Guest: Ray Dalio, Founder of Bridgewater Associates
Host: Wang Liwei
Podcast Source: Xiansheng
Original Title: Ray Dalio's Chinese Podcast Debut: Stock-Bond Tear, 10 Financial Rules for Chinese Friends
Broadcast Date: August 20, 2025
Summary of Key Points
Exclusive dialogue with the founder of Bridgewater Associates, as A-shares are booming, bond funds are 'tearful,' how should we allocate our wealth? Cultivating financial literacy in children and grandchildren, why give gold coins instead of toys?
Recently, the A-shares are booming, while the bond market has seen a significant decline. Some investment advisors have raised a soul-searching question: Should I switch from bond funds to stock funds?
Recently, Dalio has also frequently appeared in our sights, first because he released a new book: (Why Nations Fail). And last weekend, news of Bridgewater clearing out Chinese stocks attracted some attention; yesterday, a friend even asked, has Bridgewater cleared out all Chinese stocks?
In fact, the 13F disclosed by the U.S. does not reflect holdings in Hong Kong stocks and A-shares (many global funds, including Bridgewater, have significantly reduced their holdings in Chinese stocks, and Chinese stocks vary in performance). Looking only at the onshore market, Bridgewater's domestic funds exceeded 40 billion last year, and based on the increase over the past year, the managed scale should already be around 60 billion, accounting for almost one-tenth of Bridgewater's total global assets under management.
I have been following Dalio for nearly ten years, and recently, I had a conversation with him coinciding with the release of his new book, first discussing the macro perspective of his new book's calls and related controversies (refer to the text version in Caixin Weekly); later, we systematically talked from our personal perspectives about his investment advice for Chinese friends. This is also his first visit to a domestic podcast to discuss investments.
In my memory, Dalio is rarely willing to speak publicly and specifically about investments or related advice, especially regarding domestic situations. But now, we Chinese investors face a very special environment. On one hand, the stock market is booming, while on the other hand, it is not easy to achieve decent returns in a low-interest environment. Even in the recent bull market, some friends said that after three years, they actually haven't made much; while many friends made a lot from bond funds over the past two years, recently it has led to poetry from friends: 'Tears flow from bond fund thousands of households.'
In the current low-interest environment, how to deal with the market's significant fluctuations? When the market is good, should we diversify across asset classes and regions? Dalio is bearish on U.S. debt and the dollar; does that mean he is also bearish on U.S. stocks?
If you care about investment and wealth safety, I believe you can gain a lot from this conversation.
Summary of Key Points
When some markets rise, others tend to fall, reflecting different economic conditions. By achieving this balance in investments, you can reduce the cyclical volatility of the portfolio, thereby obtaining good returns while lowering risk.
In the long run, cash is a very poor investment. The challenge facing China is that investors often hold a large amount of funds in real estate or cash deposits, which is not a good diversified portfolio.
The returns of any asset typically consist of two parts: price changes and yield. When returns mainly depend on price increases rather than interest payments, one should be cautious.
Investors need to regularly rebalance their asset portfolios. If there is no clear market viewpoint, a simple rebalancing strategy can be adopted: when the price of a certain asset class rises, appropriately reduce some positions and transfer funds to other asset classes to maintain the long-term balance of the portfolio.
Anytime is a good time for diversified investments, and individuals and investors must be very cautious when trying to time the market.
Diversification and risk balancing are important means to enhance returns and reduce risk.
Do not try to predict market trends; timing the market is essentially a zero-sum game.
Do not look at the individual parts of the portfolio in isolation, but consider how the parts combine to form a well-diversified portfolio.
Debt is money, and money is debt.
Gold is the second-largest reserve currency, the first is the dollar, the second is gold, the third is the euro, and the fourth is the yen.
Gold is more attractive to me. However, I still hold some Bitcoin as an alternative choice.
Stablecoins have significant advantages in trading, especially favored by those who are less concerned about interest rates and are willing to forgo interest for the convenience of trading. However, stablecoins are not a good wealth storage tool.
Inflation-indexed bonds are an excellent tool for storing funds. They can provide compensation based on the inflation rate while also offering a certain real interest rate. This type of asset carries low risk and is an ideal investment choice.
Everyone needs to recognize the importance of saving. Saving provides you with a foundation and security, and this security gives you freedom.
Ensuring the basic financial safety of individuals and families is crucial. To achieve this, it is important to learn investment knowledge and engage in reasonable asset diversification.
