Key Takeaways from Ray Dalio’s Recent Talk on the Future of Investments and World Economies

By Alex Suzuki, Senior Account Executive

The Japan Society frequently hosts programs for the international business community on U.S.-Japan relations and related current events. Recently, I attended their corporate program entitled “Where does the Future of Investments Lie?” featuring guest speaker Ray Dalio, Founder, Chairman, and Chief Investment Officer of Bridgewater Associates.

Ray Dalio

Ray Dalio, Founder, Chairman, and Chief Investment Officer, Bridgewater Associates

During the program, Dalio stressed the importance of understanding and agreeing on not only how the “economic machine” works, but also what we should do about it. He argued that the machine works the same way in every country, and that the number one rule to maintain a growing economy is to put monetary policies in place that produce income growth faster than debt growth.

I thought Dalio shared an interesting perspective on the issue of self-reinforcing economic cycles. He applied his theories to countries within different regions of the world and commented on how they each should manage their economies. The US economy is recovering through a “beautiful deleveraging,” meaning there is the right balance between deleveraging tactics to help lessen the debt and pull us out of the recession, while Japan has been going through a 23 year “ugly deleveraging,” or a recession. However, with the Abenomics monetary policies in place Japan is finally seeing the positive effects of money growth and increasing debt-to-income ratios. Dalio warned that these positive effects will eventually wear off, though, and there will need to be another round of monetization to stabilize the economic conditions in Japan.

Dalio’s critical thinking, theories, and principles are the foundation for Bridgewater Associates’ technical operations, and essentially its tremendous success. Operational intelligence involves taking analytical processes that have been proven to deliver the right visibility and insight into your business’ data and enabling real-time delivery of that insight so that you can make decisions and immediately act either manually or automatically. Dalio’s theories on understanding and agreeing on how a machine works and what to do about it also apply to your organization and business. In order to maintain a “well-oiled machine,” or a successful, well-run business, you must understand the basics of how it operates and be able to use this information to make decisions that will allow it to continue being successful. Operational intelligence will fail or even hurt your business if it is based on untested principles and processes. Always spend the time to manually hone your understanding of the business before operationalizing and automating the manual processes.

Join us at the Japan Society on October 30, 2013 where Chateaux Principal, Ken Zimmerman, will moderate a panel discussion on the latest cyber security trends! Click here for more details about the event.