Wednesday, February 12, 2025
HomeMarketBillionaire Ray Dalio offers fresh tips on how to be a better...

Billionaire Ray Dalio offers fresh tips on how to be a better investor

-


Listen and subscribe to Opening Bid on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.

If you’re following the hot stocks of the moment — such as the Magnificent Seven — it’s likely been a rush to watch them rise.

However, “I think it’s very much like the internet and the dot-com period,” cautioned Bridgewater Associates founder Ray Dalio during a conversation with Yahoo Finance Executive Editor Brian Sozzi for the Opening Bid podcast (see the video above or listen below). The pair sat down to chat at the World Economic Forum in Davos, Switzerland, and Dalio delivered insights ranging from leadership to his personal investing mantras.

Dalio has the benefit of five decades of market hindsight. He founded Bridgewater in 1975 and grew the company from a scrappy operation that he ran out of a two-bedroom apartment into a firm that Fortune ranked as the fifth-most-important private company in the US.

Known in the industry for sticking to a bespoke set of principles and sharing them widely, Dalio is the author of several books on the subject. His latest book, “How Countries Go Broke: Principles for Navigating the Big Debt Cycle, Where We Are Headed, and What We Should Do,” is expected in September.

Rather than piling everything into the hot stock of the day, Dalio advised investors to consider more diversification by investing in 10 to 15 “good, uncorrelated return streams that are risk balanced.” Calling this strategy his “holy grail and … mantra in investing,” he told Sozzi, “If you achieve this mantra, you will make a fortune.”

“Everybody’s thinking about what is the best debt,” he continued. “They don’t realize that with diversification, the first three diversified, relatively uncorrelated assets will reduce the risk almost in half. That means you double your return-to-risk ratio.”

Dalio also advised that this type of strategy often requires patience upon deployment, which can prove difficult in a buzz-generation environment. “The game is played on not getting out,” he said. “The nature of loss [is], you lose 50%, you have to make 100% to get it back.”

For the evergreen investor with $1,000 to invest, Dalio advised reflecting on the difference between alpha and beta.

“Alpha is a zero-sum game,” he said. “To get alpha, you have to take it away from somebody else. Beta means there’s an asset class.”

But even before diversification, his first tip for investors is to be humble.

“Be humble, like in any game [where] you’re competing,” he said.

His final tip is to evaluate the headline- and buzz-generating investments. “Get away from the notion that investments which have done well recently are better investments, rather than more expensive. You have to know the difference between an investment that has gone up a lot and [that’s] done well.”



Source link

LATEST POSTS

Anthropic CEO Dario Amodei warns: AI will match ‘country of geniuses’ by 2026

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More Artificial intelligence will match the collective...

3 new reasons to be concerned about Magnificent 7 stocks

With the often-hot Magnificent Seven trade on the skids less than two months into the year, investors may need to...

As Trump’s tariff threats get louder, what’s next for India-US trade ties?

New Delhi: Ahead of Prime Minister Narendra Modi's US visit, India slashed customs duties on a range of products as Washington ratchets up threats...

More steps to lift growth on cards: FM Nirmala Sitharaman in Lok Sabha reply

New Delhi: Finance minister Nirmala Sitharaman on Tuesday pledged more steps to help India retain the world’s fastestexpanding major economy status, while asserting that...

Most Popular

spot_img