RAY DALIO WARNS STOCK MARKET INVESTORS

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Well here today at a conference ray dalio has warned all stock market investors out there we got to go ahead and look at the comments ray dalio made today and decipher those all right now if you’re at home and you don’t know who ray dalio is ray dalio is an american billionaire investor hedge fund manager dalio is the founder of investment firm bridgewater associates

Which is one of the world’s largest hedge funds as of january 2018 he’s one of the 100 wealthiest people in all of the world all right now don’t let that impress you too much one of the wealthiest people because honestly whenever you run a massive hedge fund you get your two and twenty percent okay who has a hedge fund manager so if you guys ever wonder why you

See so many hedge fund managers that are the richest people in the world because they get two and twenty so they get two percent of the money coming in regardless if they get gains losses it doesn’t matter across the board they take two percent of that okay so which means basically just for breathing they get two percent and then any profits they make for their

Customers they get twenty percent of those so when you start adding up the numbers and you see somebody that manages a hundred billion dollars or two hundred billion dollars and they take their two and twenty percent you can understand that you could become a billionaire in a very quick amount of time so don’t let that impress you too much no now ray dalio i gotta

Say for a long time he have very impressive returns but i gotta say since 2012 his returns have been absolutely awful if you compare them just to the what like the s&p 500 goes up even if you compare them to the average hedge fund which is absolutely horrible right he has really gotten really poor returns in the last number of years around a forty six percent

Return since 2012 was just horrible because you look at the s&p 500 and it’s up a hundred and eighteen percent okay that’s just the sp500 it’s not like it’s the best stocks in the sp500 that’s just the s&p 500 as a whole the average hedge fund has even outperformed his fund okay with over nearly a sixty two percent gain so needless to say ray dalio had gotten

Great returns for a really long time but over the last number of years last five six seven years his performance has been absolutely horrible the guy’s know he does have a new book out it’s called big debt crisis some people are saying it’s a pretty good book i’ve not gotten a chance to read it yet the one thing i can’t understand is it’s like this guy supposed to

Be worth seventeen billion-dollars one of the heck is he charging $45 for a book like you got 17 billion dollars like you you have enough in the world like just give that book away for free it hardly anybody’s gonna read the book anyway so i give it away as cheap as possible for everybody who wants to read it in my personal opinion it doesn’t make sense so little

By the way if you’ve read that book let me know what your thoughts are down there in that comment section i would love to hear from you guys if it’s a book we should all go out there and get i would love to hear from you guys in that comment section alright so hedge fund titan ray dalio says the world is counting on stocks going up and that will mean trouble in a

Bear market hedge fund magnate ray dalio warned investors on thursday the next bear market could be very painful since most are not prepared for it a world by and large is leveraged long dolly of who runs one of the largest hedge funds in the world said in a panel at the greenwich economic forum in connecticut when there’s a downturn i don’t think there’s going to

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Be much to protect investors dalio did not call for a sharp downturn or the start of a bear market but added any investors should have a strategic asset allocation mix in other words what will be the neutral portfolio in an overall period of time and then figure out where there is alpha that will be what distinguishes the winners in the losers when the next bear

Market elides ray dalio says okay so right off the bat he’s basically you know you could definitely understand he’s he’s coming out of somewhat of a bearish stance all right you don’t usually make comments like this unless you you’re kind of more on the the barrer side than the bullish side all right now obviously maybe he’s been positioned like that for quite a

While now and maybe that’s why his fund has severely underperformed everything for the last five six seven years you can go back in time maybe that’s why because he’s so positioned like we know the end of the world or or we’re gonna have a bad time or something like that and what we see here is his fund is obviously lacking and maybe he’s trying to come out and

Say hey we’re doing this because we think you know a bear market is coming or we want to be positioned for that all right now this is all very interesting for me to read something like this stocks are in their longest bull market since world war two since the bottom of financial crisis the s&p 500 has more than tripled okay the markets jump in that time has

Been propelled in part by historically low interest rates from the federal reserve all right no that’s always very interesting to hear when people you know point at the very bottom of the great recession which was arguably the worst financial time we had in the united states of america probably since the great depression and they pointed the very bottom and they

Say well since that time it did such-and-such to the stock market and such and such well we could also look at a period of time okay it was 2007 the dow was over 14,000 since that time which was nearly 12 years ago the dow has not even doubled okay we’d have to be at at least 28,000 plus for the dow two have doubled so in my opinion the stock market has not done

Very well the stock market an average doubles every somewhere around every seven to eight years all right every 78 years historically the stock market has double the stock market has not even doubled since 2007 okay you can look back at the data the market was over 14,000 topped out and then it started going down from there alright and if we look at you know other

Periods during 2007 we can see a lot of periods where the dow is at 13,000 so right now at 25,000 or 24 or 17,000 we’re out of the dow right now even right now we haven’t even doubled okay so not only the peak in 2007 but also a lot of the time when we were at that 13,000 range we still haven’t even doubled guys and we’re coming up on 12 years since 2007 okay so the

