the television and says that, you know, the promise that that you were going to be able to take your

40:25 paper money and go get gold, you can't do that and we're not we're going to cut off that off. He didn't say it in exactly those words, but money then was gold and what we think of as paper money, fiat money was claims on the gold. So I walked on the floor of the New York Stock Exchange that summer and I thought the market was going to go down a lot and the market went up a lot and I didn't understand why because I never went through a devaluation before. And I studied history and I found that in March of 1933, Roosevelt got on the radio and made the exact same announcement that you're not going to get your gold and they're going to print the money. And when you print a lot of money, you have that. Okay. So, I

41:12 learned that history of things that never happened in my lifetime before were important things to understand. Okay. I went back then to Harvard Business School two for two years and and two years later as a result of all the printing of money and the oil shock because of all of that uh we had the in 1973 oil shock and now because of my background I'm head hired to be director of commodities at a Wall Street brokerage firm. Okay. Mhm. Which and then all sorts of things happened. Um turbulence and so on so forth. That firm went broke. I went to another firm and I was uh rowdy. I

42:01 wasn't your typical good employee, you know, follow everything. And uh so I got fired and that was in uh 1975 and then I but uh clients all liked me and for things and so they would pay me for advice and I continued to trade the markets and that's when I formed Bridgewwater. Okay. And what that was 1975. I just passed along Bridgewater 50 years later. Yeah. Okay. So there's a journey there that has failures and successes and learnings. You know, I have a principle. Pain plus reflection equals progress.

42:48 Okay? Your best learnings come from the pain. It's a message. Pay attention. Learn how reality works and how to deal with it differently so you have principles for re dealing with reality better. And I learned that process. And from that process, my company Bridgewwater became the largest hedge fund in the world. Um, extremely successful, managing how much? $150 billion. 1,500 people, $150 billion. And that's made you a very wealthy man. And made me a very wealthy man, which by the way was not my intention. Okay. I just wanted to play the game and to have meaningful work and meaningful relationships. That was paramount. But it happened to be the game I played. If you're good at the game, you make a lot

43:34 of money. And now I'm at a stage in my life where I'm I want to pass things along. I need to pass things along, right? So, hence the books, hence our conversation and here we are. That's the life arc. But I learned a lot. And so that's the journey. I think B2B marketeers keep making this mistake. They're chasing volume instead of quality. And when you try to be seen by more people instead of the right people, all you're doing is making noise. But that noise rarely shifts the needle. And it's often quite expensive. And I know as there was a time in my career where I kept making this mistake that many of you will be making it, too. Eventually, I started posting ads on our show sponsors platform, LinkedIn. And that's when things started to change. I

44:21 put that change down to a few critical things. One of them being that LinkedIn was then and still is today the platform where decision makers go to not only to think and learn but also to buy. And when you market your business there, you're putting it right in front of people who actually have the power to say yes. And you can target them by job title, industry, and company size. It's simply a sharper way to spend your marketing budget. And if you haven't tried it, how about this? Give LinkedIn ads a try. and I'm going to give you a $100 ad credit to get you started. If you visit linkedin.com/diary, you can claim that right now. That's linkedin.com/diary. Just for context, people don't like talking about money and I understand it, but you're a prolific philanthropist. Also, Google says that your net worth is in the tens of billions of dollars. And

45:07 I'm sure there's some people that have clicked on this conversation and aren't aware of the scale of wealth you built up and the scale of Bridgewater Capital and how prolific and famous it is in the investing world. In that 50-year life arc, one of the things you mentioned is pain. All of us will encounter pain. And you said pain plus reflection. Reflection equals progress. How have you leared to deal with pain? You've had a lot of pain in all facets of life because you've lived the life arc um and you continue to. How what's the best principle for dealing with pain? First of all, um to calm yourself down and to get centered. Meditation has had a big beneficial effect on my life. We can get into meditation in a minute of

45:52 how it has. But the ability to, you know, in a sense calm yourself down and when the time is right to reflect on what's happened both to understand how reality works. You know, you want to be a hyper realist. I understand how reality works. Therefore, I need to do this under this set of circumstances, which means developing principles. And so what I did when I would do that anytime whenever I would think what what should I do whether painful or not I would pause reflect on you know what should I do if that happened again and that's how I would write down my principles and what I did

