Author Topic: Ray Dalio predicts Recession before 2020  (Read 5653 times)

andysandp

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Ray Dalio predicts Recession before 2020
« on: February 22, 2018, 06:10:24 AM »
What do you think of Ray Dalio who said there is a 70% chance of Recession before 2020?

https://www.cnbc.com/2018/02/22/bridgewaters-dalio-sees-70-percent-chance-of-recession-before-2020.html

Apocalyptica602

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Re: Ray Dalio predicts Recession before 2020
« Reply #1 on: February 22, 2018, 06:26:33 AM »
I disagree, I think 68.35%. CNBC didn't like that headline though, they said it should've been a nice round number to get clicks.

thd7t

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Re: Ray Dalio predicts Recession before 2020
« Reply #2 on: February 22, 2018, 07:03:24 AM »
The beauty of making this prediction is that if he's wrong, he can still say that it was just a 2/3 chance of a recession.  He certainly doesn't discuss his model for coming up with this figure.  I will say that he has a good record, but I don't see his prediction as helpful, particularly at that rate of certainty.

talltexan

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Re: Ray Dalio predicts Recession before 2020
« Reply #3 on: February 22, 2018, 08:35:58 AM »
I think youre looking at the wrong part of the yield curve. 10-year versus 30-year is just 28 basis points. Top is IN!

ketchup

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Re: Ray Dalio predicts Recession before 2020
« Reply #4 on: February 22, 2018, 09:10:35 AM »
Did someone say top is in!?

frugalnacho

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Re: Ray Dalio predicts Recession before 2020
« Reply #5 on: February 22, 2018, 11:24:54 AM »
Yea Ray Dalio did.

thd7t

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Re: Ray Dalio predicts Recession before 2020
« Reply #6 on: February 22, 2018, 11:39:23 AM »
Yea Ray Dalio did.
Well, he said the top might be in... but if it's not, he's left himself a lot of wiggle room!

DreamFIRE

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Re: Ray Dalio predicts Recession before 2020
« Reply #7 on: February 22, 2018, 12:41:29 PM »
Mehhh.....  I'm not concerned by his prediction.  I'm data dependent.

Also, I'm planning to FIRE in 2019, so a 2020 recession doesn't fit well with my current trajectory.

Eric

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Re: Ray Dalio predicts Recession before 2020
« Reply #8 on: February 22, 2018, 12:46:18 PM »
I predict 100% chance of a recession by 2040.  Mark it down!

Telecaster

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Re: Ray Dalio predicts Recession before 2020
« Reply #9 on: February 22, 2018, 12:52:20 PM »
Dalio is a smart guy, and he's been around the block so he's worth listening to.  But that's not really actionable information.   There is a definitely a recession coming at some point.  Best way to prepare is to live below your means, save money, avoid consumer debt, etc.  We're already all doing that, or at least trying. 

UnleashHell

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Re: Ray Dalio predicts Recession before 2020
« Reply #10 on: February 22, 2018, 12:54:29 PM »
bet Ray has some short action at stake in his hedge fund. needs a recession to make some money!

anisotropy

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Re: Ray Dalio predicts Recession before 2020
« Reply #11 on: February 22, 2018, 01:47:46 PM »
Dalio's recent track record leaves much to be desired. Although he could very well be right about this, based on the current macro data/evidence.

The significance of an inverted yield curve should not be underestimated: EVERY recession since the War began shortly after the curve became "effectively" inverted. This is not just some coincidence but can instead be perfectly explained (even predicted) by basic economics and finance.
One may even argue such is the necessary outcome of modern monetary policies.

Let this scar signify the first blow against the mortal world...
From this seal shall arise the doom of men... who, in their arrogance thought to wield our fire as their own...
Blindly they built their kingdoms upon stolen knowledge and conceit...
Now they shall be consumed by very flame they thought to control
Let the echoes of doom resound across this wretched world, that all who live may hear them and despair
                                                                                                      ~ Archimonde the Defiler, The Destruction of Dalaran.


Like LAS said, the yield curve spread is still fairly big and is unlikely to invert with in the next 12 months. Yet inversion can happen really fast, and they had done so in recent recessions.

