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Ray Dalio and gold

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  • The White Coat Investor The White Coat Investor 
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    With all due respect, you missed the point (or maybe helped make the point), which is that people tend to ignore how cyclical these things are. Going back to 1999 up to the present time, that’s an entire 20+ year stretch that gold miners outperformed the stock market, and that’s even after the miners are way down from their peak in 2011 while the S&P 500 is at its all time high. I am not at all a gold bug (like I said, gold miners are only a small portion of my portfolio), but I find that fascinating when you consider how hated these stocks are by many mainstream investors. Anyway, Ray Dalio is one of the most successful investors in the world, so I would not be too dismissive of his ideas.

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    Okay. You found a 20 year period. But it started at a massive peak in stocks and the lowest nadir for gold in the last 30+ years.  Why aren’t you talking about a 15 year period or a 25 year period? Oh wait…I know the answer to that one.

    Same nonsense people did with the “lost decade” stuff for years.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
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    #234010 Reply
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    Avatar Peds 
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    Same nonsense people did with the “lost decade” stuff for years.

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    but if you cant cherry pick, then whats the point?!?!?!

    thats my fav 10 year period to make ppls brains fritz….

    #234029 Reply
    Liked by Tim, Lordosis
    CM CM 
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    Interesting article by Ray Dalio.  One takeaway for me on things like gold stocks is that most assets are cyclical even if they don’t seem like it, so it’s not a bad idea to diversify a little into less popular asset classes.  I’ve done so by putting a little bit of my portfolio in gold and silver miner etfs in the past couple months (So far so good on those).

    On that note, if you look back at the gold bugs index (“HUI”) since January 2000, and compare it with how the S&P 500 has done since January, 2000, HUI has actually outperformed the s&p 500, up about 300% compared to about 200% for the S&P. If I hadn’t looked, I would have guessed otherwise. Just one example of how the very recent past can distort our perception of reality.

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    Gold stocks may or may not be a good investment, but it’s probably worth mentioning that Dalio is writing about gold, not gold miners.

    A well-known economist who is not a goldbug (IIRC it was John Taylor) wrote an editorial in the WSJ some years ago noting that gold is (or was) 2% of the global portfolio, so it is reasonable for valuation-agnostic investors (e.g., indexers) to hold 2% of their portfolios in gold.

    Dalio has advocated for a 10% position in gold in previous interviews and articles, but of course, he is not valuation-agnostic.

    Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried bags for Cyd Charisse (gracious). Hosted epic company parties after Friday night rehearsals.

    #234038 Reply
    Liked by PhotonsRGR8
    Avatar BCBiker 
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    Dalio is an interesting guy, very smart, honorable, and obviously extremely successful. His writing style is rambling and repetitive, however, and I do not care for it. I started reading his book, Principles, and enjoyed the first part, which is biographical and demonstrates how he is put his “principles” to work for himself, his family and his business. After that section, I found it dreadfully boring, the listing and explaining of the principles, ad nauseam, and I did not finish the book.

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    This is why I like audiobooks. When I read books (digital or paper) I hit this point where I feel like I’ve got the general point of the book and don’t think the last 30% would be worth my time. When I’m listening, which is more passive and easy, it get through and it is almost always worth it.  I also re-listen to books that are really good and I have listened to Dalio’s tome a couple times now. I agree with you that the biographical part of the Principles is the most entertaining but the end is the most useful.

    I consider this book to be one of the best books for how process-oriented thinking (as opposed to results-oriented) is transformational. I consider the the US medical system to be about as close to the opposite of Bridgewater as anyone can find. If we as a profession could bring just a small percentage of the Bridgewater philosophy to healthcare, we would see huge benefits.

    I’m allergic to gold so I don’t really care if Dalio writes about it. I don’t follow his investment strategy because a huge hedge fund’s investment strategy is not really on the same planet as mine in terms of opportunities and goals.

     

    #234041 Reply
    Avatar Perry Ict 
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    With all due respect, you missed the point (or maybe helped make the point), which is that people tend to ignore how cyclical these things are. Going back to 1999 up to the present time, that’s an entire 20+ year stretch that gold miners outperformed the stock market, and that’s even after the miners are way down from their peak in 2011 while the S&P 500 is at its all time high. I am not at all a gold bug (like I said, gold miners are only a small portion of my portfolio), but I find that fascinating when you consider how hated these stocks are by many mainstream investors. Anyway, Ray Dalio is one of the most successful investors in the world, so I would not be too dismissive of his ideas.

    Click to expand…

    Okay. You found a 20 year period. But it started at a massive peak in stocks and the lowest nadir for gold in the last 30+ years.  Why aren’t you talking about a 15 year period or a 25 year period? Oh wait…I know the answer to that one.

    Same nonsense people did with the “lost decade” stuff for years.

    Click to expand…

    I “found” a 20 year period? That 20 year period isn’t some random period picked out from the past when the s&p produced no returns. This is a 20 year period going back from TODAY. Today, as in, the S&P 500 is at RECORD HIGHS, and precious metals miners are at roughly a third their 2011 highs. So if you are accusing me “cherry picking” some random period to make it look like the S&P has done lousy and the miners have done as great as ever, then I’ve done an awful job “cherry picking”.