46:40 was I wrote down a lot of principles a lot of principles a lot of principles if this happens that happens and whatever and then so I wrote these principles down and then I found that in investing um if I can computerize those decision rules I could back test them see how they would have worked and so on. So I built systems, decision-making systems. Um, computer would make decisions. So it was AI before LLMs, but it was AI to have decision-making criteria. So it would be like I I would make a computer chess game that would play while I was playing my mental chess

47:26 game, what moves we would make. And it's completely automated and so on. But I'm what I'm trying to say is that reflecting on how does reality really work and what do I do when this happens to that happens is the development of principles and that has been invaluable and it also makes me see things differently because a lot of people um and if I didn't do this I would be seeing almost as uh a blizzard of things coming at me instead I see everything as another one of those. So let let's say for example it it's a species. So it's like seeing okay

48:14 that's what kind of species is it and how do I deal with that species? So it's one of those rather than just a lot of things coming at me. Pattern recognition of Yeah. But but let's say if you think of a it's a duck. Okay. Okay. Oh okay. It's a duck. How do I deal with a duck? Or it's a lion. Okay, how do I deal with a lion? Rather than just a lot of things coming at it. So this principle thinking and seeing it that way had a big effect on the quality of my decision making and and that helped. Two questions I had there is to become a principal thinker I need to do more reflection, right? And then the other think about how does how does the

48:59 machine how does how does life how do these things work? So that's what I mean. Okay. And to write that down. Uh yeah. Yeah. Write down your thoughts. I find sometimes what I would do is I'd uh dictate them into my iPhone. Okay. Okay. I'd say no. Okay. Ah this is how when you're making a decision. Why did you make that decision? So, not just make a decision, but think about the criteria you're using to make the decision also my emotions, my trauma, my insecurities, my anxiety, right? And and you might say when reflecting on that, is that helpful? Is that harmful? And what do I do about that? Like for example when what you're referring to is

49:47 yes the um that the motions and the things and all of those um we uh you have to understand that that basically the brain's got two parts to it right it has the logical part of your brain reasonable tries to reason things through and then which is conscious and then it has the subconscious mind which is the subliminal that is really driving you and so when you can reflect okay how are my emotions entering into it what do I you know and so on and you can think and you can align that that's very powerful and meditation by the way naturally does that because what you do when you

50:34 meditate and maybe a times come I should explain meditation okay how it works um what you do is it's a process process by which you sit quietly and you repeat in your mind what is called a mantra which is a sound that it's a word that has no meaning. Let me say the most classic example of that would be okay. So you're quietly there and you go with your breath you go you know [Music] like that but you need to be taught but anyway I um and so when you're doing that uh because your m is in your mind or your mantra is in your mind you're not able to have other thoughts.

51:21 You'll see yourself wavering between doing that and staying on the mantra and then having thoughts. Um but what and then you go back to your mantra. When you are uh in the mantra a a lot then it disappears. The sound disappears and you go into your subconscious mind. That's what they call transcending. Transcendental meditation is the type of meditation I do. And so you go there and you're not in a conscious state and you're not in a subcon unconscious state. You're in a conscious state. So it's subconscious state. It's not unconscious is you're sleeping. Conscious is that you're awake like we are. You're in this. So it's a different state. Like if you hear that noise, you would hear that noise. It would be big.

52:07 Not when you're sleeping. But when you're in your subconscious state, then it's relaxing. uh it's helpful and this process helps to um bring your conscious state and your uncon subconscious state into alignment. In other words, you recognize both and it calms you down. It it's like the ninja in the ninja movies, you know, they're fighting but they it seems in slow motion. The camera shows them in slow motion and they're doing whatever they're doing along that. It kind of makes you in that kind of state of mind so that you're dealing with what's coming at you in that way. And so what you referred to is this um these things

52:55 that happen and how you deal with those is really important to the quality of your decision-making. How influential was transcendental meditation in your success? Oh, enormously successful. Enormously significant. Ve very very significant. In other words, that way of singing seeing things and how often and and by the way, there's you know there's I I would say say there's a serenity prayer. The serenity prayer is God give me the serenity to accept that which I can't control and give me the power to control that which I can and the wisdom to tell the difference. Okay. And so to how you approach these