EDIT:
A bigger threat at the moment is inflation. I will quote my Jan 9th post, which was originally meant to correct some poor lad who failed at reading comp.:
"Market sours not because of weakness, but from excessive strength. "
All the great econ news recently had just reminded us of the memory of this long-absent beast. We are currently going through such phase right now.
« Last Edit: February 22, 2018, 02:06:41 PM by anisotropy »

anisotropy

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Re: Ray Dalio predicts Recession before 2020
« Reply #12 on: February 22, 2018, 03:48:52 PM »

I don't get it... Is this your way of saying the TOP is IN?

Nah, that discussion, along with bacon, cheese, and ice cream, reside in another thread. I was merely having a poetic moment regarding modern monetary policies.

aceyou

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Re: Ray Dalio predicts Recession before 2020
« Reply #13 on: February 22, 2018, 05:42:18 PM »
Even if correct...

-  When is the optimal time to get out of the market?
-  Where should I transfer my stache that has a higher expected ROI without increasing variance?
-  How will I know when to get out of that and back into the market?

I'm not smart enough to answer any of those 3 questions.  I'll just have to do what the stupid people do and stay 100% invested in VTSAX.

Wonder how excited CNBC would be to report on that? 

ricgnzlzcr

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Ray Dalio predicts Recession before 2020
« Reply #14 on: February 22, 2018, 08:47:11 PM »
I believe Ray Dalio is more likely to be right than most of the other charlatans on TV.

The question is does it matter to most FI-pursuers? If you've got years to invest then this is a great opportunity. If you're close to retirement then hopefully you have an asset allocation you're comfortable with. The Ray Dalio asset allocation is a good start (30% stocks, 55% bonds, 15% commodities/gold).

« Last Edit: February 22, 2018, 08:49:04 PM by ricgnzlzcr »

retireatbirth

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Re: Ray Dalio predicts Recession before 2020
« Reply #15 on: February 22, 2018, 08:54:21 PM »
Reasonable prediction. Good earnings, rising yields, these are signs of late business cycle.

aspiringnomad

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Re: Ray Dalio predicts Recession before 2020
« Reply #16 on: February 22, 2018, 10:56:59 PM »


Let this scar signify the first blow against the mortal world...
From this seal shall arise the doom of men... who, in their arrogance thought to wield our fire as their own...
Blindly they built their kingdoms upon stolen knowledge and conceit...
Now they shall be consumed by very flame they thought to control
Let the echoes of doom resound across this wretched world, that all who live may hear them and despair
                                                                                                      ~ Archimonde the Defiler, The Destruction of Dalaran.




I don't get it... Is this your way of saying the TOP is IN?

Isn't it obvious?

hodedofome

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Re: Ray Dalio predicts Recession before 2020
« Reply #17 on: February 23, 2018, 05:35:25 AM »
Heís saying thereís gonna be a bubble then a bust. So it could be like the 90s where the market is gonna double from here before it drops 50%. Getting out now isnít necessarily going to make you the most money.

Scandium

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Re: Ray Dalio predicts Recession before 2020
« Reply #18 on: February 23, 2018, 08:51:49 AM »
who?

hodedofome

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Re: Ray Dalio predicts Recession before 2020
« Reply #19 on: February 23, 2018, 09:47:11 AM »
who?

He founded the largest hedge fund in the world. Though regular investors don't know him, he's a big deal in finance. He popularized the concept of risk parity as some of his hedge fund uses that strategy.

Scandium

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Re: Ray Dalio predicts Recession before 2020
« Reply #20 on: February 23, 2018, 09:49:45 AM »
who?

He founded the largest hedge fund in the world. Though regular investors don't know him, he's a big deal in finance. He popularized the concept of risk parity as some of his hedge fund uses that strategy.

well guess my full question is: why should his "feeling/guess" matter any more than the dozens of other clowns who predict the same on a weekly basis? Was he always right before, and even if he was how do we know he will now..?

hodedofome

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Re: Ray Dalio predicts Recession before 2020
« Reply #21 on: February 23, 2018, 10:02:15 AM »
who?

He founded the largest hedge fund in the world. Though regular investors don't know him, he's a big deal in finance. He popularized the concept of risk parity as some of his hedge fund uses that strategy.

well guess my full question is: why should his "feeling/guess" matter any more than the dozens of other clowns who predict the same on a weekly basis? Was he always right before, and even if he was how do we know he will now..?