Only after ensuring a basic standard of living can one consider taking on more risk to try to earn higher returns.
Every birthday and Christmas, I give the children in my family a gold coin. I tell them they cannot sell this gold coin. They can only pass it on to the next generation on the day when the monetary system collapses.
Investment Strategies in a Low-Interest Environment
1. Can there be stable returns in a low-interest environment? The logic of an 'all-weather' strategy.
Host:
Currently, China is in a low-interest environment, which usually makes it difficult to achieve ideal investment returns. However, I noticed that Bridgewater's China all-weather fund has performed very well over the past few years, achieving over 10% returns almost every year while experiencing relatively small pullbacks amid market volatility.
Could you explain how Bridgewater achieved such stable performance in this low-interest environment?
Ray Dalio:
I am glad you asked this question. Bridgewater's performance over the past six years has indeed been very stable, with the worst year yielding between 10% and 14%. I don't recall the exact figure, but the average return is about 16%. So how did we achieve this?
Firstly, the key is to achieve a balanced portfolio through reasonable asset diversification. When some markets rise, others tend to fall, reflecting different economic conditions. For example, when the stock market declines, the bond market may rise, and the gold market or inflation-hedging assets may also increase due to currency depreciation. By achieving this balance in investments, you can reduce the cyclical volatility of the portfolio, thereby obtaining good returns while lowering risk.
My investment motto is to have 15 or fewer uncorrelated streams of income. (Deep Tide TechFlow Note: Uncorrelated streams of income refer to the performance of different assets that have no direct correlation, which can effectively diversify risk.) For example, in a slow deflationary environment, stocks may perform poorly, but bond yields may improve. And if there is a lot of money printing in the economy, inflation-hedging assets (like gold) usually perform well. Through such asset balance, very attractive returns can be obtained at lower risk levels; this is the game of investing.
In the long run, cash is a very poor investment. The challenge facing China is that investors often hold a large amount of funds in real estate or cash deposits, which is not a good diversified portfolio. Therefore, the strategy of holding a diversified asset portfolio rather than cash is very appealing. This is our core strategy, how to achieve diversification without being constrained by traditional assets. Tactical adjustments based on current market conditions are needed to achieve this balance.
As I said, my current goal is to convey these principles. I am 76 years old and plan to launch an investment course to teach these investment principles. I hope to provide this knowledge to everyone in China as freely or at low cost as possible to help them understand how to achieve balance. Therefore, I am eager to convey the specific workings of this process. Overall, as I described, this method is effective.
2. The Dilemma of Bond Investment: When Returns Mainly Come from Price Increases Rather than Interest Payments, You Should Feel 'Fearful.'
Host:
Currently, the Singapore Wealth Management Institute is conducting some research, and we hope these studies can be applied in the Chinese market.
In a low-interest environment, long-term bonds typically perform well, so many Chinese investors have entered this area over the past year. However, when some signs of economic recovery appear, long-term bonds have seen significant pullbacks, as has happened in recent days. Do you think there are good ways to identify these signs and adjust investment strategies in a timely manner?
Ray Dalio:
I want to clarify that the returns of any asset typically consist of two parts: price changes and yield. During investment cycles, there may be situations where certain low-yield assets are pushed up in price and become very expensive. At this point, investors' returns mainly come from the rise in asset prices rather than interest payments. When this happens, although it may seem profitable in the short term, future yields may become very low. This low yield is actually an important warning signal indicating that greater risks may arise in the future. Therefore, when you find that returns mainly depend on price increases rather than interest payments, you should be on high alert.
To cope with this situation, investors need to regularly rebalance their asset portfolios. If there is no clear market viewpoint, a simple rebalancing strategy can be adopted: when the price of a certain asset class rises, appropriately reduce some positions and transfer funds to other asset classes to maintain the long-term balance of the portfolio. For example, Bridgewater achieves stable investment returns through such dynamic balancing strategies. By regularly adjusting asset allocation, risks can be effectively reduced while maintaining the stability of the portfolio.
3. Geographic Diversification and Timing Traps: Abandon Predicting the Market.
Host:
I believe that in a low-interest environment, a good investment approach is to achieve geographic diversification. Bridgewater has been doing this for years. I think Japan has also achieved this through their NISA plan. Now, China has recently provided more QDII quotas for Chinese investors.
