Conversation with Ray Dalio: From Asset Allocation to Wealth Inheritance, 10 Financial Principles for Chinese Friends

Original Title: "Ray Dalio's First Chinese Podcast Appearance: Stock-Bond Divergence, 10 Wealth Management Principles for Chinese Friends"

Original Source: Xiansheng

Compiled and Translated by: TechFlow

Guest: Ray Dalio, Founder of Bridgewater Associates

Host: Wang Liwei

Podcast Source: Xiansheng

Broadcast Date: August 20, 2025

Key Takeaways

Exclusive conversation with the founder of Bridgewater Associates: A-shares are booming, bond funds are "in tears"—how should we allocate our wealth? Cultivating financial literacy in children and grandchildren: why give gold coins and fewer toys?

In recent days, A-shares have been hot, while the bond market has plummeted. Some investment advisors have raised a soul-searching question: should we switch our bond funds to equity funds?

Recently, Dalio has frequently appeared in our field of vision, partly because he released a new book: "Why Nations Fail." Last weekend, news that Bridgewater cleared out its Chinese concept stocks also drew much attention. Yesterday, a friend asked whether Bridgewater had sold all its Chinese stocks.

In fact, the US 13F filings do not reflect holdings in Hong Kong or A-shares (many global funds, including Bridgewater, have significantly reduced their holdings in Chinese concept stocks; Chinese stocks show mixed performance). Looking only at the onshore market, Bridgewater's domestic fund surpassed 40 billion RMB last year, and with gains over the past year, the AUM should now be around 60 billion RMB, accounting for nearly one-tenth of Bridgewater's global AUM.

Having followed Dalio for nearly a decade, I recently took the opportunity of his new book's release to have a conversation with him. We first discussed his new book and related controversies from a macro perspective (see Caixin Weekly for the text version); then, from a personal perspective, we systematically discussed his investment advice for Chinese friends. This is also his first appearance on a domestic podcast to talk about investing.

In my memory, Dalio rarely gives public, specific investment advice, especially tailored to the domestic situation. But now, Chinese investors face a very unique environment. On one hand, the stock market is hot; on the other, in a low-interest-rate environment, it's not easy to achieve decent returns safely. Even in the recent bull market, some friends say that after three years, they haven't made much; while in the past two years, many made good money from bond funds, but now, as a friend poetically put it, "Bond funds bring tears to ten thousand households."

In the current low-interest-rate environment, how should we deal with significant market fluctuations? When the market is good, should we diversify across asset classes and regions? Dalio is bearish on US bonds and the dollar—does that mean he's also bearish on US stocks?

If you care about investing, wealth management, and financial security, you'll surely gain a lot from this conversation.

Highlights

· When some markets rise, others fall, reflecting different economic conditions. By balancing these investments, you can reduce cyclical fluctuations in your portfolio, thereby achieving good returns while lowering risk.

· In the long run, cash is a very poor investment. The challenge facing China is that investors often hold large amounts of funds in real estate or cash deposits, which is not a well-diversified portfolio.

· The return on any asset typically consists of two parts: price change and yield. When returns rely mainly on price appreciation rather than coupon income, you should be cautious.

· Investors need to regularly rebalance their portfolios. If you don't have a clear market view, you can use a simple rebalancing strategy: when an asset class rises in price, reduce your position and shift funds to other asset classes to maintain long-term portfolio balance.

· It's always a good time to diversify. Individuals and investors must be very cautious when trying to time the market.

· Diversification and risk balancing are important means to enhance returns and reduce risk.

· Don't try to predict market trends; market timing is essentially a zero-sum game.

· Don't look at each part of your portfolio in isolation; consider how the parts work together to form a well-diversified portfolio.

· Debt is money, and money is debt.

· Gold is the second largest reserve currency: first is the dollar, second is gold, third is the euro, fourth is the yen.

· Gold is more attractive to me. Nevertheless, I still hold some bitcoin as an alternative.

· Stablecoins have significant advantages in transactions, especially welcomed by those less concerned about interest rates, who are willing to forgo interest for transactional convenience. But stablecoins are not a good store of wealth.

· Inflation-indexed bonds are an excellent tool for storing funds. They compensate according to the inflation rate and also provide a certain real interest rate. This asset is low risk and an ideal investment choice.