53:40 things, we're talking about reflection. You ask me reflection. Okay? If you can reflect in that quality way, then you deal with anything. And I've I've dealt with uh the worst possible thing. Um I lost a son. Okay? And I would have rather died. I would have rather lost everything to lose my son. So it's the worst possible thing. and and then to see what it did you know the damage and the harm from family terrible. Okay. Then to go through that with meditation with reflection and so on uh was invaluable and people have their own challenges but to be able to do it that way I I really urge your audience I urge

54:28 you to uh to learn that that's very helpful. How how did that tragedy change your your perspective and your your principles in any way on life on on happiness on success on all these things that you've written about? Well, it's again I you know I go above it and um you reflect on the life arc and I realize at that higher level that that's what the life arc is like. you you'll in in all my books there's this ar um arcing this arcing here's a bigger version of it uh yeah there's this arcing okay I don't know if you're camera sees that

55:15 okay whatever it is and that's what life and evolution is like to me meaning you make advances you will have setbacks okay if you reflect Well, and you learn how reality works and how you will deal with it, you will get past that and go on. And that's just what it is. That's just the way life is. And if you do that well, then that's your best possible life. Are you religious? Are you a religious person? I'm not religious, but I'm spiritual. Okay. The Dalai Lama who I had the pleasure of meeting told me u and I I agree with um that religions are

56:01 typically um a mix between superstitions and spirituality. There's half of it is that element that nobody knows but there is the way people should deal with each other. There is karma. Okay. All religions there's the part of them that says do unto others as you would have them do unto you or what goes around comes around and then you get to the particulars. Okay. And it is true that if we work well together that even little things I can do to help

56:49 you can make a big difference in your life and little things that you can do to help me make a big difference in our lives. And so it's practical and it is also joyous. Okay, that creates a relationship. And we talked earlier about how that meaningful relationship is like the source of great happiness. But when you have a community and you do that, you have a better society. And almost all religions will tell you that there'll be elements of those. And when I believe in spirituality, what I also mean is uh we're all part of this greater hole. Okay? We're all part of the greater hole. And if you could see yourself as

57:35 part of the greater whole and love the greater whole uh and whatever that is spirituality really okay and so I will go through my life arc okay and I will die and I'm comfortable with that okay in that okay it's all part of the greater whole you know na nature and whatever it is that's true I can't tell you about other things but I do believe in the things I just told you when it comes to living a successful life we've talked about having dreams and understanding your nature and aspiring for things and then understanding reality which transcendental meditation is a great mechanism and vehicle to do um and in your in your book about a successful

58:21 life you talk about plus determination plus determination hard work if I want to be a successful man or woman, how important do you think hard work is? Well, gives you power. It's very important, right? Some people some people, you know, I'm not saying they want to choose it, but the ir the irony of things is there are first order consequences and there are second order consequences. This is like a rule of life, okay? And most of the time the first order consequences whether they're likable or not has the opposite second quarter second order consequences. What I mean by that

59:07 is like eating or exercising. Okay, eat the foods you like. Second order consequence is probably not going to be good. um you know I don't want to exercise um second order consequences won't be as good. Okay. Working hard which gives you strength. Where does strength come from? I mean strength comes from working hard. So working hard will will give you power. Power will make things easier and make things better. That's just the way it is. and being open-minded while you do it. Something that was openminded to you. Yeah. I say uh the importance of being

59:54 open-minded and assertive at the same time. Um I I I watch people becoming so tied to their own opinions like this is the greatest tragedy of mankind. The greatest transgen of mankind because it so easily can be fixed is holding a strong opinion that is wrong that you could have made right better if you were open to learning more. If you would said, "I want to be stress tested. I want my thinking to be stress tested. I want to make sure that I'm

1:00:39 making the better decision and so I'll be challenged. But a lot of people view that challenging like a fight. It's not a fight. If somebody holds a different opinion, it should prompt a curiosity. You know, I don't know. Am I wrong or is they wrong? There's a 50% chance. I don't know. Maybe I'm wrong. So, it should prompt curiosity and in exchange to try to make sure that you're seeing the whole picture and so on. But subliminal instincts are I'm going to stick with it and I'm going to have a fight. That's a problem because there's too much on the line for so many people to it's subliminal. It's it's it just goes back to the mind thinking that the