Some Chinese people believe that the U.S. stock market is at an all-time high and too expensive; European stock markets are also at all-time highs. Do you think geographic diversification is important? Is now a good time for geographic diversification?
Ray Dalio:
I believe anytime is a good time for diversified investments. Individuals and investors must be very cautious when trying to time the market. They should first assume they cannot accurately predict market trends and then ask themselves, what kind of portfolio should I have if I have no view on the market? This portfolio should be a diversified portfolio that achieves balance, because diversification means that if you do not know how a certain asset will perform, maintaining a balanced portfolio is the best choice; individuals cannot successfully time the market.
Do not base the decision to build a portfolio on whether the U.S. stock market is booming; the key is to maintain balance. I would suggest any investor consider keeping half of their funds local, but within a diversified portfolio, adopting an 'all-weather' portfolio approach. The so-called 'all-weather' portfolio includes gold, bonds, and investments diversified across about 10 different markets. But you need to know how to balance it well; you want to balance the risk, not just in dollars or any other currency.
Diversification and risk balancing are important means to enhance returns and reduce risk. Simply put, if I introduce uncorrelated assets, assuming I have one asset and then introduce a second and third asset, which have no correlation but similar expected returns, then I can reduce risk by about one-third. If I can achieve 10 to 15 uncorrelated assets, I can reduce risk by 60% to 80% while maintaining the same return. This means that the return-to-risk ratio can be increased to five times the original. In other words, you can achieve the same expected return, but the risk taken is only one-fifth of the original. This is the game of investing.
4. The Art of Buying: Beyond Dollar-Cost Averaging?
Host:
You mentioned not to try to predict market timing. So, what is the correct way to invest? Is dollar-cost averaging (DCA) a good choice? Or are there other better methods?
Ray Dalio:
When investing, it is important to clarify the risks you are taking, not just focus on the amount invested. For example, the volatility of stocks is about twice that of bonds. Therefore, to achieve portfolio balance, it is necessary to adjust weights based on the volatility of different assets to maintain overall risk equilibrium. If you can design such a risk balance reasonably, you can achieve your expected investment goals. This may sound a bit complex, but regular investment is indeed a good way because it avoids the risk of a one-time investment while gradually accumulating assets. However, the key is to understand how to construct a balanced 'neutral portfolio,' which is a portfolio that can operate stably in different market environments.
Once again, I emphasize not to try to predict market trends, as timing the market is essentially a zero-sum game. There are always buyers and sellers in every trade, and there are always some smart investors in the market. Just like playing cards at a poker table, you need to ask yourself: Who is my opponent? Only a very small number of people can truly succeed in the market. Bridgewater invests hundreds of millions or even billions of dollars each year to study the market, but even so, we have seen that the overall market performance has generally been poor over the past six years. Therefore, if you want stable and good returns, I suggest adopting a risk-balanced investment approach rather than trying to predict the market.
Once again, I mention not to try to time the market, because you must understand that timing the market is a zero-sum game. Every buyer has a seller, and there are those who are smart. It’s like going to a poker table; do you know who you are up against? Only a small portion of people can really do well. We invest hundreds of millions, potentially reaching billions each year to try to play this game. Even if you look at the history of investment managers over the past six years, the overall market performance has been poor. Therefore, if you want to achieve good returns and maintain consistency, I encourage adopting this balanced approach.
Host:
So, would you recommend a default all-weather portfolio for the Chinese market? I remember you provided a version based on the U.S. market for Tony Robbins in 2014. What investment ratios would you suggest for Chinese investors?
Ray Dalio:
The same principles apply to any country; it is not about the country but about the investment tools available. In the Chinese market, we can also use local investment tools to achieve risk balance. The fund I mentioned is a local fund that can achieve this. I want to emphasize that there are tools available in the onshore market to achieve this.
Pros and Cons of Major Asset Classes
5. Gold: How to View Allocation of this 'Non-Yielding' Asset
Host:
Gold is a type of asset that you value highly. Over the past year, it has performed quite well, and from a long-term perspective of 20 or 30 years, its performance is also impressive. However, many people prefer to invest in productive assets; how should we think or persuade ourselves to invest in non-productive assets like gold?
Ray Dalio:
Gold is a non-productive asset, just like cash. If you put money in cash, it is also non-productive, and the two are very similar. Therefore, you need to view gold as a currency. Its main characteristic is that it is an effective diversification asset; when currency performs poorly, gold usually performs well.
