Latest news with #Dalio
Mint
a day ago
- Business
- Mint
7 key lessons from Ray Dalio's ‘Principles for Dealing with the Changing World Order'
Ray Dalio's iconic book, 'Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail', was first published in November 2021, it is a powerful tool for exploration and understanding of how global empires rise, reach their peaks, and then fall over time. The book draws on over 500 years of research and data to identify repeating patterns in history. It tries to elucidate on what historical events mean for today's turbulent world of equity markets. Ray Dalio focuses on presenting a 'Big Cycle' framework that helps readers clearly understand the currently ongoing geo-political landscape, particularly the growing rivalry between the United States of America and China. Combining historical analysis, economic theory along with personal investment thesis, the book provides both a stern warning and a sensible guide for navigating uncertain times. Ray Dalio is the founder of Bridgewater Associates, one of the largest and most reputed hedge funds in the world. Admired for his analytical approach to economics and his sincere commitment towards economic transparency, Dalio has devoted decades to study markets, geo-politics and human psychology. With this book he focuses on global sustainability, offering a prudent framework to deal with economic changes when we have a transition time of shifting tides of global power for a leading super power i.e., the US to an upcoming super power China. Here are seven key lessons from this influential work: Dalio believes that nations follow a common path i.e., a path that emerges through strong leadership and innovation, rising through economic and military might and then eventually declines under the weight of compounding debt and internal strife. 'The times ahead will be radically different from those we've experienced in our lifetimes, though similar to many times in history,' he writes. One of Ray Dalio's core ideas is that long term debt cycles, especially when combined with money printing, often precede national decline. As money printing is nothing but adding more national debt on any nation's economy. 'Debt is a double-edged sword that fuels economic growth in good times and destruction in bad times,' he explains. Ray elaborates on the crucial role of human capital in national development, economic growth and progress. He believes that education and innovation cumulatively provide strength to a civilisation and help in building powerful empires. 'The most powerful empires were those that achieved high levels of education, civility, and competitiveness,' he notes, linking societal progress, holistic development of the larger community with long-term prosperity. Rising disputes and inequalities in a nation, political polarisation and cultural fragmentation are serious red flags. Such differences weaken the core of a country and make future investments and growth difficult. 'When the causes that people are behind are more important to them than the system, the system is in jeopardy,' Dalio further warns, highlighting growing divisions in the US and other major democracies are signs of long term structural weakness. Therefore, for economic prosperity, investments and growth it is crucial for the nation to gel as one and join hands to work together in achieving sustainable long term goals. A nation's influence is backed not just by its economic power but also by its military might. Trade dominance, reserve currency status often correlate with strong and rigid defence capabilities. These elements holistically join to reinforce a nation's global leadership. Since 1945 i.e., the end of the second world war, the US has been the leader of global trade and world order, but now China is also only the podium according to Dalio and is challenging the US. Dalio considers China's resurgence not a chance or a fluke, but as a natural part of historical power shift. 'The United States and China are now in the classic late stages of the big cycle where a rising power challenges an incumbent one,' he writes, stressing that the currently ongoing geopolitical tensions are part of a much larger historical trend. The final point to take note of for individual investors is to focus on adaptability. Dalio recommends preparing for difficult and volatile times ahead by diversifying investments, having a long term vision and continuous learning. 'If you worry, you don't have to worry. If you don't worry, you need to worry,' he quips, stressing the value of proactive thinking in unpredictable environments. Therefore, Dalio's latest book is more than just a lesson in history and economics, it is in fact a blueprint for the global economy. By studying the past he suggests we can be better prepared for what lies ahead economically, politically and even personally. Disclaimer: This article is for educational and informational purposes only and should not be considered investment advice. Readers are encouraged to consult a licensed financial advisor before making any investment decisions.
