Transcription
I saw that image the other day of Putin and um President Xi in China together walking together. If China does become the dominant force in the world, the dominant power, does is that a smooth transition?
First of all, I don't think either side is going to be the clearly dominant power for for a very long time. And and the the quickest way to have it is some kind of a war, and that's a dangerous thing. But maybe it evolves, hopefully the way the Soviet Union evolved, that the the worry of mutually assured destruction keeps everybody not having that kind of war. And then what? Then then the systems, one system or another system wins. But that's an evolutionary process. And you know, I can't say.
And um, do you think much about time frames? Because when I was watching, when I was going through the changing world order, there seems to be somewhat consistent or predictable time frames when these these transitions happen. Do you think about where we are?
Well, they're long-term big cycles.
Yeah.
Right. It's it's like a life cycle. On average, they are about a life cycle, about 80 years. But it's not predetermined, just like your life cycle is not predetermined. Like if you take care of yourself and you, you know, I don't know, smoke, eat well, exercise, and so on so forth, then you will probably have a longer life cycle than if you don't take care of yourself. And it's um, kind of like that, you know. And so you see them in industry, they evolve, but you can see the symptoms, okay? You can see the actions and the symptoms, which like taking a physical, uh, then gives you a sense of where they are in their life cycles.
We're 80 years from World War II.
80 years from World War II. Yeah.
And you're seeing the symptoms.
Yeah. Symptoms are clear. They're all in that book. You can see the charts of all the systems.
Is it something to be worried about or concerned about?
If you're in the United States? No. I mean, yes. And then the question is how you as an individual handle it.
How do I as an individual handle it?
Well, first of all, I think I think you have to be aware of the situation and the risks.
For me and my family though, in terms of risks and how I should um counteract those risks. Is it a case of me saving for a rainy day? Is it a
That's part of it. Yeah.
Um, there's a there's a saying in Hong Kong, um, a Chinese saying, which is a smart rabbit has three holes. And what that means is you can see is it the UK or the US? And and I can then move to the better place and get out of the place that's a terrible place. So can I successfully be an immigrant or whatever and change my location? Throughout history, that's been important. So the ability to go to good places and away from bad places. Um, so that's part of it. Um, secondly, building your financial strength is important, which has to do with how you earn, spend, and save. That will determine the amount. And then what you do with that amount is invest. And so how you invest, uh, is also important. So if you have your financial ability and you can make the move, and then you have knowledge, you know about what's happening so that you can change things. Those are the things you need.
So on that first point about a smart rabbit having three holes, is it therefore a better decision at this point in time to not to not buy a house? Because a lot of people end up buying a house and anchors them to to a place and it means that they then have to pay into a mortgage. So a lot of a lot of the financial advice most of us have growing up is when you get enough money to buy a house, move in, pay that mortgage for 25 years. But if I'm in a new economy, in a new world, and flexibility and the ability to get up and go and move is there's there's uh value to that.
The ability to move capital matters. And if you look at history, this has been an important consideration. Yes. So it matters. So if you're nailing yourself down, and that's your primary capital, and it's nailed down there, then that's does limit your flexibility.
And on the point of earning, spending, and saving, wonder what you you're a you're a a father, aren't you?
Yeah.
What what advice are you giving to your children about earning money in the in the current world, where where they should set up their shop, the skills that are most valuable to acquire, the technologies? The we talked about the US being a place to one of the better places to build your career for all the reasons you described.
Well, that's, you know, that's kind of like the particular that you asked me for. That's below the level of the higher level. Okay. The higher level is I have a principle. Make your work and your passion the same thing. And don't forget about the money part. Okay? If you make your work and your passion the same thing, so that you're really enjoying your work, you'll have an enjoyable, satisfactory life, and you'll probably be better at your career that, um, as a result, probably advance and so on. So you have a happier life, and you will have a more probably a more successful life. But it is true that the careers that you choose will have financial implications.
Mhm.
And if you say, "I want to be a poet or something along those lines." You better consider the financial implications of that. That doesn't mean that you have to go make a ton of money because I think that that's I think a lot of people fall into that trap that they think the money is um like vast amounts of money is vast amounts of success, and that's not true. In other words, is your work and your passion the same thing? So I think that what brings people happiness is meaningful work and meaningful relationships.
Okay. If you have meaningful work, you know that you're into and your, you know, your passion and your work's the same thing, and you have meaningful relationships, whether through that work or beyond, you're going to have probably a great life. Okay? And so you have to keep that in mind, and it doesn't have much correlation past a certain level of money.
Uh, it doesn't have much correlation with um, that well-being with the amount of money you have. And if you see studies across societies, and you'll see that past that certain basic level, there's no correlation between the amount of money they have and how much happiness they have or well-being. Okay? That the highest level of correlation across societies and studies of happiness and well-being is community. Do you have a sense of community? Do you have those around you who are your community? You'll live longer that way. You'll have a more joyous life, and it'll be a better outcome. But anyway, so thinking about those things, I think is important.