    And yes, to answer your question, some might dismiss my observation as ridiculous because, as you pointed out, there are other years we could look back to, like 2003 or 2010 where we get a result where the S&P outperforms, and thereby conform to the widely held belief of retail investors to just keep aggressively investing in the most popular US stocks/funds and ignore other asset classes, regardless of the market climate, because the mantra is that those US stocks/funds will always produce superior returns over 10-20 years. The point is, isn’t it helpful to also see the other possibilities (also ask yourself, is this market climate closer to 2000 or 2010?). As investors, regardless of what decisions we ultimately make (buy and hold S&P 500 and/or diversify, etc), do we really want to be blind to the less optimistic scenarios?

    #234081 Reply
    Liked by PhotonsRGR8
    Avatar jacoavlu 
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    thereby conform to the widely held belief of retail investors to just keep aggressively investing in the most popular US stocks/funds and ignore other asset classes, regardless of the market climate, because the mantra is that those US stocks/funds will always produce superior returns over 10-20 years.

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    overwhelming majority here would not advocate investing in “the most popular US stocks/funds” nor to “ignore other asset classes” – most of us just buy the whole US market, gold miners included. And the whole international market too.

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #234083 Reply
    Lordosis Lordosis 
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    Does gold Miner stock even correlate with the price of gold?

    “Never let your sense of morals prevent you from doing what is right.”

    #234091 Reply
    CM CM 
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    most of us just buy the whole US market, gold miners included. And the whole international market too.

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    That would be one asset class: stocks. Others would be bonds, real estate, timber, gold (or precious metals), and commodities.

    Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried bags for Cyd Charisse (gracious). Hosted epic company parties after Friday night rehearsals.

    #234099 Reply
    Avatar jacoavlu 
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    understood; the overwhelming majority also advocate and hold a broad bond fund, and reits at least within a total market index.

    I will admit I ignore timber and metals and commodities

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #234110 Reply
    Avatar Tim 
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    “how process-oriented thinking (as opposed to results-oriented) is transformational.” Just a reminder, if your AA is to tilt precious metals or small cap, so be it. The danger is making a choice based upon back testing. Data mining works until it doesn’t.

    Ray did not make a dime managing portfolios. Bridgewater takes a big chunk of funds from a client and targets specific investment objectives, primarily institutional. Any asset manager by definition will “talk his book”. The most accurate understanding can be obtained by actually reading Form 13-F.

    https://www.nasdaq.com/quotes/institutional-portfolio/bridgewater-associates-lp-699510

    By the way, Dalio also jumped into Berkshire. By no means do I mean to speak ill of his performance. It’s just he wouldn’t take me as a customer and I doubt he would disclose how they are investing for different clientele.
    My guess is John Q Public isn’t his target audience. GLD has increased, “talking his book” for clientele. Perfectly fine.

    #234112 Reply
    Avatar PhotonsRGR8 
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    TL;DR

     

    #234203 Reply
    Lordosis Lordosis 
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    PhotonsRGR8 07/27/2019
    7:31:46 PM MST Reply
    TL;DR

    Thanks for sharing. That is about as useful as the Amazon question answers that say “I don’t know I haven’t received it yet”

    “Never let your sense of morals prevent you from doing what is right.”

    #234232 Reply
    Liked by PhotonsRGR8
    IntensiveCareBear IntensiveCareBear 
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    Dalio said all you need to know about gold when he said, “If you don’t own gold…there is no sensible reason other than you don’t know history or you don’t know the economics of it.”

    Gold is good a very compact and transferrable inflation-stable wealth store that can readily be converted into any world currency. To not see that is to not understand econ/history/investing. Gold is not a GRQ or growth thing, though… that is where most folks get miffed.

    The article OP linked is just part of the promo tour for Dalio’s new Big Debt book and a few snippets from it, though… I agree.

    …Dalio is an interesting guy, very smart, honorable, and obviously extremely successful. His writing style is rambling and repetitive, however, and I do not care for it. I started reading his book, Principles, and enjoyed the first part, which is biographical and demonstrates how he is put his “principles” to work for himself, his family and his business. After that section, I found it dreadfully boring, the listing and explaining of the principles, ad nauseam, and I did not finish the book…

    Click to expand…

    Spot on^

    The guy is financial genius. He is not a sharp dresser, not a very good interviewee, and not very good as a writer. His books have good info but are pretty verbose and just not too interesting (get top people, pay them well, build chem, etc… important but obvious stuff). Principles is basically a read only for someone going into HR or starting/expanding a laaaaarge company. I did the opposite with the book… skimmed first half and read majority of second half. Much of it is common sense or takes 50 pages to say what could be done in 3 pages. Money: Master the Game had many of Dalio’s ideas but was fairly good since Robbins and his team are much funnier and more dynamic at presenting the info. I’ve found over the years that I’m much better studying Dalio’s fund holdings than chasing his interviews or publications. I might gloss over Big Debt, but I have low expectations.

    The one thing I did like from Dalio that was pretty good (and free) was his How the Economy works YouTube vid.

    "Hmm, that sounds risky." - motto of the middle class

    #235570 Reply
    childay childay 
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    If you go into the bathroom, turn out the lights, then look in the mirror, and say “Crixus” three times…he will appear. But don’t say I didn’t warn you.

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    LOL

    #235608 Reply

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