Becker Private Equity & Business Podcast
Three Key Points on Investing from Ray Dalio 1-31-25
Fri, 31 Jan 2025
In this episode, Scott Becker discusses Ray Dalio’s top three investing principles from his recent interview at Davos.
Chapter 1: What are Ray Dalio's key points on investing?
This is Scott Becker with the Becker Private Equity and Business Podcast. Today's discussion, and this will probably be released on Thursday this week, is Ray Dalio on three key points on investing. Now, Ray is the founder of Bridgewater Investments, Bridgewater Associates, a brilliant, brilliant hedge fund investor over a very long period of time. He is fascinating.
He's a completely successful guy, crazily successful. the more you read about him, you realize that he's both crazy successful and probably a little bit crazy, some mix of the both. He did a great interview at Davos World Economic Forum with Rick Newman on sort of a number of subjects on investing.
And what he said was, there was a whole quote that I won't do verbatim from Rick Newman's article and interview with Ray Dalio, but it was a brilliant, brilliant interview. He basically said first, you've got to realize if you're competing in the market, there's a winner and there's a number two.
Chapter 2: Why is humility important in investing?
Chapter 3: What does Ray Dalio say about competition in the market?
And what he said was, there was a whole quote that I won't do verbatim from Rick Newman's article and interview with Ray Dalio, but it was a brilliant, brilliant interview. He basically said first, you've got to realize if you're competing in the market, there's a winner and there's a number two.
And if you want to be the winner, you also have to take it away from somebody else that in a sense that you're in a, in a, in a fight against others that somewhat of a zero sum game.
And some of us may not all believe this, but his concept is, look, if it's a zero sum game, you better be humble unless you're so freaking good at this, that you could outperform the market because, because he, you know, he goes on to say, be humble. Being number two is an asset class versus a winner.
Chapter 4: How can diversification benefit investors?
But for most of us, being in the asset class, being an S&P 500 index, and I'm paraphrasing, is absolutely fine for the most of us who aren't going to beat the market. The next thing he says is that you have to be able to diversify well because you don't pay a real price for diversification. You might not have all the
the wins that you have if you're not diversifying, but you take a lot of risk out of your investing if you diversify well your investments. And I think that is really a good point. So the first point is, unless you're a superstar, live with the fact that you're not going to have alpha and outshine the market, even though Ray might. Second is to diversify well for sort of this risk balance.
And I love that point. The third thing he says is, is to get away from the notion that because something has recently been a really successful investment, it's likely to be a really successful investment going forward.
And this is the great challenge as an individual investor, as a high net worth or a small net worth investor, do you jump onto the NVIDIA bandwagon because NVIDIA has knocked it out of the park the last couple of years, or is it really shot its wad? Similarly with Apple, is it already at a high or is it going to go to 5 trillion? Who knows? But you have to evaluate every stock
not based on the momentum it's had the last four years, but what it's likely to do going forward and in the future. And I love that thought as well. And he basically says, his quote is, you have to know the difference between an investment that has gone up a lot and the one that is done well. So something can go up a lot, but not necessarily be well-positioned to do great in the future.
And I think that just is a great, great point on investing. And so everything you do, diversify well. If you're not going to beat the market, figure out where you want to be and be in asset classes that at least perform with the market. And then finally, look at this as though Don't overweight things that have done well recently because they might not keep on doing well.
Thank you for listening to the Becker Private Equity and Business Podcast. It's great to be with you. It's great to have Chanel Bunger on my side as our producer, the best in the business. Thank you so much for joining us.
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