· Everyone needs to recognize the importance of saving. Savings provide you with a foundation and a sense of security, which gives you freedom.

· Ensuring the basic financial security of individuals and families is crucial. To achieve this, learning investment knowledge and making reasonable asset diversification is very important.

· Only after ensuring a basic standard of living can you consider taking more risks to try for higher returns.

· Every birthday and Christmas, I give the children in my family a gold coin. I tell them, you cannot sell this gold coin. You can only pass it on to the next generation on the day the monetary system collapses.

Investment Strategies in a Low-Interest-Rate Environment

1. Can You Achieve Stable Returns in a Low-Interest-Rate Environment? The Logic of the "All Weather" Strategy

Host: Currently, China is in a low-interest-rate environment, which usually means it's hard to achieve ideal investment returns. However, I noticed that Bridgewater's All Weather Fund in China has performed very well in recent years, achieving over 10% returns almost every year, with relatively small drawdowns during market volatility.

Could you explain how Bridgewater achieves such stable performance in a low-interest-rate environment?

Ray Dalio: I'm glad you asked this question. Bridgewater's performance over the past six years has indeed been very stable, with the worst year yielding between 10% and 14%—I can't recall the exact number, but the average return is about 16%. So how did we do it?

First, the key is to achieve portfolio balance through proper asset diversification. When some markets rise, others fall, reflecting different economic conditions. For example, when the stock market falls, the bond market rises, and gold or inflation-hedged assets also rise as the currency depreciates. By balancing these investments, you can reduce cyclical fluctuations in your portfolio, thereby achieving good returns while lowering risk.

My investment motto is to have 15 or fewer uncorrelated return streams. (TechFlow note: Uncorrelated return streams refer to assets whose returns are not directly related, effectively diversifying risk.) For example, in a slow deflationary environment, stocks may perform poorly, but bonds may yield higher returns. If there is a lot of money printing in the economy, inflation-hedged assets (like gold) usually perform well. By balancing these assets, you can achieve very attractive returns at a lower risk level—this is the game of investing.

In the long run, cash is a very poor investment. The challenge facing China is that investors often hold large amounts of funds in real estate or cash deposits, which is not a well-diversified portfolio. Therefore, holding a diversified asset portfolio instead of cash is a very attractive strategy. This is our core strategy: how to achieve diversification without being constrained by traditional assets, and make tactical adjustments based on current market conditions to achieve this balance.

As I said, my goal now is to pass on these principles. I'm 76 years old and plan to launch an investment course to teach these principles. I hope to provide this knowledge to everyone in China for free or at low cost to help them understand how to achieve balance. So I am eager to convey how this process works in detail. Overall, as I have described, this approach is effective.

2. The Dilemma of Bond Investing: When Returns Rely Mainly on Price Appreciation Rather Than Coupon Income, You Should Be "Afraid"

Host: Currently, the Singapore Wealth Management Institute is conducting some research, and we hope these studies can be applied to the Chinese market.

In a low-interest-rate environment, long-term bonds usually perform well, so many Chinese investors have entered this field in the past year. However, when signs of economic recovery appear, long-term bonds have seen sharp drawdowns, as in the past few days. Do you think there are good ways to identify these signs and adjust investment strategies in time?

Ray Dalio: I want to clarify that the return on any asset typically consists of two parts: price change and yield. In the investment cycle, sometimes low-yield assets are bid up and become very expensive. At this point, investors' returns come mainly from price appreciation rather than coupon income. When this happens, it may look profitable in the short term, but future returns will be very low. This low yield is actually an important warning signal, indicating that greater risk may lie ahead. Therefore, when you find that returns rely mainly on price appreciation rather than coupon income, you should be cautious.

To deal with this, investors need to regularly rebalance their portfolios. If you don't have a clear market view, you can use a simple rebalancing strategy: when an asset class rises in price, reduce your position and shift funds to other asset classes to maintain long-term portfolio balance. For example, Bridgewater achieves stable investment returns through such dynamic balancing strategies. By regularly adjusting asset allocation, you can effectively reduce risk while maintaining portfolio stability.

