Dalio In Davos: Ray Delivers Fresh Set Of Possibly Profound Prognostications

As is custom, Ray Dalio took some time away from blogging, book promoting, “principle”lizing and hanging out with his forest cult to deliver some of his patented  prognostications against a backdrop of snow-laden conifers in Davos.

At last year’s gathering, Dalio decided it was a good idea to tell CNBC the following about the relative (non)merits of holding cash:

 If you’re holding cash, you’re going to feel pretty stupid.

A charitable interpretation of that pseudo-call would be that it needs to be taken in context (and you can relive the moment via the linked post above).

A non-charitable read would entail simply pointing out the fact that 2018 ended up being the year that “cash” outperformed almost everything on the planet. Specifically, only 9% of assets outperformed 3M Libor.

(BofAML)

T-bills outperformed something like 95% assets, which is pretty much a record going back 120 years.

(Goldman)

Of course it didn’t matter. Making fun of Ray Dalio for saying something stupid is an exercise in futility. That is: you’re tilting at windmills, as evidenced by the Pure Alpha fund returning a ridiculous 14.6% in 2018, a mind-boggling number considering the environment and considering how Bridgewater’s “peers” fared (and “peers” is in scare quotes for a reason).

So, when it comes to Ray speaking in public, you’re really just tuning in for entertainment. You could characterize it as a kind of reverse “do as I say, not as I do” type of deal (i.e., “do as I do, not as I say”), but that isn’t really accurate either, because there’s no telling what Bridgewater is “doing” and even if you knew, you couldn’t “do” it.

That’s the backdrop for Dalio’s Tuesday comments from Davos, where he parroted some of his usual talking points about social tensions, populism and the limits of policy. Here’s what he said in a panel discussion:

So, the next downturn in the economy worries me the most. What scares me the most longer term is that we have limitations to monetary policy – which is our most valuable tool – at the same as we have greater political and social antagonism. These types of political issues are now very connected to economic issues. So I think that’s the character of the environment that we are in.

If you’re wondering whether Ray gave the traditional CNBC interview with Andrew Ross Sorkin, Becky Quick and a visibly bored Joe Kernen (who donned some O.J. murder gloves for the occasion) the answer is “of course he did”.

You can watch the full interview below. Again, it’s “interesting” as far as these things go, but it always reminds me of sitting at a bar and accidentally finding yourself in a conversation with someone who’s been fabulously successful (and that used to happen to me a lot here on the island back in my drinking days). You know what you’re listening to is valuable and probably some semblance of profound, and you feel like you should appreciate the fact that you were lucky enough to hear it, but by the time you leave the bar, you always feel like your time would have been better spent hitting on the cute Albanian bartender (shout out to Blarina – she works in Manhattan now, by the way – tell her I said hi).

Watch CNBC’s full interview with Bridgewater founder Ray Dalio from CNBC.