He makes guesses just like anyone else. His are more informed, but trying to predict the future with high accuracy is really hard.

anisotropy

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Re: Ray Dalio predicts Recession before 2020
« Reply #22 on: February 23, 2018, 10:09:20 AM »
who?

He founded the largest hedge fund in the world. Though regular investors don't know him, he's a big deal in finance. He popularized the concept of risk parity as some of his hedge fund uses that strategy.

well guess my full question is: why should his "feeling/guess" matter any more than the dozens of other clowns who predict the same on a weekly basis? Was he always right before, and even if he was how do we know he will now..?

You have access to only two doctors:

Doctor A has no proven track record to speak of, he frequently misdiagnoses and doesn't get reprimanded for making mistakes.
(This describes your "other clowns", namely talking heads, financial advisors, broker who tend to have no personal skin in the game)

Doctor D has a much better record. He makes mistakes here and there. Over his long career, however, he has made many more correct diagnosis on a wide range of diseases and patients. Recently his quality of work has dropped a bit, perhaps due to old age, but no one really knows. Also, he gets severely punished should he makes the wrong diagnosis.
(This describes Dalio, whose wealth and income, is largely tied to his fund)

All else being equal and you are the patient, which doctor do you prefer? 

Scandium

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Re: Ray Dalio predicts Recession before 2020
« Reply #23 on: February 23, 2018, 10:13:38 AM »
who?

He founded the largest hedge fund in the world. Though regular investors don't know him, he's a big deal in finance. He popularized the concept of risk parity as some of his hedge fund uses that strategy.

well guess my full question is: why should his "feeling/guess" matter any more than the dozens of other clowns who predict the same on a weekly basis? Was he always right before, and even if he was how do we know he will now..?

You have access to only two doctors:

Doctor A has no proven track record to speak of, he frequently misdiagnoses and doesn't get reprimanded for making mistakes.
(This describes your "other clowns", namely talking heads, financial advisors, broker who tend to have no personal skin in the game)

Doctor D has a much better record. He makes mistakes here and there. Over his long career, however, he has made many more correct diagnosis on a wide range of diseases and patients. Recently his quality of work has dropped a bit, perhaps due to old age, but no one really knows. Also, he gets severely punished should he makes the wrong diagnosis.
(This describes Dalio, whose wealth and income, is largely tied to his fund)

All else being equal and you are the patient, which doctor do you prefer?

Neither. I go about my business and walk it off (index funds). Most of the time the better choice as the risk/cost of "treatment" is greater than any potential benefit.

Funnily this describe my attitude both to investing and health care.. 

anisotropy

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Re: Ray Dalio predicts Recession before 2020
« Reply #24 on: February 23, 2018, 10:16:08 AM »
Except the illness you carry is not something you can just "walk off". Ignore it and it festers.

Perhaps some "home remedy" would be your preferred option, I heard drinking Urine and Vinegar straight up cures everything.

I suppose I should add, this "most time" you mentioned, is only true regarding Doctor A. For Doctor D, reward often outweighed the risk, at least in the past.
« Last Edit: February 23, 2018, 10:19:12 AM by anisotropy »

Scandium

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Re: Ray Dalio predicts Recession before 2020
« Reply #25 on: February 23, 2018, 10:34:45 AM »
Except the illness you carry is not something you can just "walk off". Ignore it and it festers.

Perhaps some "home remedy" would be your preferred option, I heard drinking Urine and Vinegar straight up cures everything.

I suppose I should add, this "most time" you mentioned, is only true regarding Doctor A. For Doctor D, reward often outweighed the risk, at least in the past.

I came to add that yours is of course a completely false analogy. Medicine is based on science, induction, evidence and testing. Reading market tea leaves is none of those things. And no, almost never have the rewards (avoiding a drop) outweighed the risk (loosing out on years of growth). People have predicted a crash weekly since at least 2012. How would that have gone?

