Ray Dalio
Appearances
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
It was the government that was the big buyer. Then you get everybody leveraging up. Then you've got a problem. Do you own Bitcoin, Ray? Yeah, I have some. Not nearly as much as gold. The AI war, it's a war that no country can lose. If China or the US really lose this war, it's more important than profits. We're at a civil war internally and we're at an international war simultaneously.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
to be able to have an efficient negotiation to achieve a balance without the government coming in and printing a lot of money and messing up, make a big mess. It's like they made very severe negative real rates. And we know what happened with the negative, severe negative real rates.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And the government, while they were making the significant real rates, it was the government that was the big buyer. Okay, so the government takes it on and they make negative rates. So what happens is then you get everybody leveraging up.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Then you've got a problem. And so that's how it works. And it's a global issue. It's not just an American issue.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
First, when there's a lot of borrowing to service debt, there's what's called You know, the death spiral is – we typically refer to that when a company has it, the government can have it too. And that is that dynamic where there's too much debt and you have to borrow to service the debt and then – people, investors know that that's a problem to service the debt. So the credit is worse.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And that means that interest rates go up, which is the worst thing that can happen to a heavily indebted entity. And then as they rise, you get that spiral, you need to borrow more and so on. So
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
That is also noticed when then there is, the key spot is when the debt service becomes large, and then like the real red flag, the biggest red flag, is when there's then the selling of the debt beyond the new supply, but the holders of it sell it. And then you can see it in the market action because you can see that long-term interest rates rise
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
while short-term interest rates aren't rising or go down. So it's the free market losing its desires. You have a balance problem in the free market out there. And then you start to see that when the currency then depreciates, particularly relative to gold or Bitcoin or other assets, and sometimes other currencies.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
But typically, these things happen, broadly speaking, together, in which all currencies go down relative to other things like gold, Bitcoin, or tangible values. And so that's what it looks like. That's that edge. Then you start to see the dynamics. So you either see the central bank comes in very quickly and does the buying, and when that happens, you see then the currency.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
To take Japan, for example, if you were a holder of Japanese bonds, you lost about 80% of your money relative to gold and about... 60% relative to U.S. bonds because you received an interest rate that was 3% less than the corresponding interest rate in the United States. So you lost the interest rate.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And interest rates in the United States, as you know, were very low relative to inflation for most of that time. Plus, you had a depreciation in the currency. So you lost a ton of money in the debt that way because the central bank came in and printed the money. It's very bad for holders of the debt. And it's a basic thing. You don't have to even get too technical.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
It's just a supply-demand thing, you know?
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
While gold has gone up and Bitcoin has gone up, So that is that kind of market action I'm talking about. And you've seen it in other countries too. The UK, very classic. The dollar has been a relatively strong currency, but not measured in gold or Bitcoin. So all currencies have gone down. And then you've had that dynamic you're talking about.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And you see it also in like Sterling is a good example. Sterling has gone down while UK bond rates have gone up and central banks have held it steady. And so you see it in the market action. You also see it in terms of
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
who the buyers are, and who you've seen central banks, for example, and sovereign wealth funds shift to have lesser amounts of debt, bonds, and so on, at the same time as they've accumulated gold or hard values. Now, gold is the third largest reserve currency, by the way. Dollars, euros, gold, and then yen. Yeah, you're seeing that supply-demand shift.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And it's partially for all the reasons we're talking about and also partially because of issues like geopolitical issues. Countries sometimes worry about sanctions. China is worried about holding bonds. You would, U.S. bonds. Japanese bought a lot of bonds. Even as a percentage of portfolios,
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
The bonds themselves have become such a large, US treasury bonds and US debt has become such a large part of the portfolio that it's even from a portfolio rebalancing point of view, you don't want so much concentration. All of those factors are in play for the supply, demand and bonds. That's why I emphasize, you have to look at the supply and demand of bonds.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
First of all, the United States and countries like China, you see that particular dynamic, China, Japan, They're all educational, and that means that the bonds, the debt are bad assets. So then where you store it is in those assets that benefit rather than suffer from the reduced value of money and the buying of it. And obviously you look at money and what is an international money.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
That is why gold is in it. And then there's a question of, you know, Bitcoin or others are a conversation. We can digress into that. But it can be, ideally, it's international, it's mobile. Ideally, it's relatively private. So it's relatively secure because in history, There's the value part of it, and then there's the confiscation part of it, too, in some fashion or another.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
That confiscation can easily take the form of taxing on holding it. For example, one of the problems with real estate, besides the fact that it doesn't move, so you can't use it internationally, is it is a readily taxable asset. It's there. It's there. And therefore, they won't take it and you can get it. We have to understand that taxes and confiscations are one and the same.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
It's so interesting. I've studied history and, of course, I've been through a bunch of these like the 70s. Commodities, ideally also those that might do well if the economy doesn't do well because you're dealing also with the inflation environment. are always gone to.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
You don't want economically sensitive commodities as much, unless sometimes maybe the economy will do pretty well, but usually it doesn't. But like in the Weimar Republic, give an example, rocks... were used as storeholder wealth. Now, that sounds really funny, but they were considered building ingredients.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
In other words, the rocks were used to build things with, and so they would store the money in rocks, but any asset.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Yeah, except technology devalues them. The new technology devalues them, right? So that's the question. It is those things that can't be devalued. Commodities, by the way, in real terms, all commodities, every single commodity in real terms over long periods of time have declined because of productivity. Every commodity. has declined in real terms because of productivity.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
So you would like productivity producing assets that cannot be taxed, can move around from place to place. So equities of a certain type tend to do that. That's why currency depreciations are associated with that combination of things. Currency depreciation Lowering interest rates and producing money causes equity assets to go up, not necessarily in real terms, like in the 70s.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
They didn't go up in real terms. They went down in real terms. But it is those kinds of storeholds of wealth that can't be taxed as easily that benefit from inflation rather than not.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
The purest play is gold because gold can be transferred between countries. It's used by central banks as a reserve. So central banks will go to it. They are going to it. They'll hold it. It can be private. Right. More so than crypto. Crypt is very easily taxed. You know, in other words, the government knows where it is and who's doing what and so on. And it's also an effective
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
asset to tax, but it has benefits too. It was very interesting when we had negative rates. I was with a group of the central bankers in a discussion of how negative they can have rates, and they described that they can have negative rates only to the extent that there's not enough capacity for paper money to be stored. So they estimated, it was funny actually,
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
that they could have over a short period of time up to 400 basis points negative rate.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Because there wasn't enough. They calculated how much vault storage space there was. And then they calculated that they would produce more vault storage space because it would be profitable to do that. And then they said, and the good thing is, We can tax it. OK, because if you have a digital currency, you can tax it.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Yeah, I have some. Not nearly as much as gold. You know, that's kind of my diversifier. I try to find what are the... I have to have some... But I'm a gold guy much more than I am a big guy guy.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
I'm with you. So, you know, that chart that we showed in the beginning has this line productivity going up, you know? And I think that we're in a, yeah, that's it. And it tends to compound on itself. And I think that that's where AI and that is fantastic. But it depends where you're referring to AI. I think the super scalers in this world have risk issues. You know, you think by, you know, the...