I believe most people view their portfolios and costs from a monetary perspective, which may lead to misjudgments because they do not realize that their money is depreciating. They see other assets rising, such as the price of gold or other assets. But if you look at these things in inflation-adjusted dollars or inflation-adjusted currency, that is the correct perspective. For a long time, gold has been money, and perhaps some cryptocurrencies are viewed as alternative currencies. Overall, debt is also money, and there is too much debt.
What I want to express is that during this period, the value of money has indeed decreased. I want to emphasize that when I mention gold, it is not to say that you should hold more than an appropriately diversified proportion of gold. What I mean is that in an optimized portfolio, the proportion of gold is usually around 15%. But whether it is 10% or 5%, gold can provide diversification for the other parts of the portfolio. Therefore, it must be seen as a risk-reducing tool to cope with the overall significant devaluation of currency, due to excessive debt and money printing. Therefore, gold should be a part of the portfolio. But I emphasize again, do not look at the individual parts in isolation; rather, consider how the parts combine to form a well-diversified portfolio.
6. The Dollar and U.S. Debt: Why Bearish
Host:
If we consider the value of currency, such as the dollar, I think you recently mentioned that the U.S. economy is relatively good while the global economy is relatively weak. This situation seems to favor a strong dollar. But in your opinion, is the dollar facing a structural downward trend?
Ray Dalio:
I want to emphasize the supply and demand relationship of debt, and debt is money, and money is also debt. Debt is a promise to provide you with a certain amount of money. Therefore, debt can be seen as uncollected money. When you store your funds, you are storing them in debt. This is what I mean by 'debt is money, and money is debt.'
When debt is excessive and grows too quickly, debt problems arise. In this case, the way to handle these problems inevitably faces a choice: either you choose hard currency, which changes the supply and demand relationship, leading to rising interest rates, which reduces demand and causes the market to fall; or you resolve the debt issue by increasing the money supply. In the current economic environment, this choice is a core issue.
7. Bitcoin vs. Gold: Dalio's Investment Perspective
Host:
You just mentioned digital currencies. I remember you have also held some Bitcoin in recent years. So, how do you view the investment value of Bitcoin? What are its advantages and disadvantages compared to gold?
Ray Dalio:
I have held a small amount of Bitcoin for several years and have kept this proportion unchanged. I view Bitcoin as a tool for diversified investment; compared to gold, it is a diversified choice. What is reliable currency for wealth storage? Bitcoin is undoubtedly very popular, but I think it has some downsides, such as I don't think central banks will hold Bitcoin.
Gold is the second-largest reserve currency, the first is the dollar, the second is gold, the third is the euro, and the fourth is the yen, and so on. Central banks hold gold. There is a saying that gold is the only asset you can own that is not someone else's liability. This means that gold itself is money; it does not rely on others' promises to pay you money. Gold has intrinsic value that can be held without those risks. This is especially important in politically or geopolitically challenging environments, such as Russia facing sanctions or during World War II when Japanese assets were frozen. Therefore, for these reasons, gold is more attractive to me. However, I still hold some Bitcoin as an alternative choice.
8. The Truth About Stablecoins: Are They Suitable for Holding?
Host:
I noticed that you hold Bitcoin because it has value storage functions. Nowadays, many people are starting to pay attention to stablecoins, as they seem to achieve similar functions. What do you think about this?
Ray Dalio:
Stablecoins tie currencies to stablecoins. In other words, it represents a right to a pegged currency but usually does not provide interest. From a financial perspective, it is worse than holding a currency asset that provides interest. However, stablecoins do have significant advantages in trading, especially in international transactions. They can almost be considered as a settlement tool that simplifies cross-border capital flows. Therefore, they are particularly favored by those who care less about interest rates and are willing to forgo interest for the convenience of trading.
In high-inflation countries, interest rates may be negligible, and people are more inclined to choose stablecoins for transactions. For example, in places like Argentina, if they cannot obtain interest-bearing reserve currency, stablecoins may become an alternative choice. This is how stablecoins operate, but they do not fulfill the main function of a limited-supply currency that is stable against other currencies. In contrast, inflation-indexed bonds are a better asset choice.
Currently, China has not launched inflation-indexed bonds, but these bonds are an excellent tool for storing funds. They can provide compensation based on the inflation rate while also offering a certain real interest rate. This type of asset carries low risk and is an ideal investment choice.