New York Times
2 days ago
- Business
- New York Times
Ray Dalio's Prescription for Avoiding Fiscal Catastrophe
Ray Dalio's fix Ray Dalio calls it the '3 percent solution,' and it's gaining attention with White House officials and senior Republicans as a potential fix to America's fiscal woes even as the party pushes ahead with a mega spending bill that's roiling the bond markets. For the past couple of weeks, advance copies of Dalio's forthcoming book, 'How Countries Go Broke: The Big Cycle' — and Dalio himself — have been making the rounds with policymakers in Washington and investors in New York. The hedge fund mogul has been warning for some time that America's soaring deficits risk economic calamity, and Dalio recently met with the chairman of the House Budget Committee, Representative Jodey Arrington of Texas, and its members. What's the solution? It aims to bring the annual deficit-to-G.D.P. ratio down to 3 percent, from around 7 percent. According to Dalio, this can be accomplished only by pulling 'three levers' — cutting spending, raising tax revenue, and the corresponding lowering of interest rates. 'The 3 percent solution is very practical,' he told me by email. 'It has worked many times in many places, most recently in the U.S. from 1991 to 1998.' Dalio argues the interest rates lever is the most consequential. The problem: Everyday interest rates are tied to the budget. We're seeing that connection play out in real-time. The bond market has started charging a higher interest rate to buy U.S. government debt as confidence in the government's fiscal discipline sours. If Congress can get serious, Dalio argues, it will send a huge signal to the markets. Treasury Secretary Scott Bessent had made a similar argument. But he has recently gone quieter on that message as the bill, which is expected to add significantly to the deficit over the next decade, advanced through the House. A fiscally responsible budget would ease volatility in the bond market. Any economic slowdown caused by reduced spending could be offset by lower interest rates, which is what a heavily indebted nation needs most. The challenge: All three levers need to work in tandem. Both parties have shown little interest in meaningfully cutting spending. Raising taxes, too, is a nonstarter. The upshot is a stalemate in Washington and higher interest rates. 'All the political decision makers on both sides of the aisle that I spoke with agree that we are likely headed for a terrible outcome if the deficit isn't cut down to about 3 percent of G.D.P.,' Dalio continued. 'So I feel it's like being on a boat headed for the rocks in which everyone agrees that we will crash if we don't change our course, but they're too hung up arguing which way to turn.' The question is, even if he is right — which he probably is — what would actually push lawmakers to act and avoid the rocks? 'The forcing mechanism will likely be a debt crisis and all that goes with it,' he wrote. Nvidia beats financial expectations despite limits on Chinese exports. Shares in the chipmaker are up 6 percent in premarket trading after it reported a 69 percent jump in quarterly revenue, to $44.1 billion. But Jensen Huang, Nvidia's C.E.O., warned that restrictions on sales to China would hurt America's global tech dominance. JetBlue and United form an alliance. The airlines announced a deal in which customers can earn frequent flier miles on each other's flights. The partnership will allow United to return to Kennedy International Airport amid continuing troubles at its New York-area hub at Newark Liberty International Airport, and perhaps more important allows the two to collaborate without having to strike a merger or deeper alliance. The Trump administration seeks to revoke visas for Chinese students. Secretary of State Marco Rubio said officials would 'aggressively' crack down on existing visas, especially for those studying unnamed 'critical fields,' and step up scrutiny of future applicants from China. The administration has already halted interviews for student visa applicants. Separately, President Trump suggested a cap on international students enrolling at Harvard. Why tariffs uncertainty is far from over Global markets are rallying on Thursday as investors cheer a big blow to President Trump's trade fight — even if economists warn that it hardly removes all of the risks. The dollar and S&P 500 futures are up after the U.S. Court of International Trade ruled unanimously that many of Trump's biggest tariffs — primarily those imposed under the International Emergency Economic Powers Act — are illegal and gave the administration up to 10 days to wrap up the paperwork needed to end them. That particular law, the court ruled, 'does not authorize the president to impose unbounded tariffs.' The administration sharply criticized the ruling and vowed to appeal it; the matter could end up being decided by the Supreme Court. Here's what was struck down: And some experts say the government may have to reimburse companies that have had to pay tariff duties on the above. What wasn't: The ruling throws trade negotiations with other countries into limbo. Why should anyone offer Washington any concessions until this is resolved? Investors view this as good news. Companies with big tariffs exposure — including Adidas, Puma and Stellantis — rose sharply on Thursday. In fact, stocks have rallied in recent weeks on investors' belief that the worst of the trade war is over. A lower overall tariff rate will be better for corporate profits, kick-start hiring and investment and could persuade the Fed to lower interest rates. Wall Street has lowered the odds of a recession since Trump began pausing and rolling back some of his levies. Is it too soon to celebrate? 