I mean just a month ago he predicted a "surging market":
https://www.cnbc.com/2018/01/23/ray-dalio-says-market-surge-may-be-ahead-if-youre-holding-cash-youre-going-to-feel-pretty-stupid.html
So was it only supposed to be a month long? I don't see where he said that. I'm to lazy to check the gains in the last month..

anisotropy

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Re: Ray Dalio predicts Recession before 2020
« Reply #26 on: February 23, 2018, 11:05:35 AM »
Except the illness you carry is not something you can just "walk off". Ignore it and it festers.

Perhaps some "home remedy" would be your preferred option, I heard drinking Urine and Vinegar straight up cures everything.

I suppose I should add, this "most time" you mentioned, is only true regarding Doctor A. For Doctor D, reward often outweighed the risk, at least in the past.

I came to add that yours is of course a completely false analogy. Medicine is based on science, induction, evidence and testing. Reading market tea leaves is none of those things. And no, almost never have the rewards (avoiding a drop) outweighed the risk (loosing out on years of growth). People have predicted a crash weekly since at least 2012. How would that have gone?

I mean just a month ago he predicted a "surging market":
https://www.cnbc.com/2018/01/23/ray-dalio-says-market-surge-may-be-ahead-if-youre-holding-cash-youre-going-to-feel-pretty-stupid.html
So was it only supposed to be a month long? I don't see where he said that. I'm to lazy to check the gains in the last month..

First, allow me to apologize, the drinking urine part is borderline inappropriate, yet if we compare passive investment to home remedy or walking it off, it seemed fitting.

I disagree, "proper" market timing is also based on evidence, science (if econ/finance could be a science), and induction. Most "people" that predicted crash weekly since 2012 are Doctor As, I had made that crystal clear with my "This describes your other clowns" statement.

Regarding Dalio's market surge call, I see no inconsistency here. You can have a market surge that leads to a recession before 2020, how are these two things mutually exclusive? Note: before 2020, it aint over yet, is this another case of RCF?

2Birds1Stone

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Re: Ray Dalio predicts Recession before 2020
« Reply #27 on: February 23, 2018, 11:36:34 AM »
I know beyond a shadow of a doubt that there is a 100% chance of the market going up, or going down, sometimes between now and 2020.

aspiringnomad

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Re: Ray Dalio predicts Recession before 2020
« Reply #28 on: February 23, 2018, 11:53:56 AM »
Except the illness you carry is not something you can just "walk off". Ignore it and it festers.

Perhaps some "home remedy" would be your preferred option, I heard drinking Urine and Vinegar straight up cures everything.

I suppose I should add, this "most time" you mentioned, is only true regarding Doctor A. For Doctor D, reward often outweighed the risk, at least in the past.

I came to add that yours is of course a completely false analogy. Medicine is based on science, induction, evidence and testing. Reading market tea leaves is none of those things. And no, almost never have the rewards (avoiding a drop) outweighed the risk (loosing out on years of growth). People have predicted a crash weekly since at least 2012. How would that have gone?

I mean just a month ago he predicted a "surging market":
https://www.cnbc.com/2018/01/23/ray-dalio-says-market-surge-may-be-ahead-if-youre-holding-cash-youre-going-to-feel-pretty-stupid.html
So was it only supposed to be a month long? I don't see where he said that. I'm to lazy to check the gains in the last month..

First, allow me to apologize, the drinking urine part is borderline inappropriate, yet if we compare passive investment to home remedy or walking it off, it seemed fitting.

I disagree, "proper" market timing is also based on evidence, science (if econ/finance could be a science), and induction. Most "people" that predicted crash weekly since 2012 are Doctor As, I had made that crystal clear with my "This describes your other clowns" statement.

Regarding Dalio's market surge call, I see no inconsistency here. You can have a market surge that leads to a recession before 2020, how are these two things mutually exclusive? Note: before 2020, it aint over yet, is this another case of RCF?

This one was a gem of a call:

http://www.businessinsider.com/live-investors-ray-dalio-david-rubinstein-and-steve-schwarzman-at-the-dealbook-conference-2012-12

Just specific enough to call him out for being flat wrong. Looks like he's learned his lesson and is now giving himself a couple of years to be right plus 30% wiggle room to be wrong. Talk about views you can use. Well done, Ray! Just take my money now!

Scandium

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Re: Ray Dalio predicts Recession before 2020
« Reply #29 on: February 23, 2018, 11:58:48 AM »
Except the illness you carry is not something you can just "walk off". Ignore it and it festers.