3. Regional Diversification and the Timing Trap: Give Up Predicting the Market

Host: I think in a low-interest-rate environment, a good investment approach is to achieve regional diversification. Bridgewater has been doing this for many years. I think Japan has also achieved this through their NISA plan. Now, China has recently provided more QDII quotas for Chinese investors.

Some Chinese believe the US stock market is at historic highs and too expensive; the European stock market is also at historic highs. Do you think regional diversification is important? Is now a good time to diversify geographically?

Ray Dalio: I think it's always a good time to diversify. Individuals and investors must be very cautious when trying to time the market. They should first assume they cannot accurately predict market trends, then ask themselves: if I have no view on the market, what kind of portfolio should I have? This portfolio should be a balanced, diversified one, because diversification means that if you don't know how an asset will perform, maintaining a balanced portfolio is the best choice—individuals cannot successfully time the market.

Don't base your portfolio decisions on whether the US stock market is high; the key is to maintain balance. I would advise any investor to consider keeping half their funds locally, but in a diversified portfolio, using the "All Weather" approach. The so-called "All Weather" portfolio includes gold, bonds, and investments diversified across about 10 different markets. But you need to know how to balance well—you want to balance risk, not just dollars or any other currency.

Diversification and risk balancing are important means to enhance returns and reduce risk. Simply put, if I introduce uncorrelated assets—suppose I have one asset, then add a second and third asset, which are uncorrelated but have similar expected returns—I can reduce risk by about a third. If I can reach 10 to 15 uncorrelated assets, I can reduce risk by 60% to 80% while maintaining the same return. This means the return-to-risk ratio can be increased to five times the original. In other words, you can get the same expected return but take only one-fifth the risk. This is the game of investing.

4. The Art of Buying: Beyond Dollar-Cost Averaging?

Host: You mentioned not trying to time the market. So, what is the correct way to invest? For example, is dollar-cost averaging (DCA) a good choice? Or are there better methods?

Ray Dalio: When investing, you must first clarify the risk you are taking, not just the amount you invest. For example, stocks are about twice as volatile as bonds. Therefore, to achieve portfolio balance, you need to adjust weights according to the volatility of different assets so that overall risk is balanced. If you can design this risk balance well, you can achieve your investment goals. This may sound complicated, but dollar-cost averaging is indeed a good way because it avoids the risk of lump-sum investing and allows you to accumulate assets gradually. However, the key is to understand how to build a balanced "neutral portfolio," one that can operate stably in different market environments.

Again, don't try to predict market trends, because market timing is essentially a zero-sum game. Every trade has a buyer and a seller, and there are always some smart investors in the market. It's like playing poker at the table—you need to ask yourself: who is my opponent? Only a very small number of people can truly succeed in the market. Bridgewater invests hundreds of millions or even billions of dollars each year to study the market, but even so, we have seen that over the past six years, the overall market performance has generally been poor. Therefore, if you want stable and good returns, I recommend using a risk-balanced investment approach rather than trying to predict the market.

Again, I mention not trying to time the market, because you must understand that market timing is a zero-sum game. Every buyer has a seller, and there are smart people out there. It's like playing poker at the table—do you know who you're up against? Only a small number of people can really do well. We invest hundreds of millions, possibly up to a billion dollars a year, trying to play this game. Even if you look at the history of investment managers over the past six years, overall market performance has been poor. So, if you want to achieve good and consistent returns, I encourage this balanced approach.

Host: So, would you recommend a default All Weather portfolio for the Chinese market? I remember in 2014, you provided Tony Robbins with a US-market-based version. For Chinese investors, what allocation would you suggest?

Ray Dalio: The same principles apply to any country; it's not about the country, but about the available investment tools. In the Chinese market, we can also use local investment tools to achieve risk balance. The fund I mentioned is a local fund that can do this. I want to emphasize that there are tools available in the onshore market to achieve this goal.

Pros and Cons of Major Asset Classes

5. Gold: How to View the Allocation of This "Non-Yielding" Asset

Host: Gold is an asset you value highly. In the past year, it has performed quite well, and from a 20- or 30-year perspective, it has also done very well. However, many people prefer to invest in productive assets. How should we think about or convince ourselves to invest in non-productive assets like gold?

Ray Dalio: Gold is a non-productive asset, just like cash. If you put your money in cash, it's also non-productive—the two are very similar. Therefore, you need to view gold as a currency. Its main feature is that it is an effective diversification asset—when currencies perform poorly, gold usually performs well.