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
the super scales or video or those. I think that the tech war, certainly productivity, I'm with you, man, but you want to invest in productivity. But there's disruption, great disruption that's going to take place. And there are going to be the disruptors and the disruptees. And it's not necessarily those who are producing
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Thanks for having me here to talk about this important issue.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
the vehicles, but it's those who are implementing and changing as a result of having their big impact. I think that like the tech war for the AI war, it easily is, I think it is actually more important. It's a war that no country can lose. Okay. Because it's more important than profits. if you lose, if China or the US really lose this war, it's more important than profits.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And so you have to play that war that way and it could be like electric vehicles or more in terms of Chinese electric vehicles and the like, you can produce them. So I don't think, and I think there's such expectations. I think we are going to see applications. Like I think the Chinese are a bit behind in the chips.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
but they're ahead in the applications in terms of- Yeah, did you see the DeepSeek announcement this weekend? And obviously markets are reacting. That was known for a little while now. Yeah. And so I think you're going to even see, well, the Chinese play is going to be Chips, very inexpensive chips embedded into manufactured goods. You'll see robotics.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
So you're going to see Chinese are unbelievably in making things inexpensively, terrifically. They own 33% of all world manufactured goods, which is more than the combined U.S., German and Japanese manufactured goods, Chinese produce more. So, you know, you're going to see that type of competition. And it may be it's like solar panels or something. Right. It's profit doesn't matter.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
through my roughly 50 years of being a global macro investor, I would, um, keep to myself. And then now I'm 75 and I want to pass along the things that have helped me and, um, The bond markets, global bond markets, I've been involved with all over the world for a long time. And there's a mechanical process which is not understood about the question, when is enough debt? When does it matter?
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
So you have to go where there's I think that. where there's productivity and innovation and disruptors to be essentially long those who are benefiting themselves through usage or creating the applications that are having the big effect is certainly one thing. But you also have to look at different countries and places and things. Most importantly is price.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
I think a lot of investors make the mistake of thinking, I want to buy good things. That's a great company. But a great company that gets expensive is much worse than a bad company that's really cheap. So you have to look at pricing. This is all part of the cycle. Everybody says that's great and it's going to be great for the future. And like You know, like the Internet and dot com. It was great.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
It's great. OK, but the price has to be paid attention to. And I'm particularly concerned of those companies at a time when we are in a situation with the interest rates operating as we write. In other words, this looks quite alike like 1998 or 99, where the assets of the new hot thing.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Yeah, so are hot. The prices are high. Yeah. And you have a rising interest rate environment. That is a classic issue. Yeah. So we have to pay attention to the interest rates and the pricing of those assets. And you have to think where is next. The other thing is, I think diversification is very, very important because everybody's leveraged long.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Everybody thinks, you know, I'm going to buy assets that are going to go up. And if they're good, I'm going to do that in a leveraged way. So the world is so leveraged long, you have to pay at least as much attention to correlation. So that's why when I look at something like gold or these uncorrelated assets, it's interesting.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
As you add it into the portfolio, it reduces the risk of the portfolio. So you have to pay attention to the uncorrelated assets in that kind of an environment. And those could be geographically looked at. So that's part of portfolio construction.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Equity prices, just to keep in mind, there's many times... equity prices and inflation adjusted, therefore purchasing power times have declined 60 or 70%.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And from 1966, until 1984, you had a negative real return.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Yeah, so I'm glad you're bringing it up. I think it's super important too. And I just want to emphasize, you have to look at your returns in real dollars, right? What can you buy? What can you get? Or what can you buy? Yeah. It's funny because I watch the value go up and down, even the currency go up and down, and it's a distorted perspective.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
How does it work mechanistically? And I feel compelled to get that understanding out now. How do the mechanics work? for countries, for the United States, for other reserve countries. I want to make sure that's understood.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
It's like being on a boat that's going up and down and judging the land to be volatile.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Just to be clear, 100% does not mean 100% probability of it happening. It means 100%. That's the highest that it's ever been. it's at the kind of maximum. But yeah, just to describe it, the longer term risk gauge is taking existing amounts, projecting those two things that I've described before, the supply demand and the debt service creating the squeeze.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Just have people behave logically. Maybe that's too much to ask. We hope.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
So think of it as going into your doctor and having him give you your test results and how much plaque is in there and what it's looking like and how you did on your stress test and what your arteries are looking like and what your condition is. That's what the first measure is. The second is you're in a seizure.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
In other words, now, so that second measure of the debt is exhibiting, okay, it's now happening. And happening means things like you're seeing the selling, you're seeing the spreads widen. In other words-
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
the interest rates rising on the long end without the short end, you're seeing that the central bank is put into that position of having to make the difficult choice of coming in there and monetizing everything, and then credit problems and debt monetization, because you're in the middle of it. That's what the one on the right means.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
So what we have is, if I'm speaking to you as the government policymakers, your condition is very bad. Right. Okay. You're not in the middle of it now. In other words, we're not seeing that particular dynamic transpire, but you have to change your... You have to change your behavior. You have to maybe have a stent put into the equivalent. So you asked about what that is, okay?
