11/30/21, 9:17 PM Council Post: Your Exit Strategy: Five Marketing Strategies To Maximize Valuation

EDITORS' PICK | Nov 29, 2021, 09:06am EST | 207 views

Ray Dalio Says

America’s
Decline Will
Upend Lives,
Not Just
Portfolios—
The Billionaire
Investor Paints
A Dire
Scenario In His
New Book
Maneet Ahuja Forbes Staff
Entrepreneurs
Introducing the Forbes.com
Senior Editor covering everything from Wall Street &
billionaires to the intrepid world of entrepreneurs,
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billionaires to the intrepid world of entrepreneurs,
startups and small business.

Ray Dalio, founder of Bridgewater Associates, speaks at the World

Economic Forum in Davos, Switzerland in 2017. ASSOCIATED PRESS

“N
o empire lasts
forever,” says Ray
Dalio. Humble
words for a man who’s built
the world’s largest hedge
fund, with assets in excess
of $150 billion. But the
billionaire founder of
Bridgewater Associates, 72,
isn’t talking about the
empire he created and
stepped down from
managing as CEO in 2017.
(Dalio remains Co- Introducing the Forbes.com

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Chairman and Co-CIO.)

Instead, the empire that
worries Dalio is the one in
which he resides: the
United States.
“Right now, money and credit and how it’s
behaving are affecting the financial markets, it’s
affecting inflation,” says Dalio in an interview
with Forbes as U.S. inflation has spiked to its
highest rate in over 30 years.

America’s domestic issues and decline as the

world’s leading superpower are more than simply
a matter for debate to Dalio. They underpin the
core thesis of his latest book, The Changing
World Order: How and Why Nations Succeed
and Fail, that comes out on November 30th. In it,
he builds the case that the confluence of rising
U.S. debt and income disparities, along with
America’s diminished influence, has put the
country at risk of not just economic hardship but
war. Specifically, he points to growing debt and
near-zero interest rates that have led to a massive
printing of money ($16 trillion of debt at negative
interest rates this year, by Dalio’s estimates),
increased conflict and polarization due to
widening wealth gaps and China’s increased
ability to challenge U.S. hegemony on the world
stage.

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Dalio believes there’s a 30% chance that the U.S.

will enter into a major “civil-war-type” conflict
within the next five years. While other countries
face similar challenges, America looks especially
vulnerable. “It’s very important that we deal with
this now,” he says. “We can have a type of civil
war or international war based on how we are
behaving with each other and our financial
conditions.” What’s more, the U.S. is not alone in
facing this dire scenario.

“It’s very important

that we deal with this
now. We can have a
type of civil war or
international war
based on how we are
behaving with each
other and our financial
conditions.”

Dalio has built his business and net worth, which

Forbes estimates at roughly $20 billion, on
figuring out where the world is going and
designing investment strategies to profit from it.
Former U.S. Treasury Secretary Hank Paulson Introducing the Forbes.com

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describes him as a “big thinker and brilliant

academic disguised as an investment manager.”
Moreover, Paulson adds, Dalio’s assessment of
macroeconomic risks and strategies is often right.
He famously made money during the 1987 stock
market crash and predicted the 2008 financial
crisis, which enabled his fund to outperform
during that crash, too.

What’s different now is not just the scope of the

problem but Dalio’s ability to amplify it. Instead
of writing up his views on the global business
landscape for an audience of clients who’ve
bought into his fund and stand to profit from his
investment strategy, Dalio is sharing them with
the wider world. Thanks to his bestselling 2017
book Principles, Dalio has become something of a
celebrity and cult hero to the millions of readers
drawn to his leadership philosophy of “radical
transparency.” As a result, Dalio’s new book
could attract an audience far bigger than the usual
fans of his macroeconomic missives.

“[He’s] a big thinker

and brilliant academic
disguised as an
investment manager.”

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Those readers may find The Changing World

Order to be both eye-opening and potentially
frustrating—it is more an academic study versus
investment playbook. While Dalio inspired
readers with his life story and leadership
philosophy in Principles, his new book raises
alarm bells about problems for which there are no
clear solutions. If Dalio has a clear strategy for
how to invest and hedge risk in this environment,
he’s not going to explain it here. After all, creating
strategies to build wealth amid seismic global
shifts is why companies like Bridgewater exist.
Rather, Dalio’s modus operandi typically is to
establish an economic framework (usually in the
context of cycles or “the economic machine”) and
then provide key broader principles on how best
to navigate the path forward. Anyone who has
read Dalio’s writing on the rise of populism in
2017 or his two-part missive on why capitalism
needs to be reformed two years later will be
familiar with this approach. If they’re hedge fund
investors, they’re used to reading pieces that
explain how a manager sees the investment
landscape.

