by Ray Dalio
Ray Dalio is one of the most successful Hedge Fund Managers in history.
If you want to get a better grasp of how to understand the scale of world order change that is upon us and what to do about it from a financial, economic and business perspective, this is by far the best book I could recommend!
Ray Dalio attributes much of his success to understanding cycles not just economic and financial cycles, which is his primary focus, but multiple cycles that overlap with economic and financial cycles including social and political cycles.
There is much uncertainty in our world and whatever your views of the Covid pandemic, there is no denying that is has seen changes in the world on a scale that most people just 2 years ago would not have foreseen.
When I read this book, I was even more certain that this last 18 months are just the beginning of a momentous change in world, not just economically and financially as focused upon in Ray Dalio’s book but also socially, politically, the way business is conducted, technologically and in all aspects of life on a scale that has not been seen since the 1930s and 1940s!
Early in his career, Dalio recognised that events such as ‘The Great Depression’ that followed The Wall Street crash and ‘historical changes in world orders’ were once in a lifetime events. In his early years working as a young trader in the stock market, Dalio realised that to be able to understand and predict these less frequent once in a lifetime event meant studying history.
In this book Dalio systematically explains his approach and the principles which he applies to understanding historical patterns to be able to see the future patterns that are coming. He is so thorough in his approach that, I cannot do it justice in a summary in this review, however I will attempt to give you a flavour of his approach and how profound it is:
Dalio explains how he studied patterns over the last 500 years through western world history and 1,400 years of patterns in the case of Chinese history to understand the underlying patterns behind the building and falling of nations and great empires. Different nations or empires in the world are typically in different cycles at any one moment in time, as is the case now, where some countries have peaked economically and are in decline whilst others are rising. Both at global and national levels Dalio brilliantly identifies historical patterns and swings throughout history, of growth and recession, boom and bust, left wing and right wing, socialist and capitalist, war and peace etc!
Dalio takes care to see through the veneer of technological advances that prevent many from seeing these subtle, but profound underlying cycles. With regards to financial cycles, the form of value exchange has changed through history ….
From bartering to using shells and gems, to early bronze, copper, and silver coins, to gold and silver bars and coins, to promissory notes and paper currencies (tied to the gold standard), to fiat currencies (not tied to the value of gold), to electronically transferred fiat currencies which are now on the cusp of being replaced by Digital Crypto Currencies. It would appear almost obvious that the Blockchain and Crypto Currency Sectors are on the verge of almost unimaginable growth as the world’s new form of information and value storage and more secure, more efficient currencies.
There are mini economic and financial boom, bust cycles every 10 to 20 years, the big busts, like the Great Depression of the 1930s come around once every 70 to 100 years. Immediately prior to the crash there is a period of relative excess know as the bubble of the boom before the bust. On reading the wisdom in this book it confirmed to me that are in that time now, it is an inevitable part of the cycle.
The current levels of money being printed / generated out of thin air by governments has led many major economies to increase the money supply more in the last 20 months than in the rest of history. I know some immensely wise financial professional that tell me that hyperinflation is a nailedon certainty, Dalio’s book only adds fuel to such views!
This is not however, all bad news, because when you can see it coming you can understand where the greatest opportunities lie. When there is exponential change, there is both exponential challenges AND exponential opportunities.
If you take on board the wisdom in this book you will most certainly be better prepared the uncertainties and opportunities that lie ahead.
As a valued subscriber, if you have any questions or thoughts around the coming exponential changes please send me an email OR if are interested in how I personally have invested in the blockchain and Crypto sectors, I would be happy to share, please email me at info@certainprogress.com and I will send you my thoughts.