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Okay, here's what it is.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Sure. Like that chart, if you go back to that chart, Think about that chart as being your plaque, so to speak, in the arteries and the debt service. So you can calculate all those numbers and you know what the picture looks like. And that is a stability. So number one is stability. I call it my 3% solution.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
You know, Bridgewater and I, up until my Passing along Bridgewater maybe a little over a year ago has been indistinguishable, you know, and the same. And over through that period of time, we've been involved in the markets. I've been involved in the markets and thinking about such things. So the data is largely public data that's available for anybody.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
The solution is you must cut the deficit, which is the equivalent of bonds selling, down to 3% of GDP. And it's 7.5% expected. Now, different people have different views as to how to cut it. Forget it. I don't really care. Just you have to have a unified agreement. Everybody in Congress and the president and so on should pledge to do that. And then the question is how to do it.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
But they should know that number.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Yeah, well, it's yes, because with the continuing the tax cuts, Trump tax cuts, that'll be 7.5%, and you want to get it down to three. And it sounds draconian, but we did that kind of change from 1991 till 1997. And the key, there are three keys to this. do it soon, fast, when the time is good, when the economy's good. In other words, do it now. Now. Okay.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
The temptation is going to say, well, we're going to ease into this and we're going to be there and we're going to do it in three years from now. But if you have a bad economy, you cannot do it. Okay. And that's the worst. So we have the best economy and the sooner you do it, the more you're going to do it. So 3% solution, Do it now and recognize that you have to deliver it.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
So if you're having, let's say, cost cuts in government, You have to own the number. So everybody's got to pledge 3%. Now, there'd be arguments as to how to get there. But you have to own the number, so much so that you'd say, if it's not 3%, throw me out of office because I've got to deliver that number. So if somebody, if government cost, expense, cutting...
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
You know, is it really the two trillion number? Is it the one trillion number? Is it a half a trillion dollar number? We all throw those numbers around. You got to own the number and you got to get to three. And you can't make it any one thing. Right. But you also have to realize, like, if you did it spread out, nothing is going to be that big. So, I mean, nothing's going to be insurmountable.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
That would mean I go through the numbers in the book. By the way, this book is online free. And everybody can get it.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
This is being put out. not to sell books. Anyway, it's all free, so everybody can go through the mechanics. But the main thing is you take the things you can cut from or build from. So what can you cut from? And you look at government expenditures. Roughly 70% of government expenditures are you can't cut.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
So it comes down to a small percentage that you can cut, but you find out how much can you cut. So the important thing is 3%. The other thing about it is to realize that if you make those moves, the bond market will benefit. You see, and so interest rates- And then interest rates will go down. Right. And interest rates going down, interest rate expense is most important.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
He's right. If you look at my calculations, you need 100 basis... If you get 100 basis points cut in rates, that's equivalent to significant cutting in spending. So he's right. But if you do that without... the other parts, you're gonna take money away, you're gonna make it less desirable to own these things, these bonds. Because that's gonna be a problem.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
We just, you know, collect it from all different spots and go back through history like I did in Changing World Order. We were in some cases in the Changing World Order because we were dealing with data that was hundreds of years ago. We would go through archives and pull data out. The data is all available to everyone.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Where if you do these things together, they can support each other. So in other words, fine, cut it from spending.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Yes, and you can do it in a manageable way, you know, a bit here, a bit there, these bits add up. And if you don't, you're going to have this arc of compounding.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
There's a combination of a question. It's not just Doge. It's a matter of less regulation, productivity changes that might come from AI, which then translate to profits. That might be capital gains profits. They might be profits and all of that. And so... But it really, you know, when I look at it, it looks very tough. But there's also, you know, revenue also, tariffs produce revenue.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
So, but yeah, people think on the tariffs, people don't think of taxes as inflation, but taxes are inflation. Right. Because it costs you more. So-
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
The real question, as you play with the numbers, is it's very, very difficult to know and be precise about how much is going to come from productivity and profit increases, from the efficiencies gained by AI and new technologies, how much is going to come from this and that. We don't honestly know. But the important thing is not to, we're at the edge, and not to make it a crapshoot.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And to get the, the number must be 3%. And so you should have handle, not Hail Mary passes, but a clear passage to that 3% number.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Yes, I do believe we are in the financial context, because in terms of profitability and the likelihood of cutting, I think the Republicans are probably more likely to make these moves than Democrats. the Democrats, but you also have to take into consideration the impacts, the social impacts and the other impacts that are going to come from this.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
We're at a civil war internally and we're at an international war simultaneously. So there are second order effects. I think the main thing is take those numbers and make them real at 3%, not speculating. I worry honestly about the gap like the idea of when profits kick in from AI.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
That's right. But there are two dimensions. The near term is... I don't think the profit impact and the financial impact on productivity is going to be nearly enough, near enough to deal with the supply-demand issue that we now have. So let's say, is it this year? Is it next year? Just imagine you are at risk of a heart attack.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
You know, and then I say someday we'll have the productivity conveyed to profits that will cover the budget deficit. OK, it may be out there, but it's not as immediate as it needs to be. And then we have the other aspect of it, which is how is that pie divided, which is going to be very political because the disruptive effects will be enormous.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And we're really all guessing on how those disruptive effects will be. It's too much of a... But you're absolutely right. Lots of jobs are going to be lost. Lots of change is going to happen in terms of turbulence. And how do we have a plan? How can we even agree on a plan of how to deal with that? I don't think we're in a time...
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
maybe in the rest of our lifetimes, that agreement is going to be easy. I think we're going to see fragmentation of states from the central government. I think you're going to see big fragmentation in the world, not just in the United States, on the failure to agree on most things. And so I'm worried about the timeline. Think of the timeline as this way. There's the first hundred days.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
We're in a honeymoon period. I've been through, I'm old, you know, I've been through this a long time. I know what the honeymoon is like right afterwards. There's a hundred days that you can change legislation. You move quickly and everybody's there. Then there's the next important time horizon is two years to the midterm elections. You get in about years, you know, 18 months after the election.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And not everybody goes, everything goes as anyone expects. You could have this supply-demand situation. And think of our cycle. I mentioned, you know, the average cycle is about six years, give or take three years. And so we're going to be later into the cycle. We have this supply demand situation. Are things going to stay good into the midterm elections and that mandate?