1:01:25 intellectual challenge is a fight and it's egotistical. You know, ego, I must be right. As an as an investor and entrepreneur, that's obviously particularly important because you're constantly dealing with your information and feedback, which you need to be flexible. That was one of the two things that changed my uh my my my whole direction and made me successful. I I can explain it if you want. Please. 19 79 and 80 I had calculated that American banks had lent more money to foreign countries that they were going to be able to pay back and that we were going to have a debt crisis. Very controversial point of view. In

1:02:12 August of 1982, Mexico defaulted on its debts and over the next decade, many other countries did and it caused bank problems. However, at that time, I thought things were going to get bad and that was the exact bottom in the stock market, August 1982. So, I couldn't have been more wrong. I lost money for me. I lost money for the clients. I lost money. I was so broke that I had to borrow $4,000 from my dad to help to pay for family bills because I was faced with the choice. What am I going to do? And and do I do I go back to work on Wall Street, get a uh tie, get on the train, and go back that

1:02:59 which is again not in my nature or whatever. And and two things changed me. Okay, reflection. First of all, um, I learned what we were just talking about. I learned humility and fear of being wrong and open-mindedness. So, I wanted the smartest people who could I could find to stress test my opinions because I'm always realized I could be wrong. And then I learned how to diversify my bets so that I could dramatically reduce my risk without reducing my returns. Okay, that was the bottom. Okay, from that point all the way over that following those principles

1:03:45 took me to the biggest hedge fund in the world, the most successful and so on because I applied it to the markets, applied it to what we did and so on. So that notion of reflection and then how do you deal with what reality is like and then you know okay the learn learn radical open-mindedness in other words and like there's a principle in the book you have to take in before you put out or that um decision making is a two-step process first take in then decide. Okay. So, yes, open-mindedness. You don't doesn't in any way minimize your ability to decide. So, you still have the freedom to decide, but it's crazy not to be open-minded.

1:04:30 You recognize that the biggest threat to good decision-m is harmful emotions. And that two-step process is first learn and then make the decision. Which is funny because it sounds simple, but when you said it, I think about all the worst decisions I've ever made in business. And I missed step one. I forgot to I forgot to take a minute and do the evidence gathering or the like information gathering process. Yeah, just smart people who care about your decision say stress test me. Why don't we do that? That ego and also instinct that that's a fight. Is there any advice you would give me on becoming a better decision maker? So I have a fund, I have many businesses. Is there any sort of practical simple foundations of becoming a better decision maker that we haven't talked

1:05:16 about? Get smart people to interrogate my thinking. Um, be open-minded. I think we've talked about almost all of them. Um, I think then you have to then know about how to leverage yourself. Okay. In other words, as you do more and more, uh, how do you do more and more when your brain has a capacity limit, okay, and there's only certain number of hours in the day or the week, okay, you have to know how to do that. Is that focus or is that something? No, no, no. It's knowing how to do it through others. Okay. It's knowing how to pick others and orchestrate. Well, it's like uh running a symphony or whatever. Okay.

1:06:02 get the best players. Okay, when I say uh you know um good character and good capabilities and orchestrate them well and then provide that um that leverage like uh um when I was doing the most I had 30 direct reports whatever the number is. So uh it the process is how to get more out of a minute or a day, not how to work harder, okay? It's how to leverage yourself. And you're going to leverage yourself by picking the right people who you can trust. They're not going to screw you. They're going to operate in your interest and they're going to be capable. And so a lot of people what you can do is you can deal

1:06:48 with them and then you can say like I I would deal with them on this 30 reports. I'd have maybe um an hour meeting with them once every two weeks and and they go off and do things. And when you do that you can even find people who are much better at things than you would be if you did them. Because if you have these different things, okay, you better because otherwise you don't have the capacity. You have these two key challenges to to overcome as an entrepreneur, which is find these great capable people that have great character and then like bind them with the right culture to make sure that they do the best work, right? And and in other words, it's meaningful work and meaningful relationships