Perhaps some "home remedy" would be your preferred option, I heard drinking Urine and Vinegar straight up cures everything.

I suppose I should add, this "most time" you mentioned, is only true regarding Doctor A. For Doctor D, reward often outweighed the risk, at least in the past.

I came to add that yours is of course a completely false analogy. Medicine is based on science, induction, evidence and testing. Reading market tea leaves is none of those things. And no, almost never have the rewards (avoiding a drop) outweighed the risk (loosing out on years of growth). People have predicted a crash weekly since at least 2012. How would that have gone?

I mean just a month ago he predicted a "surging market":
https://www.cnbc.com/2018/01/23/ray-dalio-says-market-surge-may-be-ahead-if-youre-holding-cash-youre-going-to-feel-pretty-stupid.html
So was it only supposed to be a month long? I don't see where he said that. I'm to lazy to check the gains in the last month..

First, allow me to apologize, the drinking urine part is borderline inappropriate, yet if we compare passive investment to home remedy or walking it off, it seemed fitting.

I disagree, "proper" market timing is also based on evidence, science (if econ/finance could be a science), and induction. Most "people" that predicted crash weekly since 2012 are Doctor As, I had made that crystal clear with my "This describes your other clowns" statement.

Regarding Dalio's market surge call, I see no inconsistency here. You can have a market surge that leads to a recession before 2020, how are these two things mutually exclusive? Note: before 2020, it aint over yet, is this another case of RCF?

This one was a gem of a call:

http://www.businessinsider.com/live-investors-ray-dalio-david-rubinstein-and-steve-schwarzman-at-the-dealbook-conference-2012-12

Just specific enough to call him out for being flat wrong. Looks like he's learned his lesson and is now giving himself a couple of years to be right plus 30% wiggle room to be wrong. Talk about views you can use. Well done, Ray! Just take my money now!

wow. so if you took his "medicine" you'd be out of the market since 2012. That would have cost a few bucks.. That'd be like prescribing chemo if you stubbed your toe. Or something, this analogy is getting stupid.

The 30% cop-out is also pathetic. Shits that's 30% likely happen all the time! At least have the balls to go 110% all in..

anisotropy

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Re: Ray Dalio predicts Recession before 2020
« Reply #30 on: February 23, 2018, 12:09:57 PM »
Regarding the 2012 link, please note I said his recent record is not good. In fact, I mentioned this specifically in my other post way before this thread came to be.

From this thread alone:
"Recently his quality of work has dropped a bit"
"Dalio's recent track record leaves much to be desired."

Sometimes it really helps to read carefully. Odds are (based on data) Dalio will be right this time. I should stress, if someone indeed followed his 2012 call without doing his own work, lolz, you deserve to lose $.

I am going to be honest, for an average poster, or someone who is financially illiterate, it is not easy to tell these guys apart. Because they ALL look like Doctor D at first.

Here is an idea, or rather, an actionable strategy on how to deal with this:

1. You assume everyone is Doctor A
2. You look at their track records. Perma bears/crash callers stand out like big roaches in daylight; you then ignore them when they spew further garbage.
3. You probe for inconsistencies in their (the person in question) investment thesis. Granted, reading comprehension skill is required for this, which seems to be in short supply these days.
4. At this stage, few "doctors" remain. You then study available data to either reinforce or refute the person's forecast (diagnosis). 
5. Monitor the situation as it unfolds, do it long enough and well enough you might just become Doctor D yourself!

You are currently on step 1, work down the list.

Or

You could indeed walk away and/or rely on home remedy. What's the worst that could happen? In the long term we are all dead anyway.

P.S. Last edit, I see you like SC2 as well. I was a Gold player when WoL first came out, now I am prob Bronze lol. I've been playing some co-op missions lately, I suck so bad (APM rarely over 70) I can't even make past Hard.
« Last Edit: February 23, 2018, 12:35:36 PM by anisotropy »

aspiringnomad

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Re: Ray Dalio predicts Recession before 2020
« Reply #31 on: February 23, 2018, 12:33:51 PM »
I'm in finance and know who Ray Dalio is. I've got nothing against him personally, nor do I question his intellect, but I prefer my well respected hedge fund managers to not make predictions that might tempt retail investors to do stupid stuff with their money.