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
I think there could be a lot of fighting in the midterm elections.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
I think that we can do it. When I talk about the 3% solution, I think that we can cut and make the adjustments in a few percentages. to be able to do this without great trauma. So we can get to having that limitation done without great trauma, and it will be supported by interest rate moves. So that's first. We can get this thing done. We must get that thing done.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And if we don't, then of course, I think we are in an era That, of course, we're going to have great conflict in the United States. This is not a run to nirvana. This is, you know, the moment. You're going to have legal challenges. One state, the Democrats, you know, the blue states, the red states and within the states.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
you're going to have a lot of disruption and you're going to have a lot of dissatisfaction and it's going to be about money and power. And so that's ahead. And so, like you say, there's the socialists, the left, the right, and that's why you're going to... This type of civil war or internal conflict is going to be with us. This is not a straight race to nirvana and prosperity.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And you have that at the same time as you have the other elements. You know, they're the five big forces. So what I'm calling, so you have the debt money we talked about. There's the internal conflict that is, we're going to test the legal system and, you know, and we're in an environment now that might is right. internationally, you are going to have the same kind of conflict.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
We touched on China. We're going to have conflict. You no longer have a cooperative, even an attempt at a cooperative world order. Things like the World Health Organization, the World Trade Organization, all of those are obsolete. And so we're going to have, again, might is right. And so it's going to be a period of greater conflict. You're going to have a technology war.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
You can have increased military spending in this kind of environment. That creates a budget issue. And climate will be an economic issue as well as an environmental issue. So these expenses are going to go up. So all of those coming together. So yes, left, right, and conflict will be ahead of us.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
I think two important aspects of it is, does the legal system work well?
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
so that the Supreme Court, you know, you asked me about the independence of the central bank. You know, does law work? And I think there's gonna be a lot of challenges. I'm not saying it doesn't work. I'm saying that's the question. And that'll be very much state by state. You're going to see conflicts between the states and the central government. So how does that decision-making system hold up?
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Is it might as right, you know, sanctuary city issues and such? Or is that going to all work well? I mean, that's, you know, that's the most important thing. And then we have in a time of great stress and challenge, you know, when things get worse. Right now, things are good. This is pretty good. but they're going to get worse. And then you have the international going on at the same time.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And so internally within countries, we have the same kind of conflict. You're seeing it happen in Europe. You're seeing the same dynamic. We talk about the problems that the United States is having regarding debt and so on. You have then the expense, same problem within Europe. You're seeing greater polarity, left, right. You're seeing economic... problems cause more confrontation.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And so you're seeing this around the world. So you're coming into an environment that is likely to have over a period of time, over a period of time, not immediately, greater conflict. When you talk about 10 years, there's going to be a period in that 10-year period where it's going to be hellacious.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
in that 10 year period where the coordination of dealing with our problems, our problems will be greater and the cooperation for dealing with problems will be less.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
There's a cycle that has to do with changes in money and all of these things, where you don't have enough money You need money to support international conflict. You need money to make domestic people happy. And then there's no power. You know, there's no system for making judgments internationally. The United Nations doesn't work. The World Health Organization, they don't work.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
So there's no system. So you come into this power. So when we're talking about the financial problems that we're talking about, that we covered earlier, and recognize that that's worldwide. And then you have the polarity worldwide that has to do with different wealth and values. And you have that problem within the population. And then you have no rule system internationally.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
So it is a might is right series. You have that confluence of things, particularly And then there's disruptions, big disruptions. Technology, we talked about how you can't lose the technology war because you'll lose the military war. All of that stress and shortage of what is perceived to be needed is incendiary. It's a risky situation. Of course, productivity helps, but it was like...
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
You have to understand and put it in its place. The 1920s leading up to the stock market bubble, that was the decade that we had the greatest number of inventions, patents, innovation, great productivity increases while we simultaneously had big debt increases and we simultaneously had these wealth gap and values increases. And so you don't get away from that.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
So this is going to be a lot of tension in a world where it's difficult to get all the parties to cooperate. In wars, if you look at history, when I say wars, there are military wars, and then there's less than military wars. And I can't tell you that we're going to go into military wars. I think like the Soviet Union and the United States, because of the risk of mass destruction-
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
was able to avoid those. But in history, it's going to be a very difficult period.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Yeah, and I want to emphasize, just based on what you said, that they're mechanical. They can watch. You can watch it. You can do the calculations. So if you read the book, you can see these. It'll even make common sense to you. You see the calculations. To me, it's almost like
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Yeah. The general belief of the Chinese on the art of war, and this has existed for throughout and it exists today is that if you're going into a fighting war, you must not have been smart enough to win without a fighting war. And you win through deception and manipulation because fighting wars are going to damage you a lot. You don't want to be damaged. You want to get to your objective.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
So that's how they fight wars. That sounds like a smart way to fight wars. Also, international relations, there's what's called the tribute system. And the tribute system was your power determines where you are in your hierarchy. If you have more power, you have more hierarchy. You're higher in the hierarchy. It's like Confucian. And everybody should know what each other's power is.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And the lesser power should give tribute to the greater power. This is internationally. And the greater power should respect that and treat and they should work and have harmony together rather than to have the conflict. Because it's all about getting what you want. Harmony and prosperity is what you want. And fighting that destroys things is not what you want.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Whereas, yeah, the man who was vice president, great historian of China, a man by the name of Wang Shishan described it to me that there's the Mediterranean approach.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Yeah. And the Mediterranean approach, which is a very different approach. really began out of that there were families and there's no borders. And the way it worked is there were no limitations. In fact, we didn't have countries with borders and ideas that you don't cross borders until the Peace of Westphalia in the mid-17th century. I think it was like 1650-something.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
