Original title: "Dialogue with Ray Dalio: From asset allocation to wealth inheritance, 10 financial management rules for Chinese friends"

Compiled by TechFlow

Guest: Ray Dalio, Founder of Bridgewater Associates

Host: Wang Liwei

Podcast source: Xiansheng

Dalio's Chinese podcast debut: 10 financial management rules for Chinese friends amid the stock-bond split

Air Date: August 20, 2025

Summary of key points

Exclusive interview with the founder of Bridgewater Associates: A-shares are booming, while bond funds are struggling. How should we allocate our wealth? To cultivate financial intelligence in children and grandchildren, why give them gold coins instead of toys?

In recent days, the A-share market has been hot, while the bond market has fallen sharply. Some investment consultants have raised this soul-searching question: Should I exchange my bond funds for stock funds?

Ray Dalio has been popping up in our news feeds recently, partly due to the release of his new book, "Why Nations Go Bankrupt." Last weekend, news of Bridgewater liquidating its Chinese-listed stocks sparked renewed interest, prompting a question from a friend yesterday: "Did Bridgewater liquidate all its Chinese stocks?"

In fact, the 13F filings disclosed in the US do not reflect holdings in Hong Kong and A-shares ( Bridgewater and other global funds have significantly reduced their holdings of Chinese concept stocks, with mixed sentiment towards Chinese stocks ). Looking solely at the onshore market, Bridgewater's domestic funds surpassed 40 billion yuan last year. Based on the growth over the past year, the assets under management should now be around 60 billion yuan, representing nearly one-tenth of Bridgewater's total global assets under management.

I have been following Dalio for nearly ten years. Recently, I had a conversation with him on the occasion of the release of his new book. We first talked about his new book's appeal and related controversies from a macro perspective (you can refer to the text version of Caixin Weekly ); then, from our personal perspective, we systematically talked about his investment advice to Chinese friends. This was also his first time to be a guest on a domestic podcast and talk about investment.

As far as I can remember, Dalio rarely discussed investments or related advice publicly or specifically, and even less so regarding the domestic situation. But right now, we Chinese investors face a very unique environment. On the one hand, the stock market is booming, but on the other , achieving stable and decent returns in a low-interest environment is challenging . Even during the recent bull market, some friends have said they haven't made much in three years . Meanwhile, the bond funds that have made so much money for many of them over the past two years have recently inspired a poem: "Ten thousand bond fund holders shed tears."

In the current low-interest rate environment, how can we navigate significant market volatility? When the market is bullish, should we diversify across asset classes and regions? Dalio's bearish outlook on US Treasuries and the US dollar also means he's bearish on US stocks.

If you care about investment and financial management, as well as wealth security, I believe you can gain a lot from this conversation.

Summary of highlights

• When some markets rise, others fall, reflecting varying economic conditions. By achieving a balance among these investments, you can reduce cyclical fluctuations in your portfolio, thereby achieving good returns while reducing risk.
• Cash is a very poor investment in the long run. The challenge in China is that investors tend to hold a lot of money in real estate or cash deposits, which is not a well-diversified portfolio.
• The return on any asset is generally composed of two components: price changes and yield. When an asset's return relies primarily on price increases rather than coupons, it's cause for concern.
• Investors need to rebalance their asset portfolios regularly. If you don't have a clear market view, you can adopt a simple rebalancing strategy: when the price of a certain asset class rises, reduce your holdings and transfer funds to other asset classes to maintain the long-term balance of your portfolio.
• While it is always a good time to diversify, individuals and investors must be very cautious when attempting timing.
• Diversification of investments and risk balancing are important means to increase returns and reduce risks.
• Don't try to predict market trends; market timing is essentially a zero-sum game.
• Rather than looking at each part of your portfolio in isolation, consider how the parts fit together to form a well-diversified portfolio.
• Debt is money and money is debt.
• Gold is the second largest reserve currency, the first is the US dollar, the second is gold, the third is the euro, and the fourth is the Japanese yen.
• Gold is more attractive to me. But despite this, I still hold some Bitcoin as an alternative.
• Stablecoins have significant advantages in transactions and are particularly popular among those who are less concerned about interest rates and are willing to give up interest in exchange for the convenience of transactions. However, stablecoins are not a good wealth storage tool.
• Inflation-indexed bonds are an excellent way to store money. They provide compensation based on the rate of inflation while also offering a real interest rate. They offer low risk, making them an ideal investment option.
• Everyone needs to realize the importance of saving. Savings provide you with a foundation and a sense of security, and this sense of security gives you freedom.
• Ensuring the basic financial security of individuals and families is crucial. To achieve this, it is important to learn investment knowledge and make reasonable asset diversification allocations.
• Only after ensuring a basic standard of living can you consider taking more risks and trying to earn higher returns.
• I give each of my children a gold coin for every birthday and Christmas. I tell them you can't sell it. You can only pass it on to the next generation on the day the monetary system collapses.

Investing at low interest rates

1. Can you achieve stable returns under low interest rates? The logic of the "all-weather" strategy

host:

China is currently experiencing a low-interest rate environment, which typically means it's difficult to achieve ideal investment returns. However, I've noticed that Bridgewater's China All Weather Fund has performed very well over the past few years, achieving returns exceeding 10% almost every year while also experiencing relatively small drawdowns during market fluctuations.