In the long run we're all dead, but in the long run the market goes up and the Great Dalio 70% Likely Recession of 2018, 2019, or Maybe 2020 makes no difference. In your analogy, the market is truly self-healing (no home remedies or professional medics needed, ever) because as far as anyone in the world knows the market always goes up:

http://jlcollinsnh.com/2012/04/19/stocks-part-ii-the-market-always-goes-up/

anisotropy

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Re: Ray Dalio predicts Recession before 2020
« Reply #32 on: February 23, 2018, 12:45:57 PM »
If the retail investors do stupid stuffs with their money, that's more money for us :P

Joking aside, I am a firm believer that if you do dumb things then you deserve the consequences. Sad, but necessary.

Market goes up in the long run, that is true. Since you are in finance, I hope you agree with me on a significant underlying cause of an upward trending market: economic growth, which, doesn't always happen. I am not preaching doom and gloom (that belongs in TOP IS IN thread), the analogy was meant to contrast Dalio vs "other clowns". Even though Dalio hasn't been as stellar since 2011.

Market goes up, market goes down, Doctor D simply gives us an idea on what to expect (if you believe him), and perhaps profit handsomely off it as well.

MrDelane

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Re: Ray Dalio predicts Recession before 2020
« Reply #33 on: February 23, 2018, 12:50:47 PM »
I should stress, if someone indeed followed his 2012 call without doing his own work, lolz, you deserve to lose $.

It seems that you're saying it is our own work that should lead us to whichever conclusion we accept, irrespective of Dalio's opinion (which I would agree with, by the way).

But if that is the case then what value does a specfic call by Dalio's add?
I understand that in the past he may have been more right than wrong, but that tells us nothing about this specific call that he's made.

His predictions, like so many others, seem to be like the surges and dips in the market itself. Looking back we can say with confidence that the market will go up over time - but we cannot pinpoint where the dips and surges might happen moving forward.

Dalio's opinions may average out to be more correct than others, but that is of no help to us if we have no way of determining if this specific opinion will increase or lower his average (until it's too late to act on it).

anisotropy

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Re: Ray Dalio predicts Recession before 2020
« Reply #34 on: February 23, 2018, 01:05:01 PM »
I should stress, if someone indeed followed his 2012 call without doing his own work, lolz, you deserve to lose $.

It seems that you're saying it is our own work that should lead us to whichever conclusion we accept, irrespective of Dalio's opinion (which I would agree with, by the way).

But if that is the case then what value does a specfic call by Dalio's add?
I understand that in the past he may have been more right than wrong, but that tells us nothing about this specific call that he's made.

His predictions, like so many others, seem to be like the surges and dips in the market itself. Looking back we can say with confidence that the market will go up over time - but we cannot pinpoint where the dips and surges might happen moving forward.

Dalio's opinions may average out to be more correct than others, but that is of no help to us if we have no way of determining if this specific opinion will increase or lower his average (until it's too late to act on it).

True, regarding we cannot pinpoint where the dips and surges might happen, at least I can't. We can run an EV (expected value) tree for Dalio's calls, note, this is again to only contrast his calls vs "other clowns'". I suspect most clowns would get you a negative EV while Dalio's EV might be positive.

The most valuable portion of Dalio's calls, in my opinion, is his thought process for us to investigate how he got to his conclusion. We can test/compare it against other data to make our own conclusions. Charlie Munger said in a recent interview (Michigan Ross?) that his grandfather believed (as he does) it is "our moral obligation" to constantly better ourselves in light of new information, which in my experience, actually helps us to determine if a specific opinion is valid or not. I hope this makes sense.

Scandium

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Re: Ray Dalio predicts Recession before 2020
« Reply #35 on: February 23, 2018, 01:07:30 PM »
Sometimes it really helps to read carefully. Odds are (based on data) Dalio will be right this time. I should stress, if someone indeed followed his 2012 call without doing his own work, lolz, you deserve to lose $.

P.S. Last edit, I see you like SC2 as well. I was a Gold player when WoL first came out, now I am prob Bronze lol. I've been playing some co-op missions lately, I suck so bad (APM rarely over 70) I can't even make past Hard.

