Ray Dalio: Paradigm Shifts

Bodacious · Jul 20, 2019

The following article is admittedly a little bit over my head. My take away is that the world economy tends to ebb and flow at roughly ten year intervals, Mr. Dalio covers the last one hundred years comprehensively.

One of my investment principles is:

Identify the paradigm you’re in, examine if and how it is unsustainable, and visualize how the paradigm shift will transpire when that which is unsustainable stops.

Over my roughly 50 years of being a global macro investor, I have observed there to be relatively long of periods (about 10 years) in which the markets and market relationships operate in a certain way (which I call “paradigms”) that most people adapt to and eventually extrapolate so they become overdone, which leads to shifts to new paradigms in which the markets operate more opposite than similar to how they operated during the prior paradigm. Identifying and tactically navigating these paradigm shifts well (which we try to do via our Pure Alpha moves) and/or structuring one’s portfolio so that one is largely immune to them (which we try to do via our All Weather portfolios) is critical to one’s success as an investor.
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Please read the entire article at:
https://www.linkedin.com/pulse/paradigm-shifts-ray-dalio/

Ray Dalio: Paradigm Shifts

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Ray Dalio: Paradigm Shifts

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