The quote is from none other than Ray Dalio, who I sometimes use as a contrary indicator for his calls (ref. the ‘BOND BEAR!!!‘ gang from 2018) but who is actually a brilliant investor. That is because his calls, which are probably just his thoughts as amplified by a financial media doting on every word, don’t really matter to his investment strategy.
B.A.L.A.N.C.E.
Hmmm, what is the word I use in NFTRH more than any other (except possibly “perspective” and “patience”)? Yup, it’s “balance”. It is absolutely critical to always be in balance during difficult times when the market is whipsawing and/or not clear in its direction. This for me means balance with respect to cash levels, long/short (as applicable) and with respect to various classes of assets.
When I get in trouble is when I make conscious and all too human decisions to get out of balance (i.e. to lean in a certain direction before it’s time). But then again, with all that dividend paying cash I like to take some speculations once in a while. Cash really was the great balancer in 2018.
Check out the article here…
What regular investors can learn from Bridgewater’s stellar 2018 performance
Consider the need for balance as applies to your own individual orientation, which almost by definition is different from mine or the next schlep’s orientation.
Within that I think that an open mind for rebalancing is important as well. As we move along with our best plans working out and/or being altered or negated, we have to put our egos to rest and let the market direct.
I am not talking about hysterical media articles (sewing fear or greed) about the market. I am not talking about the Tweeter-in-Chief poking away at the Fed or his Chinese adversary.
I am just talking about trends and technicals, macro indicators and the probabilities they flesh out. It makes sense to follow a favored plan but to be balanced within that until directions (trends) become more clear. For example, will there be another leg down to finish this bear phase for a while? If so, do you drop shorts/hedges and go full bull? Possibly. But 2 things…
Thing 1: We don’t have the answer yet on a 2nd shoe to drop and
Thing 2: We’d want to evaluate reasons to lean very bullish if we get to a logical major support area (sentiment may be the primary reason at such time but personally, I’d want to take a look at the place where we began our counter-cyclical signaling a year ago and evaluate its forward prospects along with other macro indicators).
Anyway, I’ve always liked Ray Dalio. He’s got a good head on his shoulders.
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Featured image scale from iconleak.com