Based on your life cycle in this book, principles, your guided journey, create your own principles to get the work and life you want. Do you think you have to play different games in different seasons of your life cycle as it relates to generating wealth? And what I'm talking about here is really like risk profile, um, or what I should be optimizing for. Should I be should I be trying to hang around with Ray Dalio or should I be focusing on the job that pays me the most?
First of all, the answer is yes. And the second question you asked, the answer is um, that you should be around the the people who are the best people to teach you to operate by the the mentors and the learnings and so on. You should be around the best people. And when I say best people, I mean people of good character and good capabilities. Okay? And uh, so you should be around the best, not the job that pays you the most. And I could explain why that is, but and yes, in terms of that arc, you will play it differently at different parts of your life cycle. So in the early part of your life cycle, what you're going to do is I mean, the more learning and experiencing is the most important thing that you can do in the learning in the early part of your life cycle. It's like you're going to make your choices. What direction am I going to be in and so on so forth. So learn, okay, that's that's most important. And then what you're at the end of your life cycle, you're pretty much relieved from all of that. You're not going to be working to earn, okay? You're going to be free of all of that. You're going to have um, and you have freedom of choices and so on. And you're going to be thinking about transitioning. How do I transition well-being, or how do I transition my wealth, or how do I transition and so on. You know, that's that's where you are. Still learning is a joy, but at the same time, in terms of trying to accomplish, it's not the same at your late part of your life cycle as it is in your early part of your life cycle.
So I want to ask about your early life cycle and what the most important strategic or wealth generating decisions you made that you would encourage everybody to consider if their nature is aligned to yours.
Okay. My nature was I hated school. I didn't like the whole thing of remembering this and remembering this and then give it back to me. And there were these uh, you know, history like there's William the Conqueror in 1066 and what did he do? And you know, like all of that was what education represented. And when I was um, 12, a kid, I earned money with odd jobs, like um, I had a paper route. And um, I mowed lawns, and I caddied. And I took my caddying money, and when I was 12, I got everybody was talking about the stock market. So I put some money in the stock market. I didn't know what I was doing, of course, but I um, I picked um, the stock that was the only stock I ever heard of that was selling for less than $5 a share. And my reasoning was I could buy more shares, so if it went up, I could make more money. Okay, that was a stupid criteria. But it was a company that was about to go bankrupt, and another company acquired it, and it tripled in price. And I said, I like this game. So I got I got hooked on the game. I'm still hooked on the game. Right. So I liked it. Okay. That that affected me. So I barely got into uh CW Post College, and then I went to uh Harvard Business School, and that opened my eyes to the world in in many ways, because of who were there and what it was like and all that, you know, the best and the brightest kind of thing. But I always still traded markets because I always played the game. I could tell you stories. You want a couple of quick stories?
100%.
Okay. So, I'm clerking on the floor of the New York Stock Exchange between graduating from college and in the summer between graduating from college and going to uh Harvard Business School. And that is 197 the summer of 1971.
Mhm.
And on August 15th, 1971, Richard Nixon gets on the television and says that, you know, the promise that that you were going to be able to take your paper money and go get gold, you can't do that, and we're not we're going to cut off that off. He didn't say it in exactly those words, but money then was gold, and what we think of as paper money, fiat money, was claims on the gold. So I walked on the floor of the New York Stock Exchange that summer, and I thought the market was going to go down a lot, and the market went up a lot. And I didn't understand why because I never went through a devaluation before. And I studied history, and I found that in March of 1933, Roosevelt got on the radio and made the exact same announcement that you're not going to get your gold, and they're going to print the money. And when you print a lot of money, you have that. Okay. So, I learned that history of things that never happened in my lifetime before were important things to understand. Okay. I went back then to Harvard Business School two for two years, and and two years later, as a result of all the printing of money and the oil shock, because of all of that, uh, we had the in 1973 oil shock. And now, because of my background, I'm head hired to be director of commodities at a Wall Street brokerage firm. Okay.
Mhm.
Which and then all sorts of things happened. Um, turbulence and so on so forth. That firm went broke. I went to another firm, and I was uh rowdy. I wasn't your typical good employee, you know, follow everything. And uh, so I got fired, and that was in uh 1975. And then I but uh clients all like me for things and so they would pay me for advice, and I continued to trade the markets. And that's when I formed Bridgewater. Okay.
And what
That was 1975. I just passed along Bridgewater 50 years later.
Yeah.
Okay. So there's a journey there that has failures and successes and learnings. You know, I have a principle. Pain plus reflection equals progress.
Okay? Your best learnings come from the pain. It's a message. Pay attention. Learn how reality works and how to deal with it differently so you have principles for re dealing with reality better. And I learned that process, and from that process, my company Bridgewater became the largest hedge fund in the world. um extremely successful.
Managing how much at
$150 billion dollars. 1500 people. $150 billion.
And that's made you a very wealthy man.
And made me a very wealthy man, which by the way, was not my intention. Okay. I just wanted to play the game and to have meaningful work and meaningful relationships. That was paramount. But it happened to be the game I played. If you're good at the game, you make a lot of money. And now I'm at a stage in my life where I'm I want to pass things along. I need to pass things along, right? So, hence the books, hence our conversation.
And here we are. That's the life arc. But I learned a lot. And so that's the journey.
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