So we should follow his advice, except when he will be wrong? ok.... Not exactly actionable advice. Not listening to any gurus is probably best, no matter their record


SC2: lots of new (bad) players since went free to play, hop in! :D I'm one win from plat so too afraid to ladder now, lol.
add me! DenimDemon#1619 / Panzer on NA

ChpBstrd

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Re: Ray Dalio predicts Recession before 2020
« Reply #36 on: February 23, 2018, 01:12:37 PM »
I am interviewing for the role of media guru. I need someone to tell me how to time the market based on their gut instinct at the moment.

The bulk of the applicant's experience is preferred to be in some area other than market timing, such as the mechanics of setting up hedge funds, salesmanship, and using viral media to promote one's own company.

Simply riding the rapids in an index fund until I'm a millionaire is too hard.

boarder42

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Re: Ray Dalio predicts Recession before 2020
« Reply #37 on: February 23, 2018, 01:22:38 PM »
i predict before i die there will be at least one more recession - nope two

if i'm wrong you can kill me.

KTG

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Re: Ray Dalio predicts Recession before 2020
« Reply #38 on: February 23, 2018, 03:00:35 PM »
I have to be honest I feel a storm brewing too. I think of it like, the chef is putting the ingredients into the pot and is starting to stir. I read the financial news constantly. I keep seeing more and more examples of rising home prices, lack of affordable homes, meaning peeps are bidding higher for 'affordable' homes and overpaying for them. The cost of housing/renting is starting to consume over 30% of people's pay, which is not sustainable. Most Americans don't have savings either.

Which leads to debt, and there is a lot of it. Not just here, but globally. China, Europe. And its going to be a minor country in the EU that will spark a crisis there, or the realization that not only has China been lying about its GDP, but becomes obvious it cannot sustain its economic policies. In the Great Recession, the US went to China for a bail out. I don't see anywhere to go to for the next one. I think it will be worse than the Great Recession.

Timing-wise, I kind of agree with Dalio, but I really think its going to happen in the next Presidental term, regardless if its Trump or someone else. The good times are going to ride for awhile, peeps are going to have forgotten all the lessons from the Great Recession, and people will take on more and more debt before it all comes crumbing down.

And when I see the beginning, I will sell everything. At that point I wont care about what Collins or Money Mustache says. I will want to be cash rich at that point, even if it means I sit out of the market for awhile. Then when all the shit hits the fan, buy back in.

I know peeps like to say you can't time the market, but I was cash rich during the last Recession and could see the impact not having cash did to a lot of people. Sure I can say 'I am in it for the long term' but I would rather take the chance of selling when things are obviously crazy rather than missing out on a few % points of returns.

My dad predicted the housing bubble and talked me out of buying a house at the time. He could see how over leveraged and the insanity going on at the time. After watching the market come back, and everyone upgrading, buying new cars, re-designing kitchens, etc etc, peeps are spending again. We aren't in trouble now, but we will be. Call it late cycle if you want, but I think it has more to do with human behavior.
« Last Edit: February 23, 2018, 03:02:38 PM by KTG »

anisotropy

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Re: Ray Dalio predicts Recession before 2020
« Reply #39 on: February 23, 2018, 03:22:38 PM »
Sometimes it really helps to read carefully. Odds are (based on data) Dalio will be right this time. I should stress, if someone indeed followed his 2012 call without doing his own work, lolz, you deserve to lose $.

P.S. Last edit, I see you like SC2 as well. I was a Gold player when WoL first came out, now I am prob Bronze lol. I've been playing some co-op missions lately, I suck so bad (APM rarely over 70) I can't even make past Hard.

So we should follow his advice, except when he will be wrong? ok.... Not exactly actionable advice. Not listening to any gurus is probably best, no matter their record


SC2: lots of new (bad) players since went free to play, hop in! :D I'm one win from plat so too afraid to ladder now, lol.
add me! DenimDemon#1619 / Panzer on NA

Alright, I am on NA too, I will drop you a line sometime this weekend.

mjr

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Re: Ray Dalio predicts Recession before 2020
« Reply #40 on: February 23, 2018, 03:44:09 PM »
but I was cash rich during the last Recession and could see the impact not having cash did to a lot of people.