My opinion the stock market has not done an amazing job or something the only way it’s an amazing job is if you look at the very bottom we hit in 2009 when we were going through the great recession and we had the financial crisis like it hasn’t been a very good place okay ee-aw says here these low rates have created an incentive to borrow money and buy stocks that

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Is what’s caused the market to go up that’s a very very very big comment there okay to say well because stocks are going up it’s because people are borrowing money to buy stocks or something like that when in my opinion that’s a definitely a very different reason than why the stock morgana’s actually gone up okay if we go ahead and look at united states corporate

Profits what we’ll find is a massive uptick in corporate profits to you know stratospheric levels the highest they’ve ever been by far and away in a long long time okay corporate profits have absolutely exploded in the united states over the last number of years but that is just half the story that’s just half the story the other half is earnings per share or even

Much stronger than what corporate profits would show because of the massive share buybacks all right so basically over the last you know five ten years there’s been a lot of companies that not only are they making a lot more money on their bottom line but on top of that they’re using their own money to buy back their own shares and basically what it makes it the

Earnings per share look like they’re going up dramatically and dramatically because they’re less shares to be counted against on that net income okay so there’s more money attributable to shareholders out there so the company can pay off more dividends or do whatever they want to do with that money basically the earnings per share goes up at a much faster rate and

Then on top of that you have everybody’s net income exploding corporate profits exploding guys and that is a real reason why the stock market has gone up so much okay because investors look at this and they’re like this is a huge opportunity corporate profits exploding companies buying back tons of shares earnings per share going up and even a faster rate and

Naturally you’re gonna have a lot of people that want to invest in the stock market because you just have a lot of companies that have blockbuster earnings per share okay that’s the truth that’s a real reason now are some people borrowing money to buy stocks or have some people borrowing money or funds or whatnot absolutely but that’s pretty much been like that

In the stock market for a long long time you always have some people out there and generally those people are funds end up getting burned okay this is a completely honest a lot of times those who borrow money they end up getting burned in the end and maybe they can be hot for a few months or a year or something like that but generally if they’re borrowing money

To buy even more and more stocks they’ll end up getting destroyed okay he says you have to create differentiation without much beta being built into the portfolio that will be the opportunity to distinguish those who are able to extract alpha and those who aren’t all right dalia founded bridgewater associates largest hedge fund in the world back in 1975 through

The end of 2017 the fund managed 160 billion dollars in assets all right now so da leone’s got a lot of interesting talk okay da leo is a very interesting speaker the only thing i would say to dali about there is why has your firm underperform the market so severely the last six or seven years why have you underperformed even the average hedge fund out there by

A massive amount why is your firm doing so poorly as what i would like to know it’s certainly not doing poorly as far as the amount of money it manages okay great marketing but at the same time it’s certainly not doing well at all about it based upon any metrics all right so i look at ray dalio right now i think his comments are interesting i may even agree with

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It a little bit you should always be diversified but my opinion is you should always have a lot of cash on the sidelines you should always have you know a good amount of cash on the sidelines ready to the employee if things go south ready to deploy when there are dips in the market that’s one of my big things as far as when i look at you know the average person out

There being diversified i think one of the biggest things is always having money ready to go because you’re always gonna have huge dips in certain stocks that are great companies that maybe in the short term go down but over the long term they have great futures ahead of them you’re always going to have dips in the stock market in general because of whatever the

Worry was in 2017 ray dalio was telling everybody go out and buy gold because it was scared about north korea and united states situation obviously nothing ended up happening there that obviously was a great thing that nothing ever ended up happening as far as our nuclear war or something like that to north korea in the united states but if you’re worrying about

All these short-term things all the time it’s what ends up making out for horrible performance over years and years i fully like ike if he had just a bad year or maybe even two bad years i’ll look down the way like okay big deal you had one bad year you had two bad years everybody can have a bad year or two but when you have five six seven straight bad years you

Underperform the markets in a massive way you underperform your peers which are the average hedge funds out there in a massive way we’re talking about the average hedge funds up you know 62 percent they were up something around 46% he’s underperforming his funds underperforming the sp500 massively underperforming the average hedge fund out there and i look at

Ray dudley and i say have you lost your touch sir have you lost your touch you know and then you go around and preach and you know that everybody is not ready for the next bear market or something like that well we’ll see what the their returns over there are in the next bear market we’ll see if they you know well outperformed s&p 500 will outperform the you

Know average hedge fund out there we’ll see if it all turns around but as of right now you know i always try to stay a lot in cash you know i’m always always heavy stocks okay that have great futures but i always always keep money on the sidelines because you get a lot of buying opportunities because so many people worry about short-term things in great companies

Or the stock market in general you always get you know huge buying on the dips so interesting stuff i would love to hear from you guys in that comment section do you think dahlias lost his touch well obviously he has over like you know the the performance you know speaks for itself over the last six or seven years but you know do you think he can come back do you

Think the firm will produce great returns again i would love to hear from you guys in that comment section as always thank you for watching and have a great day

Transcribed from video
RAY DALIO WARNS STOCK MARKET INVESTORS By Financial Education

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