No one can see the future… but that doesn’t stop people from making predictions!
Ray Dalio is no different. I think his videos on the economic machine are very well done. And he’s made accurate predictions (and many many inaccurate ones, which he has admitted to as mistakes, which many people do NOT do) in the past.
What should you make of his recent prediction that the U.S. debt crisis will cause a financial heart attack in the next three years? Ben Carlson has a good take on it (with receipts):
Predicting a Financial Crisis [A Wealth of Common Sense] – “Perhaps the most impressive part of Dalio’s track record is the fact that these macro predictions haven’t really impacted Bridgewater’s performance numbers. It remains one of the biggest hedge funds in the world with an enviable long-term track record.
I think one of the biggest reasons for this is the fact that Bridgewater uses a rules-based framework that relies more on quantitative models rather than human forecasting ability.
That’s the way I think about macro forecasts as well. I have my opinions about what I think could happen. Some of them will be right. Most of them will be wrong.
My investment process does not change substantially based on those macro forecasts.”
In other words, predict all you want, just stay the course. 😁