'The Trump administration has other authorities it can use to impose tariffs similar to those the court struck down,' Alec Phillips, a political economist at Goldman Sachs, wrote in a research note last night. They include reclassifying the levies under different trade laws, such as by using Section 232 of the Trade Expansion Act of 1962, which underpins the levies on steel, aluminum and auto imports that remain in place. There's plenty at stake: The ruling potentially deprives the government of about $200 billion in annual tariffs revenues, he estimates. The Musk-Trump situationship Elon Musk is ending his formal work as President Trump's chief cost-cutter, seemingly driven by frustration with Washington gridlock and pressure from investors to refocus on the companies that made his fortune. But we don't knowhow big any Musk-Trump rift is. And Musk will still need to retain some influence in the Trump administration to help out his businesses. Musk is stepping back from Washington and politics to some degree. He noted on X last night that 'my scheduled time as a Special Government Employee' was coming to an end. That's after he publicly criticized Republicans' budget bill, which Trump has championed. And Musk told Ars Technica, 'I think I probably did spend a bit too much time on politics.' But Musk's influence in Washington appears shakier. Trump has pressed ahead with tariffs despite Musk pushing back publicly, if gingerly. And while he said that his Department of Government Efficiency team's approach has become 'a way of life throughout the government,' Musk has acknowledged that the initiative has faced 'an uphill battle.' Trump's recent trip to the Middle East underscores that reality. Musk had sought to derail a big A.I. data center deal struck by one of his archrivals, Sam Altman of OpenAI. The Wall Street Journal reports that Musk had warned executives at the Emirati tech investor G42 that Trump wouldn't sign off on the plan unless his xAI was included in the transaction. In the end, Trump officials pressed ahead — and Musk's company was left out. (A reminder: Musk's move appears to be what Altman said at last year's DealBook Summit that the Tesla chief wouldn't do: 'I believe pretty strongly that Elon will do the right thing and that it would be profoundly un-American to use political power to the degree that Elon would hurt competitors and advantage his own businesses.') Musk still needs to stay on Trump's good side. SpaceX and Starlink have benefited heavily from a seeming lock on space-related contracts. Tesla's bet on autonomous vehicles, which is reportedly poised to begin a crucial real-world test next month, depends on Trump regulators relaxing rules on the technology. And Musk, like other A.I. entrepreneurs, is continuing to push for looser oversight. 'You call that chickening out?' — President Trump, bristling on Wednesday at a reporter's 'nasty' question about the so-called TACO trade, short for 'Trump Always Chickens Out' in trade fights. The Fannie and Freddie trade Hedge fund managers who have bet big on Washington relinquishing control of Fannie Mae and Freddie Mac may have reason to smile this week. Over-the-counter shares of the mortgage finance giants briefly surged on Wednesday after President Trump posted on social media that he was 'working on TAKING THESE AMAZING COMPANIES PUBLIC.' Trump said that the U.S. government would still guarantee loans made by Fannie and Freddie if they're no longer under Washington control, a backstop that could help limit volatility in the mortgage market. That said, it's unclear what a guarantee might look like in practice. Here's who stands to gain: Big shareholders could see a 'windfall' from privatization, said Lawrence White, an economics professor at the N.Y.U. Stern School of Business. But that's a big if, he added, since it's unclear whether Trump will actually follow through. (The president made a similar promise in his first term, and it never happened.) The context: Fannie and Freddie have been under government control since the federal government bailed them out in 2008. At the time, canny investors saw an opportunity, buying up shares in both at rock-bottom prices. It's been a long wait. Even as the housing market bounced back, consecutive administrations took no action to re-privatize the companies. Trump seems to see it as a priority, but the administration is 'going to need congressional cooperation,' White said. Risks loom. Removing the conservatorship could have ripple effects that affect borrowers with lower incomes or credit scores, 'resulting in less access to credit and a harder path to homeownership,' Bharat Ramamurti, a senior adviser at the American Economic Liberties Project, said in a brief released on Thursday. A rise in mortgage rates would be probable too, but the magnitude would depend on how privatization is carried out, said Laurie Goodman, the founder of the Housing Finance Policy Center at the Urban Institute. Deals Tech and artificial intelligence Best of the rest
Time of India
3 days ago
- Business
- Time of India
Billionaire who predicted 2008 crash warns Trump over $36 trillion U.S. debt crisis
Ray Dalio , the hedge fund billionaire who foresaw the 2008 financial meltdown, has issued a stark warning about America's ballooning $36 trillion debt—calling it the country's 'biggest problem.' In his new book, How Countries Go Broke: The Big Cycle, and in a recent NBC interview, Dalio expressed deep concern about the fragility of the U.S. financial system, comparing today's conditions to the economic turmoil of the 1930s. Dalio also directed sharp criticism at Donald Trump , accusing the US president's administration of slashing federal spending and promoting policies reminiscent of hard-right regimes from the 1930s. He argued that Trump's efforts to expand presidential power mirror the actions of historical figures like Andrew Jackson and Franklin D. Roosevelt, but in a more aggressive manner. 'It would be fair to argue that his attempts to maximize the power of the presidency by bypassing the other branches of government are analogous to the ways that Andrew Jackson (of the right) and Franklin D Roosevelt (of the left) did, though he is even more aggressive than they were,' Dalio said. Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Massive Car Finance Refunds Funded – Look Up Your Name to Claim Lookup Finance Get Offer Undo — RayDalio (@RayDalio) In excerpts published by The Guardian, Dalio warned that cutting federal support systems could harm millions of Americans and further destabilize the economic order. Live Events Last month, Dalio cautioned that the U.S. may be headed for something 'worse than a recession.' He pointed to a convergence of factors, including Trump-era tariffs and the breakdown of the current monetary system, as signs of looming crisis. 'We have a breaking down of the monetary order,' he said. 'Such times are very much like the 1930s. I've studied history, and this repeats over and over again.' As the founder of Bridgewater Associates , the world's largest hedge fund, Dalio's warnings carry significant weight—especially given his track record of predicting major economic shifts.