I think most people view their portfolios and costs from the perspective of their own currency, which can lead to misjudgment because they don't realize their currency is depreciating. They see other assets rising, like gold or other assets, but if you look at things in inflation-adjusted dollars or inflation-adjusted currency, that's the right perspective. Over a long period, gold has always been a currency, and perhaps some digital currencies are seen as alternative currencies. Overall, debt is also money, and there is too much debt.

What I want to express is that during this period, the value of money has indeed declined. I want to emphasize that when I mention gold, I'm not saying you should hold more than an appropriate diversified proportion of gold. What I'm saying is that in an optimized portfolio, gold is usually about 15%. But whether it's 10% or 5%, gold can provide diversification for the rest of your portfolio. Therefore, it must be seen as a risk-reduction tool to cope with significant currency devaluation, because of excessive debt and money printing. Therefore, gold should be part of your portfolio. But again, don't look at each part in isolation; consider how the parts work together to form a well-diversified portfolio.

6. The Dollar and US Bonds: Why Bearish?

Host: If we look at the value of currencies, such as the dollar, I think you recently mentioned that the US economy is relatively good, while the global economy is relatively weak. This situation seems to favor a strong dollar. But in your view, is the dollar facing a structural downward trend?

Ray Dalio: I want to emphasize the supply and demand relationship of debt, and debt is money, money is also debt. Debt is a promise—a promise to give you a certain amount of money. Therefore, debt can be seen as unredeemed money. When you store your funds, you are storing them in debt. That's what I mean by "debt is money, money is debt."

When there is too much debt and it grows too fast, debt problems arise. In this case, the way to deal with these problems inevitably faces a choice: either you choose hard currency, then the supply-demand relationship changes, interest rates must rise, which leads to reduced demand and a market downturn; or you ease debt problems by printing more money. In the current economic environment, this choice is a core issue.

7. Bitcoin and Gold: Dalio's Investment Views

Host: You just mentioned digital currencies. I remember you've also held some bitcoin in recent years. How do you view bitcoin's investment value? Compared to gold, what are its advantages and disadvantages?

Ray Dalio: I've held a small amount of bitcoin for several years and kept the proportion unchanged. I see bitcoin as a diversification tool; compared to gold, it's a diversified choice. What is a reliable currency for storing wealth? Bitcoin is undoubtedly very popular, but I think it has some drawbacks—for example, I don't think central banks will hold bitcoin.

Gold is the second largest reserve currency: first is the dollar, second is gold, third is the euro, fourth is the yen, and so on. Central banks hold gold. There's a saying that gold is the only asset you can own that is not someone else's liability. This means gold itself is money; it doesn't depend on someone else's promise to pay you. Gold has intrinsic value and can be held without these risks. This is especially important in challenging political or geopolitical environments, such as when Russia was sanctioned or Japanese assets were frozen during World War II. For these reasons, gold is more attractive to me. Nevertheless, I still hold some bitcoin as an alternative.

8. The Truth About Stablecoins: Are They Suitable to Hold?

Host: I noticed you hold bitcoin because it has a store-of-value function. Nowadays, many people are paying attention to stablecoins because they seem to offer a similar function. What do you think?

Ray Dalio: Stablecoins peg a currency to the stablecoin. In other words, it represents a claim on the pegged currency, but usually doesn't pay interest. Financially, it's worse than holding a currency asset that pays interest. However, stablecoins do have significant advantages in transactions, especially in international transactions. They can almost be seen as a clearing tool, simplifying cross-border fund flows. Therefore, they are especially welcomed by those less concerned about interest rates, who are willing to forgo interest for transactional convenience.

In high-inflation countries, interest rates may be negligible, and people are more likely to choose stablecoins for transactions. For example, in places like Argentina, if you can't get an interest-bearing reserve currency, stablecoins may become an alternative. That's how stablecoins work, but they haven't fulfilled the main function of a currency with limited supply and stability against other currencies. In contrast, inflation-indexed bonds are a better asset choice.

Currently, China has not yet launched inflation-indexed bonds, but such bonds are an excellent tool for storing funds. They compensate according to the inflation rate and also provide a certain real interest rate. This asset is low risk and an ideal investment choice.