They had 30 years of war, and everybody would fight. So they were fighting experts, and that's what the norm was. And then after 30 years of war, they decided, okay, let's draw a boundary around it and try to see what goes on. And then there's your business, and that's how it came about. And that's, by the way, in history—
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
One of the reasons that the Chinese and Japanese lost what they called their hundred years of humiliation when the foreign powers came in in late 1830s, and they had a fight, the opium wars and so on, the Western powers were strong at fighting because they were practiced at it. And then there was the hundred years of humiliation, they call it in China, where the foreign powers came in.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
So anyway, I'm giving you too much history, but I'm saying that There's a whole different attitude about how to play that game. And so that's what I think you're going to see. You know, that's when we come back now to the chips war and you took a look at today's news, you know, there we are.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
The circulatory system, you know, I think that credit is like blood that brings nutrients to all of the parts of the body. And it passes through a system that is like arteries. And then credit creates debt. And the key question, if it's healthy, is does the debt create an income that is more than enough to service the debt? And that's like, I don't know, eating vegetables or something.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
We can do this. And if we don't do this, the power of the United States is going to be greatly diminished. So it's domestic, it's international. So I appreciate, yeah, I appreciate you, Dave, that we can have this kind of conversation, just have people behave logically. Maybe that's too much to ask.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
You know your stuff. You're great. And this is really invaluable. Thank you for doing that for your listeners.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
We just have to do our best. That's right.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
It's a healthy process. And if not, credit... begins to build up this debt, it begins to become like plaque in the arteries. And you can measure it just like you could measure it in the arteries. And you can see how it constricts that circulatory system because as credit and debt service rise, you see that it eats up more and more consumption because you have to spend that.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
So you could watch the government do that. You can see that how interest is eating up and debt service is eating up and that means there's less money. And then you also can see how heart attacks take place. And they're very, you know, economic debt heart attacks. And the way they take place is by looking at the supply and the demand.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
If you have a lot of debt and then you have a large supply of debt, That has to be bought. Somebody's got to buy it. And so that when you get to the point where there's debt risks, there's not only the new supply that has to be offered, but there is the possibility of holders of those debt assets selling those debt assets. And so the supply becomes overwhelming relative to the demand.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
And then what that means is it's the same dynamic for the government as it is for an individual or a company, except the government can print money. So when that debt service burden rise or there's a big supply demand imbalance, if the government, most importantly the central bank, doesn't print money and buy it,
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
then there has to be a rise in the price of the debt to constrict borrowing, and that borrowing constricted, that credit that is not gonna come, will weaken the economy and cause bad economic conditions. And so they can let that happen, or they can print money and buy the debt and monetize it. When they do that, that's inflationary and it lowers the value of the debt.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
In either case, you don't want to hold that debt because either there's a debt service problem or there's a depreciation. You get paid back with a greater supply and cheaper debt.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
money and that is the dynamics and that's the mechanism and because it can be measured it can be seen in all countries you can watch it happen and so like you're going to your doctor you can measure these things you can see them and you can know what needs to be done so yeah i want to just
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
That's right. They're essentially making the money up. Right. And buying.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Very well described. And, you know, a good example was in covid. There were two waves. The first wave was the COVID wave in which the government wanted to, and actually did, deliver a lot more money to people, companies, than there was a loss of income. So they first waived a lot of that money. Where did they get the money from? They had to borrow it. The central bank then came in and lent them.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
That was the primary. Then the second, when President Biden was elected, there was a second wave of that after COVID. It was mostly like a universal basic income thing. In other words, hand people money and we're going to be better off. And so they handed people money doing that same exercise again. And so naturally, all these people got a lot of money. And so they deposited them in banks.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
They went out and spent and so on. And it therefore shouldn't be surprising that we had a big wave of inflation. And we also had a lot of banks buy government bonds, which they lost a lot of money on. And that was that crisis. So that's how the mechanics work.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
Very well said, Dave. You can't get richer by making money. You know.
All-In with Chamath, Jason, Sacks & Friedberg
Ray Dalio | The All-In Interview
That's right. And there are two purposes of money, which is as a medium of exchange and a storehold of wealth. Saving. is very important. And if you don't have savers who have it as an effective storehold of wealth, then you don't have a viable long-term credit market. People don't understand that the bonds become a bad deal. You need that. Like any marketplace, you need purchasers and sellers to
The School of Greatness
The Practical Guide To Making More Money in 2025
You know, pain plus reflection. You will get the pain. Pay attention to it. Listen to it because you're going to get the pain. Yeah.
The School of Greatness
The Practical Guide To Making More Money in 2025
I was in the right place at the right time. I held this thing or bought it, or I am at that company. I'm working at that company and you know, all of a sudden it goes from this to that and you know, you're holding onto it and it goes, okay, that's true. Oh wow. Okay. It's winning the lottery kind of thing. Okay. Do that again.
The School of Greatness
The Practical Guide To Making More Money in 2025
okay and then again and you do it again and can you make the thing the the thing work over and over and can you hold on to it and so on yeah because that's that's where you know it's like um Well, using your sports analogy, right? You know, you can luckily crack the bat and, you know, I mean, or whatever, the Hail Mary pass and so on. When you have to do it on an ongoing basis, regularly, that's,
The School of Greatness
The Practical Guide To Making More Money in 2025
the test of talent, then that's harder.
The School of Greatness
The Practical Guide To Making More Money in 2025
Well, um, on the doubts, you know, the question is always like, how big of a deal is it and what is the type of bed and so on. And little doubts, OK, that's no big thing. Life and death decisions, those kinds of things, those are the big questions. And what I realize on those is doubting is part of that process. You can only be sure a certain amount. How do you get to the best triangulation?
The School of Greatness
The Practical Guide To Making More Money in 2025
In other words, take in. from the smartest people and your own thoughts and so on so that you're making that, understand how reality works, and then try to make sure that none of your decisions are the ones that knock you out of the game. In other words, like I've got an expression for people who work for me, you can scratch the car, but you can't total the car.
The School of Greatness
The Practical Guide To Making More Money in 2025
So realize, okay, you don't win it all. You make your best bets, but don't have the one. So you have to eliminate the killer ones. Because you have enough killer ones, and odds are one of them is going to get you. So I approach it basically that way. Try to make the diversification. Try not to have any killer. Eliminate all of those that are unacceptable, and then go for the upside. And doubt.