1:07:35 through radical truthfulness and radical transparency. Radical truthfulness and transparency. Okay. First, if you can have um meaningful work and meaningful relationships, the people are on the mission with you. Wow, that's fantastic. But you you better be truthful and transparent. That'll show that you're honest and you better because you have to get a truth including what people are bad at and how to deal with all those things and and most people hide them. They don't bring them out into the open. Okay, they everybody's worried about hurting each other's feelings or you

1:08:22 know uh that and then so they're not honest with each other and and they're that's the barrier you we talked about the barrier of disagreement there's it's like that okay um you know uh I don't know are you good at that or you're striking out if you're striking out and what is it how do we deal with it you better talk about that clearly because you need to have an a team of players you know you have to work yourself so your team is an A team of players who are tight. How did you do that at Bridgewater? How did you make people honest? Oh, well uh f first of all um I had a policy talk behind another person's back um critically. That happens three times, you're out. And then I would have

1:09:08 radical transparency so everybody could see everything. So you could see why I'm making decisions and I would reflect. But the main thing is you know you know if it's happening or not. Okay. And I made that comfortable because that's ordinarily uncomfortable. We talked about the fact that there's an intellectual you and there's an emotional subliminal you. Okay. I made them understand like if I had a team a football team and so on that this is going to be better for the team. is going to be better for you and you'll have your evolution because what do you want to have dishonesty? Do you want people to think one thing about you and really say

1:09:53 something different? How is that going to work? So there's an intellectual okay we believe it and then also by having the meaningful relationships. I mean I'm not I don't force them. I create a culture of meaningful relationships so that they have known each other for a long time. They go go to each other's parties or they go to each other's there are funerals. There are baby showers. There are these things. Not that anybody's f I created uh clubs. I said, "Any club that you want to create that has more than uh 20 people um whatever it is up to $500 per half." So,

1:10:39 so I don't care what it is. If it's play softball or play chess or whatever it is that you're enjoying each other's company or you want to go to ball games or something, I don't care what it is. I'll pay for half up to that up to $500. So I to nobody has obligations to or something but if I have that kind of meaningful relationships so you can talk honestly with each other uh I found that very helpful and you've built a famously built an idea meritocracy which in my understanding means where the best idea ends up winning in the company versus just your idea because you're the most powerful person in the business right I mean I want what do I want I want the best idea to win This sounds

1:11:26 simple but but again it's it's not how businesses operate. One of the fascinations I've always had is that when businesses get bigger and they have more intellectual horsepower by I mean if you just added up how many brains they had they sometimes get less innovative and it it feels like the the CEO well because they become more more bureaucratic and more fragmented. Yeah. Okay. There's um I found it to be true and it's wellestablished fact that if you get a group of people past a certain size which is 75 to 100 people um they don't know each other. Okay, they they they start to become different and then you lose those relationships. You lose a lot and so on. I found it

1:12:13 because uh um at the holiday season every year, what I would do is I would write everybody notes, long notes in their cards and I would pick an individualized holiday gift for them. And when it got to be to 67 people, I remember the year, it broke my back. I mean, I I just couldn't do it. Okay. And I realized that at that point I was going into another frame. Okay. And so it's a organizational reality that you can keep that group and then what you have to do is then you have different those different areas and you have to create cohesiveness between those different and cohesiveness common

1:12:59 mission and how do you do that between that. So, like for example, when we would have our holiday party where it used to be everybody would be, you know, sort of go in and you have a holiday party and everybody together, what I found out is we had a big arena that we would uh go to and I'd have both. I'd have okay um that department is in that area and whatever and then they come out and they all mingle together and so on. So there's an organizational thing that you've got to realize in terms of culture and and management of that. It's like villages in a city I guess like yeah you basically keep build the villages and then good example city. Interesting. Okay. Yeah. Our media company's at that exact point now. It's at it's at that 90 90

1:13:44 odd people. Okay. There you are. So when you said 75 to 100 I was like ah interesting. Yeah. I was thinking about all the things I should be doing now to counteract some of those adverse effects of the culture splintering or relationships breaking down. But I guess you've described it there. Uh interesting. And I have to say one of the things I found to be most I'm 33 years old. I just turned 33 last week. It's crazy how how often people say that hiring is the most important thing. Yet when you look

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