Host:
After hearing your analysis, I began to think about how large the demand for stablecoins might be. Can they really solve America's debt problem?
Ray Dalio:
This question requires time to observe. The fundamental logic of stablecoins is that buyers will purchase them, especially in emerging market countries where economic instability is higher, and buyers are less concerned about interest rates; they buy stablecoins for trading purposes.
And the law requires stablecoin producers to be backed by government bonds and government debt. Therefore, the purchase of stablecoins will lead to the purchase of U.S. government debt, but there is a problem: where does the source of these funds come from? If they hold U.S. debt, they will transfer it to stablecoins. So what is the new demand? I believe stablecoins are not a good wealth storage tool.
The Fundamental Logic of Family Wealth
9. Dalio's Family Finance Lesson: Insist on Giving Gold Coins to Grandchildren Instead of Toys?
Host:
In a 2019 interview, you mentioned that individual investors face some significant challenges. So, can you provide some practical investment advice for the general public? I also heard that you have been educating your grandchildren on how to invest and manage personal finances.
Ray Dalio:
I believe everyone needs to recognize the importance of saving. I personally calculate how many months I can maintain my lifestyle without any new income. Then, I double that number to prepare for unexpected situations, such as a significant economic downturn.
Saving provides you with a foundation and security, and this security gives you freedom. This is very important. What I do for my children (who are now all adults) and grandchildren is that every birthday and Christmas, I give them a gold coin. I tell them that they cannot sell this gold coin. They can only pass it on to the next generation on the day when the monetary system collapses. In this way, they can see the value of the gold coin being passed down through generations. I find this practice more meaningful than simply giving toys. Of course, I occasionally give some toys, but not too many, because toys quickly lose their appeal, while gold coins help them understand the process of saving and accumulating wealth.
My core point is that ensuring the basic financial safety of individuals and families is crucial. To achieve this, it is important to learn investment knowledge and engage in reasonable asset diversification. Only after ensuring a basic standard of living can one consider taking on more risk to try to earn higher returns. For me, such high-risk investments are more like a game, and I really enjoy the process because it is full of challenges and fun.
When saving, one must consider the impact of inflation on funds. Simply put, you are storing not just the currency itself but its purchasing power. For example, if the interest rate is 4% and the inflation rate is 3%, then your real return is only 1%. These are all my suggestions for ordinary people and principles that I and my family have been practicing. Only after mastering these basics can one further explore higher-risk investment opportunities.
Host:
This is also why many people now choose to build different portfolios, such as a safe investment bucket and a more risky market investment bucket.
Ray Dalio:
But I want to remind everyone that the investment market is like a poker game, and you are facing many smart opponents who may be investing hundreds of millions or even billions in this game. Therefore, beginners should start with small investments and accumulate experience through practice. This way, you can observe the performance of professional investors and review their strategies and results over the past few years, rather than being blindly confident. Understanding this and maintaining humility is key to successful investing.
10. The Importance of Rebalancing: Overcoming Emotional Investing
Host:
One very interesting piece of advice you gave me last time was to act against your intuition. But I think that is not easy for most people. So, what should one do when adjusting their portfolio?
I noticed that the Pure Alpha fund performed well in the first half of this year, and it also performed well in the global hedge fund industry last year. However, it also returned some cash to clients. Additionally, China's OS fund also took similar actions after achieving over 15% returns in the first half of this year.
Regarding rebalancing, can you share some experiences or lessons? What is your view on this?
Ray Dalio:
The core of rebalancing is to set a strategic asset allocation target to achieve portfolio balance. When certain markets perform well and asset prices rise, while other markets perform poorly, rebalancing can help you adjust the portfolio according to the established target. This not only allows you to sell high and take profits but also to buy low, thereby maintaining investment discipline. Therefore, rebalancing is very important in investing.
Host:
It certainly sounds like it requires strong discipline and psychological control.
Ray Dalio:
This is the essence of the game; like many things in life, it requires self-control. For decades, I have been recording my decision-making rules and organizing them into a set of 'principles.' Then I turned these principles into computer programs, executing my investment plans in a systematic way. This helps avoid being influenced by emotions because I know what the expected outcomes of the plan are.
You must have a game plan. If you are going to do this, your game plan should be backtested so that you can understand how the plan performs. Then, you will be able to avoid emotional decisions leading to mistakes.