Ray Dalio: “Think About How To Rotate Your Portfolio To Buy That Which Is Cheap And Sell That Which Is Expensive”

Johnny HopkinsInvesting Strategy, Ray DalioLeave a Comment

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Last week Ray Dalio did a question and answer session with some folks on Reddit where he shared a number of valuable investing insights. Dalio started the conversation with the following message:

“I’m Ray Dalio—founder of Bridgewater Associates and author of Principles. This is my first AMA. Ask me anything!”

My favorite Dalio answer was his reply to the following question:

What is the number 1 thing a young investor can do to improve their investing abilities?

Thanks, Ash

Dalio’s response was:

Dive into the markets, have the shit kicked out of you, and learn how to do things differently. One of my most basic formulas for life is Pain + Reflection = Progress. And by the way, when you create reflections that give you principles for how to do things better in the future, be sure to write them down.

Dalio’s Reddit interaction was later picked up by CNBC. Here’s how they covered it:

Bridgewater Associates founder Ray Dalio, who runs the world’s largest hedge fund, believes investors should not just chase the latest hot trend.

The fund manager shared his top two pieces of advice for investors during a Reddit “Ask Me Anything” question and answer session Thursday. He cited the importance of diversification and analyzing the valuation of investments.

“First, know how to balance your portfolio so that you don’t have any systematic bias toward bull or bear markets in anything,” he wrote. “Second, don’t make the mistake of thinking that investments that have been good over the past few years [will continue] Rather than more expensive investments .. think about how to rotate your portfolio to buy that which is cheap and sell that which is expensive.”

Dalio also emphasized the importance of building relationships over focusing on academic pursuits. He said real-life experiences are the best teacher versus the class room.

“I don’t think you learn the most from an MBA anyway. And I do think you learn a lot from the most basic experiences. You can work yourself up from running a little store or other simple experiences,” he said. “When I look back on my life and the various accomplishments I’ve made and impacts I’ve had, the most important source of happiness for me has been the wonderful relationships I’ve had.”

In a similar fashion, the investor told a student how to get the most out of his or her college experience.

“Party like crazy and don’t make the grades your highest priority. Make the friendships and your experiences most important,” Dalio wrote.

Bridgewater currently manages about $160 billion, according to its website. Dalio started the firm in 1975 out of his two-bedroom apartment in New York City. He is now worth an estimated $17.4 billion, according to Forbes.

You can read the entire Q&A session at Reddit here.

You can read the original CNBC article here.

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