Host: After hearing your analysis, I'm starting to wonder how much demand there really is for stablecoins. Can they really solve the US debt problem?

Ray Dalio: This question still needs time to observe. The basic logic of stablecoins is that buyers will purchase them, especially in emerging market countries where economic instability is higher and buyers don't care much about interest rates—they buy stablecoins for transactional purposes.

And the law requires stablecoin issuers to back them with government bonds and government debt. Therefore, buying stablecoins leads to buying US government debt, but there's a problem: where do these funds come from? If they hold US debt, they transfer it to stablecoins. So what is the new demand? I think stablecoins are not a good store of wealth.

The Underlying Logic of Family Wealth

9. Dalio's Family Finance Lesson: Persistently Giving Gold Coins Instead of Toys?

Host: In a 2019 interview, you mentioned that individual investors face some major challenges. Can you offer some practical investment advice for the general public? I also heard that you have been teaching your grandchildren how to invest and manage personal finances.

Ray Dalio: I think everyone needs to recognize the importance of saving. I calculate for myself: if I had no new income, how many months could I maintain my lifestyle? Then I double that number to cope with possible emergencies, such as a major economic downturn.

Savings provide you with a foundation and a sense of security, which gives you freedom. This is very important. What I do for my children (now all adults) and grandchildren is that every birthday and Christmas, I give them a gold coin. I tell them, you cannot sell this gold coin. You can only pass it on to the next generation on the day the monetary system collapses. In this way, they can see the value of gold coins passed down between generations. I find this practice more meaningful than simply giving toys. Of course, I occasionally give some toys, but not too many, because toys quickly lose their appeal, while gold coins help them understand the process of saving and accumulating wealth.

My core view is that ensuring the basic financial security of individuals and families is crucial. To achieve this, learning investment knowledge and making reasonable asset diversification is very important. Only after ensuring a basic standard of living can you consider taking more risks to try for higher returns. For me, this kind of high-risk investing is more like a game—I really enjoy the process because it's full of challenges and fun.

When saving, you must consider the impact of inflation on your funds. Simply put, what you store is not just the currency itself, but its purchasing power. For example, if the interest rate is 4% and the inflation rate is 3%, your real return is only 1%. These are my suggestions for ordinary people and the principles I have always practiced with my family. Only after mastering these basics can you further explore higher-risk investment opportunities.

Host: That's also why many people now choose to build different investment buckets, such as a safe investment bucket and a riskier market investment bucket.

Ray Dalio: But I want to remind everyone that investing in the market is like a poker game—you are facing many smart opponents who may be investing hundreds of millions or even billions of dollars in this game. Therefore, beginners are better off starting with small investments and accumulating experience through practice. This way, you can observe the performance of professional investors and review their strategies and results over the past few years, rather than being blindly confident. Understanding this and staying humble is the key to successful investing.

10. The Importance of Rebalancing: Overcoming Emotional Investing

Host: Last time, you gave me a very interesting piece of advice: act against your instincts. But I think that's not easy for most people. So, when adjusting a portfolio, what should you do?

I noticed that the Pure Alpha Fund performed well in the first half of this year, and last year it also performed well in the global hedge fund industry. However, it also returned some cash to clients. In addition, China's OS Fund also did something similar earlier this year after achieving over 15% half-year returns.

Regarding rebalancing, can you share some experiences or lessons? How do you view this?

Ray Dalio: The core of rebalancing is to set a strategic asset allocation goal to achieve portfolio balance. When some markets perform well and asset prices rise while others perform poorly, rebalancing helps you adjust your portfolio according to your set goals. This not only allows you to sell high and profit, but also buy low, thus maintaining investment discipline. Therefore, rebalancing is very important in investing.

Host: It does sound like it requires strong discipline and psychological control.

Ray Dalio: That's the nature of the game, just like many things in life—it requires self-control. For decades, I've been recording my decision rules and organizing them into a set of "principles." Later, I turned these principles into computer programs to systematically execute my investment plan. This avoids being affected by emotions because I know what the expected outcome of the plan is.

You must have a game plan. If you're going to do this, your game plan should be backtested so you know how it performs. Then, you'll be able to avoid making wrong choices due to emotional decisions.