The School of Greatness
The Practical Guide To Making More Money in 2025
But I'm used to doubt. I doubt. There's everything. Every time you put on a position in the markets, for example, I am never sure. Look, it would be easy if I knew, so there's a lot of doubt. So doubt is part of it, but don't put yourself in a position that you can have unacceptable
The School of Greatness
The Practical Guide To Making More Money in 2025
OK, like the marshmallow test. OK, so I want to save. You got to start there. Then if you do that, you're necessarily going to go save in what, and then you'll start to get exposure to how these things are different. Okay. Then you start to care, one of these and one of those, and you start to experience, and then you start to learn. And basically that's what makes the difference.
The School of Greatness
The Practical Guide To Making More Money in 2025
place that bet i have enough bets that i i make the bet so that none no one of them i'm i won't allow anyone that'll kill me right and then i raise and i'll typically only want to make bets that i feel good about and i will have them stress tested my bets by having other people stress tested so yeah just imagine i don't know you're playing a chess game
The School of Greatness
The Practical Guide To Making More Money in 2025
Okay, now, okay, maybe you're a chess master, but okay, what are you going to do? You have to still make a move. So, okay, what's the best thing to do? Now, imagine you could ask the best chess masters in the world what you do and think about the pros and cons and make your decision and just not make it that also one's going to knock out of the game. So, it's that.
The School of Greatness
The Practical Guide To Making More Money in 2025
Well, what's so interesting to me, I think is, that immediately your question about the disagreement is toxic. That's the first thing that people go to. Somehow they think disagreement is toxic. And supposedly it's because the part of our brain, which is the amygdala, which is this fight or flight, takes disagreement as the equivalent of a fight. And so it anyway gets triggered that way.
The School of Greatness
The Practical Guide To Making More Money in 2025
Now, instead, imagine it's a curiosity. In other words, I view it as a curiosity. I mean, I could tell if somebody's wanting to disagree with me or I'm disagreeing with them because I wanna hurt them. I mean, that's a different thing. If you wanna hurt them, okay, then that's a different thing. But I mean, like disagreement,
The School of Greatness
The Practical Guide To Making More Money in 2025
should be a comfortable thing that prompts curiosity and so on and mutual respect. Like, how could I ever get along with you if I couldn't disagree with you? I like how many times, you know, I mean, you're going to... disagree, like you might one thing, another, then that's the beginning of trying to find out what's correct and the path.
The School of Greatness
The Practical Guide To Making More Money in 2025
So a good partner is going to disagree with you and you have to get past it. So the fact that you're asking that question the way it is, which is a normal question that everybody would ask, so reflects the fact that there's a hesitancy for disagreement, like it's a bad thing and it's a fight and it's nastiness rather than just a disagreement. That needs to be figured out.
The School of Greatness
The Practical Guide To Making More Money in 2025
Well, first of all, I learned by it because, you know, like it works. I mean, you know, like I'm afraid of the opposite. And how can I have, it helps my decision-making. It helps our relationships. What are they gonna do? Bottle it up and I'm gonna bottle it up? Is that smart? I mean, you know, that sounds stupid to me. You don't even know what's true. You can't figure it out.
The School of Greatness
The Practical Guide To Making More Money in 2025
So everybody's confused because nobody knows what each other's really thinking. And then also like, you know, you won't get to the right answer. And I mean, that just is too stupid a path for me, for me to do it. It's too risky a pass. And it's so much rewarding, so much more rewarding to do the other. Right. Have you always been like that or was it until you went?
The School of Greatness
The Practical Guide To Making More Money in 2025
I think what helped me get that way was the markets. Okay. Because, again, what happens is, you know, there's just being right or wrong. There's just a winning or a losing. Okay. So just imagine, you know, it's like being a trained monkey. You know, like what works, okay, should we push a button? Should we push a button? Okay. Okay. Yes. Okay. It makes sense. Okay.
The School of Greatness
The Practical Guide To Making More Money in 2025
Is better than I'm going to push the button, push the button, whatever it is. Okay. No, I don't see it that way. Okay. Let's figure it out. and so on. And then the scorecard, I think probably had the benefit of that kind of notion. I got a scorecard. Okay, I don't know, like I'm not sure. Okay, bring it on. Please stress test me. Oh, that's great. We're good partners.
The School of Greatness
The Practical Guide To Making More Money in 2025
So that to some extent, I think played a role in my types of experiences. Maybe if everybody had a scorecard on all their decisions, and then was being able to experience, essentially, you try it one way, you try it the other way, and you start to see what's better, and you get punished one way, you get rewarded the other way. Naturally, you wanna go in the direction you get rewarded.
The School of Greatness
The Practical Guide To Making More Money in 2025
That's so stupid. My way is the way I just want to make the right, the best decision possible. I don't care where it comes from.
The School of Greatness
The Practical Guide To Making More Money in 2025
Well, like I say, I think before that 1982-ish incident, I probably was a lot more, okay, yeah, okay, you know, I think it's right and what I think is right and I'm a smart guy and so on. So I was like, you know, life is a good teacher. Just a good, you know, like two by four in the head, you know, and you got a couple of those and... You know, pain plus reflection equals progress.
The School of Greatness
The Practical Guide To Making More Money in 2025
Well, first of all, they, you know, they got to want it, but let's assume they want it. You know, then there are three things you have to do basically. First, you have to put your honest thoughts on the table and have the other person put their honest thoughts on the table. Okay, so now you know what you honestly think, both sides, that's great. Then there are protocols for disagreeing well.
The School of Greatness
The Practical Guide To Making More Money in 2025
I wrote a bunch in the book. Yeah. Um, yeah. And, um, like I could go through some of those types of things. There are certain exercises that you could do. You know, there's a, I have a two minute rule. Do you speak with two minutes without the other? You start to think, are you blocking?
The School of Greatness
The Practical Guide To Making More Money in 2025
Um, you have a mediator, maybe in other words, somebody, when you're disagreeing, if you can't disagree, say mutually agree. that this person will be our mediator. Or maybe to the judge, they'll decide. Maybe it's a group that decides. In other words, you have a protocol for disagreeing and then deciding.