Yahoo
4 days ago
- Business
- Yahoo
Investor Who Predicted 2008 Crash Sounds Alarm On 1 Particular Donald Trump Policy
Hedge-fund billionaire Ray Dalio — who correctly predicted the financial crash that roiled the world in 2008 — has warned in his new book that America's current $36 trillion debt is the country's biggest problem. And Dalio slammed Donald Trump's administration for slashing federal spending and gutting the government because 'many people who will be hurt by them will fight back and valuable support systems will be weakened or eliminated,' according to quotes of 'How Countries Go Broke: The Big Cycle' that The Guardian published Tuesday. Dalio, the founder of global hedge fund Bridgewater Associates, also suggested Trump's 'Make America Great Again' policies are 'remarkably like the policies that those of the hard-right countries in the 1930s used.' 'It would be fair to argue that his attempts to maximize the power of the presidency by bypassing the other branches of government are analogous to the ways that Andrew Jackson (of the right) and Franklin D Roosevelt (of the left) did, though he is even more aggressive than they were,' he added. 'We will see how far he will take it.' Dalio last month warned how 'something worse than a recession' could soon happen, attributing it to a raft of issues including Trump's tariffs on products imported from other countries. 'We have a breaking down of the monetary order,' Dalio cautioned on NBC's 'Meet The Press.' 'Such times are very much like the 1930s,' he added. 'I've studied history, and this repeats over and over again.' Harvard's Laurence Tribe Delivers Unflinching Message To Foreign Students In Trump Crosshairs Fox News' Brit Hume Scoffs At Trump's Latest Rant: 'Don't Know What' He's Talking About Wall Street Journal Shatters Core Trump Fantasy In Editorial Urging GOP 'Revolt' Rage Against The Machine's Tom Morello Unleashes Anti-Trump Fury With Flip Of His Guitar
Yahoo
23-05-2025
- Business
- Yahoo
Ray Dalio says politicians addressing U.S. budget deficit are like passengers ‘on a boat that's headed for rocks'
Ray Dalio said Republicans and Democrats agree that the budget deficit needs to be addressed, but their political squabbling prevents a solution. Any bipartisan effort to reduce the budget wouldn't happen until after the 2026 midterms, at which point a commission would be put together to tackle the problem, Dalio predicted. Lawmakers won't address the deficit until after the midterm elections in November 2026, according to Ray Dalio. The legendary investor said on Thursday the problem of lowering America's growing budget deficit would be put off until after those elections, citing contacts in Washington, D.C. Early that morning, the Republican-led House passed a new budget bill that critics say will expand the country's budget deficit at a time when government officials should be focused on shrinking it. According to Dalio, Democrats and Republicans both agree on the gravity on the issues, but their political rivalry prevents them from finding a workable solution, he said. 'It's like being on a boat that's headed for rocks, and they agree that they should turn, but they can't agree on how to turn,' Dalio said during an event for the Paley Media Council in New York. That's why, he said, no serious attempts to reduce the deficit will happen until the 2026 midterms. 'So I'm told the way that this is going to go down is that we'll pass this [budget bill],' Dalio said . 'There won't be any important changes until after the 2026 elections.' After those midterms elections lawmakers plan to convene a special committee to address the deficit, according to Dalio. 'After 2026 the aspiration is to try to put together a bipartisan commission to try to be able to deal with this,' Dalio said. 'So there's no prospect of this being materially dealt with until after the 2026 election.' Dalio added that he was lukewarm on the outcomes of such a group, despite calling the need for 'bipartisanship and getting over political hurdles' the 'essence of the challenge of our country.' When asked about the prospects of finding a solution, Dalio said: 'I cannot be optimistic about it.' Thursday's budget bill passed the House of Representatives in a 215 to 214 vote, with no Democrats in favor of the legislation. Two Republican representatives—Thomas Massie of Kentucky and Warren Davidson of Ohio—joined the Democratic caucus in voting against the bill. In the past, Dalio has advocated for reducing the budget deficit with what he calls the 3% solution. The proposal would aim to lower the U.S. national debt to 3% of GDP from its current levels between 6.5% and 7%. The current bill puts that target even further out of reach, according to a report from the nonpartisan Committee for a Responsible Federal Budget. This story was originally featured on