In this new book, Dalio offers a deeper analysis

and some new tools to measure and navigate the
risks. Dalio says he felt compelled to write a book
because of how swifty the economic climate has
changed. As co-chief investment officer at
Bridgewater, he explains, “I need to make
decisions now.” There’s also an altruistic instinct
Introducing the Forbes.com
to educate people about what’s around the corner.
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Says Dalio: “I'm at a stage in my life where I'm

passing along the most important things I've
learned, so I decided to put it out as a book for
that reason.”

Dalio has created a “Health Index” in the book

that rates around a dozen nations on 18 different
factors ranging from debt burdens and economic
output to military strength and innovation. It’s
the kind of tool that readers can use themselves to
assess risks and form strategies. He plans to
create a website for people to assess objective data
in real-time, much like doctors do when
evaluating patients.

Dalio is as much a student of history as science.

As the title suggests, his assessment of the current
threats to economic health comes from years of
studying the rise and fall of great empires. The
U.S. is not the first nation to experience rising
debt levels and income inequality while facing
diminished power and influence on the world
stage. “The last time those three things happened
was in the 1930 to 1945 period,” says Dalio.
“When they happen together, it’s a very telling
story.”

To a boy born in Brooklyn during the post-war

baby boom that followed America’s success in
World War II, the threat of devastating
consequences isn’t simply a compelling
investment scenario. It’s a call to action. Through
his writing and conversations with leaders like Introducing the Forbes.com

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former U.S. Secretary of State Henry Kissinger

and JPMorgan Chase CEO Jamie Dimon, Dalio
hopes astute leaders and citizens can take action
to stave off the worst outcome. The issues, after
all, have been percolating for years. “It's high time
we actually look at these things and take the
warnings and deal with it,” he says.

As he has done for decades in writing about

macroeconomic risk, Dalio is careful to clarify
that the exact scope and timing of the risks he
sees remain unclear. Much like a hurricane, he
explains in the book, knowing the conditions for
an economic storm and the signals that one is
coming makes it easier to prepare and get out of
harm’s way. “I’m not interested in making any
more money,” he says. “I’m just trying to pass
along now the things that have been valuable to
me and to help others.”

One piece of advice on the safest hedge against

what’s coming? “Not cash!,” he exclaims. In early
2020, Dalio caused a stir in Davos by saying “cash
is trash” as people were pulling out of markets
amid concerns that included a then-new
coronavirus. Dalio’s argument then, as now, was
to diversify across different asset classes,
currencies and markets. Betting big on one or two
things is rarely a winning strategy.

“I worry, too many Bitcoin holders, they better be

right that it’s Bitcoin and it’s not something else,”
he says. “What you’re seeing is in all assets, you’reIntroducing the Forbes.com

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seeing it in real estate, stocks, gold, silver, Bitcoin,

and so on. From all of that [economic] stimulation
they have all gone up,” he says. In his view, many
investors overweight U.S. assets at the expense of
attractive alternatives. “If I were to give it in a
nutshell, I’d pick countries [to invest in] that are
earning more than they are spending so that they
have a good income statement and balance sheet.”

“What you’re seeing is

in all assets, you’re
seeing it in real estate,
stocks, gold, silver,
Bitcoin, and so on.
From all of that
[economic]
stimulation they have
all gone up.”

And if you want to know more, well buy the book.

Dalio says it’s likely to be his second-last, as he
plans to write one more book about economic and
investment principles. Once I get past that, I
won’t have anything to say and I’ll be quiet,” says
Dalio. Maybe so, but that doesn’t mean he’ll
abandon his day job anytime soon. “I love the Introducing the Forbes.com

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game I play—the markets.” While he wants to help

improve the odds for continued growth in the
U.S., Dalio knows there’s money to be made when
you know how to play what comes next.

Follow me on Twitter or LinkedIn. Send me a

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Maneet Ahuja Follow

I am Senior Editor at Forbes covering everything from

Wall Street and billionaires to the intrepid world of
entrepreneurs, startups and small business. A
former Forbes “Under 30” lister... Read More

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