There's a massive difference between "not having cash" and selling everything when you perceive a crash/correction coming.  Not having cash can be avoided by an appropriate asset allocation.  Selling everything is market timing, pure and simple.

KTG

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Re: Ray Dalio predicts Recession before 2020
« Reply #41 on: February 23, 2018, 04:58:12 PM »
Yes, and I plan on doing it.

There is another event that I expect to happen that will proceed any natural occurring recession, but while it will effect the market in the short term, I am not sure yet how it will effect it in the long term (and may even trigger the event we are referring to.

And that event is Trump bombing North Korea.

And I will cash out before I think that will happen too.

I forgot to mention this in my post above, and I am really sure it will happen, maybe even this year. Kinda off topic so I am going to post why I think so but have to decide if it belongs in Off Topic or in Investor Alley.

2Birds1Stone

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Re: Ray Dalio predicts Recession before 2020
« Reply #42 on: February 24, 2018, 07:29:31 AM »
And that event is Trump bombing North Korea.

=D****

theolympians

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Re: Ray Dalio predicts Recession before 2020
« Reply #43 on: February 24, 2018, 09:44:20 AM »
Ray who???? Click Bait nothing more: "Something bad will happen in the future, when it does, remember I predicted it. If it doesn't, you won't remember."

Wintergreen78

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Re: Ray Dalio predicts Recession before 2020
« Reply #44 on: February 24, 2018, 09:04:41 PM »
Thank you for this thread. I have gone 100% into cash. I will now wait until after 2020 to jump back into the stock market.

I am very glad we got this warning in time!

ChpBstrd

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Re: Ray Dalio predicts Recession before 2020
« Reply #45 on: February 25, 2018, 07:34:50 AM »
KTG,
If you both foresee a catastrophe and plan to sell after the occurrence of the catastrophe, your plan involves watching the market evaporate 20-25% overnight and then selling at 20-25% lower the next day/week/month. At that point, you've already lost because markets move quickly downward. Might as well reallocate today and skip the heartbreak. The bulk of the latest correction, based on no particular event, occurred within a couple days. If we assume the catastrophe will happen and assume we must sell when the catastrophe happens (both points are highly arguable, but I'll accept them to make another point), there are a lot of better strategies to implement that would save us from selling at the new low prices.

1) Trailing stop loss orders - this is very conventional but very risky because you'll be forced out of your investments on a normal market zig zag. Also, your sale could still happen far below your limit. Not recommended, but still better than manually pushing the sell button after a correction has occurred.
2) Options: Protective puts, or a collar. Allows you to put a floor on your acceptable losses, for a price. Costless collars may be available.
3) Options: Just buy long-term calls (expiring in ~3 years) and obtain lots of market leverage while only risking ~10% of the money you'd risk buying stocks outright. Put the rest in treasuries or whatever. Max loss is 10% of your money, but a loss is more probable than with the stock portfolio.
4) Options: Buy straddles - this position pays off if there is a big move up or down. Most of the time, these lose money, but if your crystal ball predicts bumpy sailing ahead, it pays off big.
5) Options: Sell bearish vertical spreads - This is my favorite strategy, given your assumptions. You make a regular income while being fully insulated from a market crash. You lose a fixed amount of money if the market zooms upward in a statistically improbable way. You would want to quit this strategy after a correction because, as we've seen, that's when stocks are most likely to zoom upward.
6) Just go 100% short term bonds.

A note - if you are investing based on fear, options provide a rope to hang yourself with. Some are more volatile than stocks, and you could easily sell these positions low just like with stocks. DO NOT under any circumstances invest in options before you have spent at least 40 hours of self-education in a finance textbook or optionseducation.org. Then you should spend a few months messing around in a paper trading account before committing real dollars. Go with option 6) until you've done these things.

talltexan

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Re: Ray Dalio predicts Recession before 2020
« Reply #46 on: February 26, 2018, 12:30:32 PM »
Option (3) sounds nice, isn't it advocated by Nassim Taleb in "Anti-Fragile"?

Mighty-Dollar

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Re: Ray Dalio predicts Recession before 2020
« Reply #47 on: February 26, 2018, 04:30:24 PM »
What do you think of Ray Dalio who said there is a 70% chance of Recession before 2020?
Economists have predicted 10 of the last 3 recessions