During his recent interview with Business Today, Ray Dalio explains why investors need to look at returns relative to inflation. Here’s an excerpt from the interview:
Dalio: Over the long run look at your returns relative to inflation. Whichever country you’re in. Whichever currency you’re denominated in, look at the returns relative to inflation.
Too many people look at just the level of returns and they don’t pay enough attention to inflation.
Generally stay away from debt assets, debt-denominated assets.
Third, have a well-diversified portfolio, diversification reduces risk without reducing expected returns if you do it well.
Also, don’t be too tactical. You have to realize that the markets are a zero-sum game and to compete in the markets is more difficult than competing in the Olympics because there are more people trying to do it and taking money away from others.
So have a strategy which is over a long period of time you know to save money in a diversified portfolio of assets.
So those would be the most important things I think.
You can watch the entire discussion here:
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