The School of Greatness
The Practical Guide To Making More Money in 2025
Sometimes in that disagreement, hopefully you both learn a lot and you may reach an agreement, but you still may not have an agreement. But then you try to say, what's the best protocol for moving past that disagreement?
The School of Greatness
The Practical Guide To Making More Money in 2025
know like a you have a judge and a jury and you know they have a case and anyway what do you have good protocols so so you have to have three things you have to put your uh honest thoughts on the table um you have to go through processes that helps uh to reach the right answer depending on how serious the question is right if it's
The School of Greatness
The Practical Guide To Making More Money in 2025
Well, and what it does then when it comes to the money, that means money.
The School of Greatness
The Practical Guide To Making More Money in 2025
And then number three, you have to have a way of getting past that decision and moving on. I have a basic view though, whenever there's any disagreement or anything that's not going well, stop. Okay, pause. Don't just keep banging at each other.
The School of Greatness
The Practical Guide To Making More Money in 2025
Just pause and sort of go above it and say, what are our, Ground rules for disagreeing. How should we be with each other? And you turn your attention rather than to the argument at hand, but say, okay, if I think this and you think this, how do we do this? And then once you agree, okay, then you go back into the argument and then you follow those protocols.
The School of Greatness
The Practical Guide To Making More Money in 2025
Now, at that moment that you don't want it, you have savings. That means I want savings. Okay. Now you got savings. So the next thing inevitably that's going to come at you is where do I put it? And then you get your choices and then you experience it and you learn, right?
The School of Greatness
The Practical Guide To Making More Money in 2025
Because half of the problem is that people just don't even know how to disagree. But if you do it that way with those protocols and so on, and you get past your disagreement, it's great. I wanna talk a little bit about- I wanna answer the part two of your question. Yeah, go ahead. The greatest problem of mankind I believe. Wow. That's a big statement. The greatest problem of mankind.
The School of Greatness
The Practical Guide To Making More Money in 2025
And it is an exceptional problem at this moment in time is people having opinions that they're stuck on that. Um, they won't, you know, like I have to have my opinion and that's right. And so on because it prevents them from, um, resolving it, from moving forward to finding the best answer, from compromising or doing, you know.
The School of Greatness
The Practical Guide To Making More Money in 2025
So like everybody's arguing over everything and they, you know, it's almost like they're killing each other. And we're in a society, you know, I have another principle, which is when the causes that you're behind are more important to you and others than the system, the system is in jeopardy. So do you, are you just literally going to go fight?
The School of Greatness
The Practical Guide To Making More Money in 2025
So here we are, as we think, will we fight or will we have protocols for having thoughtful disagreements and getting past them?
The School of Greatness
The Practical Guide To Making More Money in 2025
Well, I think first you start with what are the most important things that you're closest to, like, is it your business? First, calculate how many days, weeks, months, or years you can live on your savings. because when you do that, you'll start to, you'll gain security, you'll gain that, okay? So look at how much you're spending, okay? And then say, how much do I need?
The School of Greatness
The Practical Guide To Making More Money in 2025
And whatever that number is, you're gonna need more than that because it may go down rather than go up. So, okay, now do I have a year spending? Okay, so I think you start there. Then you start to think, what are the things that are most important for me? And then you start with your business or your residents that have a symbiotic relationship and that you know well.
The School of Greatness
The Practical Guide To Making More Money in 2025
Let's say if you'd start with your business Okay. You're closer to that investing in yourself with whatever that may end up being. That may be your best investment.
The School of Greatness
The Practical Guide To Making More Money in 2025
Well, it depends if you're, if you're not, you know, if you're doing something where you can do it yourself and that's the thing, but if you're in a job and that that's not the thing, right. Cause you, cause you're in a different position. Okay. But anyway, if you, And then I really think there's something good about your home, a basic thing about your home, because it's nice forced savings.
The School of Greatness
The Practical Guide To Making More Money in 2025
Is this top 1% earners, top 100% accomplishments?
The School of Greatness
The Practical Guide To Making More Money in 2025
And it also means that you fix it up, you're saving, you find out there's, oh, well, if I add this thing or that thing, and you're enjoying it. So when you're enjoying it and you're controlling it and it's yours and so on, that's pretty good. And if, you know, if they keep mortgage tax deductions and so on, there might be some benefits to it also. But that's not a black and white answer.
The School of Greatness
The Practical Guide To Making More Money in 2025
So you could take a short pencil and say, is it better to rent or buy? Okay, that's a different question. Maybe yes, but by and large, am I gonna move? All of those other questions. So when you start with, okay, what is it that's close to home and how much? You need a certain amount that's liquid.
The School of Greatness
The Practical Guide To Making More Money in 2025
In other words, you got it in your house, you got to make a mortgage payment or something and all of a sudden it's not liquid and you lose your job. Well, that can cause you trouble. So how much do I have that's liquid? How much do I have that's not liquid? And you start to get those things right. I've got enough liquid. I got enough not liquid in those other things.
The School of Greatness
The Practical Guide To Making More Money in 2025
Pretty soon, you're getting yourself in good shape. You do those things, you're pretty much in good shape. And then you're also having some experiences. And then you go beyond that, you know, and then so you start to, okay, what, you know, okay, what's a stock? What's a bond? And then, you know, you learn through experiences. I learned through my experiences. I started when I was
The School of Greatness
The Practical Guide To Making More Money in 2025
a kid, 12, I used to caddy. And I took my caddying money and I put it in the stock market. And I was lucky. What happened to me, by the way, is I took my caddying money and I bought the only company that I ever heard of that was selling for less than $5 a share. And I thought that that, you know, well, I was really dumb. I thought I'll buy more shares so if it goes up, I'll make more money.
The School of Greatness
The Practical Guide To Making More Money in 2025
Out of the time or the money?
The School of Greatness
The Practical Guide To Making More Money in 2025
Uh, and it was the only company and it was a company that was about to go broke, but somebody, some other company acquired it and it tripled. And I thought, ah, there's an easy game and I like it easy money. So, but you know, you experiment and you learn.
The School of Greatness
The Practical Guide To Making More Money in 2025
To give the knowledge, teach a man how to fish is better than to give him a fish. I mean, I think you can give them both. You can give education and you can show, but ability, the capacity to be productive, because, you know, if I can give you the capacity to go out in the world, it's like go into a jungle. I give you a knife and can you live in the jungle? Okay.
The School of Greatness
The Practical Guide To Making More Money in 2025
If I give you that capacity, that's the best thing I can give you. That's why I wrote the book and, you know, pass it on. I wrote those principles over years. And I wrote them down. And that's what I want to pass along. That's the most important thing.
The School of Greatness
The Practical Guide To Making More Money in 2025
But but if you but if you've got money, you can help people a lot in a lot of different ways, which is thrilling.
The School of Greatness
The Practical Guide To Making More Money in 2025
Well, I want to distinguish there's big differences in opportunities. Yes. So let's say supposing you have two people of comparable opportunities. Yes. And then they were going to do that. Okay. The marshmallow test, as you know, apparently, is you take a kid and you say, okay, you can have one marshmallow now, or you could have two marshmallows in 15 minutes.
The School of Greatness
The Practical Guide To Making More Money in 2025
Well, as I said before, I remember watching the movie when I was young, David Copperfield with W.C. Fields, and he speaks to David Copperfield. And he says, he said something like, and I'll put it in dollar terms, you earn $100 and you spend $105 That's misery. If you earn $100 and you spend $95, you'll have a good life.
The School of Greatness
The Practical Guide To Making More Money in 2025
I mean, it wasn't exactly like that, but basically, I know so many people who don't earn much but are there. Because if you start to think about what it is that it costs you to live in terms of, let's say, the basics, give me a bed to sleep in, give me the food, let me be educated, and so on and so forth, I think most people can get themselves in a position where they're net positive.
The School of Greatness
The Practical Guide To Making More Money in 2025
So if you can be net positive, And you could do that, you know, that's number one, you know, as I carry that. So that's, you know, that's number one. Then I guess it was the list that we went to. You know, the second is, you know, what do you do next in terms of what do you need? What do you invest in? You know, and then, you know, going beyond it.
The School of Greatness
The Practical Guide To Making More Money in 2025
And then avoid the following mistake, the most common mistake of investing. thinking that the investment that did good is a good investment. People rather more expensive. Quite often, those markets that did really, really well became more expensive. And everybody, smart money is all the time comparing them and competing them.
The School of Greatness
The Practical Guide To Making More Money in 2025
So what happens is the naive money buys the thing that was hot or is hot. The thing that has been terrible, which might be the thing that's beaten down. So I would say also an important element. Okay, so here's another one that's really important, diversify. So don't put all your eggs in one basket. Right, because what I learned about this, is that first of all, all investments compete.
The School of Greatness
The Practical Guide To Making More Money in 2025
And it's not easy to tell whether one investment is better than the other, because if people could do that, life would be easy and everybody would make a ton of money. And this is a competitive game that's very difficult to compete in. So it's very difficult to say which one's better or worse.
The School of Greatness
The Practical Guide To Making More Money in 2025
You could take experts and do all sorts of tests, and you'll find out that they can pick that and you can't tell whether the worst ones are going to be better. So because of that,
The School of Greatness
The Practical Guide To Making More Money in 2025
you understand that even picking the best ones is difficult and particularly if you're naive like we spend hundreds of millions of dollars each year on research to try to give us an edge okay now you've got to compete with us so uh competing in the markets is more difficult than competing in the olympics You wouldn't go think I'm going to compete in the Olympics.
The School of Greatness
The Practical Guide To Making More Money in 2025
But there are more people who try harder in order to do that. So it's a zero sum game. But diversification, that they're different, will reduce your risk without reducing your return. So if you know how to diversify well, So that's critical. So I would say, again, get your savings right. And the reasons I say, I would say, have great humility about what you don't know.
The School of Greatness
The Practical Guide To Making More Money in 2025
Don't buy the thing that was hot just because you think it's hot. And then know how to diversify well. Those would be the most important things I could convey.
The School of Greatness
The Practical Guide To Making More Money in 2025
It is one of the most important things possible, and it's not easy to do. So I needed to do two things. I found that by writing down my principles and the rules, and then testing how they would have performed over time. And that's where the algorithms came so that I can basically, just like a machine, play it click, click, click, click, click, okay, with execute the game plan.
The School of Greatness
The Practical Guide To Making More Money in 2025
If you don't eat the first one, yeah. If you don't eat the first one, right? Yep. Okay, once you start to realize that deferred gratification... is gonna make you better and so on. And you start to count and you say, like something like how many days, weeks, months or years can I live if I don't have money come in? And you start to focus in on that. That's the first step.
The School of Greatness
The Practical Guide To Making More Money in 2025
You know, don't do it because I know what the experience is like. The experience is like you're wrestling around with it, you're losing money. The day you put on a trade, It doesn't go either straight up or straight down. It goes against you. So now, I don't know, you're losing money.
The School of Greatness
The Practical Guide To Making More Money in 2025
okay how how much should you lose what's your game plan you've got to know your game plan and stick to the game plan and you can't be shaken out and yet um the emotions are going to cause you to doubt yourself and plus it brings you stress all of that so you have to execute a game plan that's very well thought out right yeah um then over time you start to develop some better instincts.
The School of Greatness
The Practical Guide To Making More Money in 2025
Like if you're excited and you're going along, be scared. If you're doing something you're really worried about and nobody else is doing it, maybe good. Don't be dissuaded. See, the markets are very different than consensus decision-making. It's counter consensus because the consensus is built into the price. So if everybody loves something, it's expensive.
The School of Greatness
The Practical Guide To Making More Money in 2025
And if everybody hates something, it's cheap. So where most people say, ah, this is like, oh, what a great company. Okay, Amazon is a great company. We got Amazon's a great company. Who doesn't got that Amazon's a great company? Okay, and then, okay, I'm gonna go on Amazon, okay?
The School of Greatness
The Practical Guide To Making More Money in 2025
But if everybody's got that it's a great company and it becomes increment less great than they anticipated, bam, that baby goes down. So you have to...