Could you please explain how Bridgewater has achieved such solid performance in such a low-interest rate environment?

Ray Dalio:

I'm glad you asked this question. Bridgewater's performance over the past six years has been remarkably consistent. Our worst year's return was between 10% and 14%. I can't recall the exact figures, but the average return has been around 16%. So how did we achieve this?

First and foremost, it's crucial to achieve a balanced portfolio through proper asset diversification. When some markets rise, others fall, reflecting varying economic conditions. For example, when stocks fall, bonds rise, and gold or inflation-hedge assets rise as currencies depreciate. By achieving a balance among these investments, you can mitigate cyclical fluctuations in your portfolio, thereby achieving good returns while minimizing risk.

My investing motto is to have 15 or fewer uncorrelated return streams. (TechFlow Note: Uncorrelated return streams refer to assets with no direct correlation in their performance, effectively diversifying risk.) For example, in a slowly deflating environment, stocks may underperform, but bonds may see higher returns. Conversely, if there's significant money printing in the economy, inflation-hedge assets like gold typically perform well. By balancing these assets, you can achieve very attractive returns with relatively low risk. That's the game of investing.

Cash is a very poor investment over the long term. The challenge in China is that investors often hold a large amount of funds in real estate or cash deposits, which does not constitute a well-diversified portfolio. Therefore, a strategy that holds a diversified portfolio of assets other than cash is very attractive. This is our core strategy: how to achieve diversification without being constrained by traditional assets. We make tactical adjustments based on current market conditions to achieve this balance.

As I mentioned, my goal now is to pass on these principles. At 76 years old, I plan to launch an investment course that teaches these principles. I want to make this knowledge available to everyone in China, at as little or no cost as possible, to help them understand how to achieve balance. Therefore, I'm eager to convey the specifics of how this process works. Overall, the approach, as I've described it, works.

2. The Bond Investing Dilemma: When Returns Come Primarily from Price Appreciation, Not Coupons, Should You Be "Frightened"?

host:

Currently, the Singapore Institute of Wealth Management is conducting some research, and we hope that these studies can be applied in the Chinese market.

Long-term bonds typically perform well in a low-interest rate environment, leading many Chinese investors to flock to this sector over the past year. However, when signs of economic recovery emerge, long-term bonds can experience significant pullbacks, as has been the case over the past few days. Do you have any good strategies for identifying these signs and adjusting investment strategies accordingly?

Ray Dalio:

I want to clarify that the return on any asset is generally composed of two components: price changes and yield . Sometimes during an investment cycle, the prices of low-yielding assets are driven up, making them very expensive. In this case, investors' returns come primarily from price appreciation, rather than coupon payments. When this happens, while there may appear to be short-term profits, future returns will be significantly lower. This low yield is actually a significant warning sign of potentially greater risk ahead. Therefore, if you find that returns rely primarily on price appreciation rather than coupon payments, be wary.

To address this situation, investors need to regularly rebalance their portfolios. If they lack a clear market view, a simple rebalancing strategy can be employed: when prices of certain asset classes rise, they can reduce their holdings and shift funds to other asset classes to maintain a balanced portfolio over the long term. For example, Bridgewater Associates has achieved robust investment returns through this dynamic balancing strategy. Regularly adjusting asset allocation can effectively mitigate risk while maintaining portfolio stability.

3. Regional Diversification and the Timing Trap: Abandoning Prediction Markets

host:

I think a good investment approach in a low-interest rate environment is to diversify geographically. Bridgewater has been doing this for years. I think Japan has also done this with their NISA program. Now, China recently offered more QDII quotas for Chinese investors.

Some Chinese believe that the US stock market is too expensive, at a record high; European stock markets are also at record highs. Do you think geographic diversification is important? Is now a good time to diversify?

Ray Dalio:

I believe it's always a good time to diversify. Individuals and investors must be extremely cautious when attempting to time the market. They should first assume they can't accurately predict market movements and then ask themselves, if I had no view on the market, what would my portfolio be like? This portfolio should be a balanced and diversified mix, because diversification means that if you don't know how a particular asset will perform, maintaining a balanced portfolio is the best option; 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 of their funds locally, but within a diversified portfolio, adopting an "all-weather" approach. An "all-weather" portfolio includes gold, bonds, and investments spread across about 10 different markets. But know how to strike a balance. You want to balance risk, not just the US dollar or any other currency.

Diversification and risk balancing are crucial for increasing returns and reducing risk. Simply put, if I introduce uncorrelated assets—let's say I have one asset, then a second and a third that have no correlation but similar expected returns—I can reduce my risk by approximately one-third. If I can reach 10 to 15 uncorrelated assets, I can reduce my risk by 60% to 80% while maintaining the same return. This means the return-to-risk ratio can be increased fivefold. In other words, you can achieve the same expected return with only one-fifth the risk. This is the game of investing.

4. The art of buying: besides (fixed amount) fixed investment?

host:

You mentioned not trying to time the market. So, what's the right approach to investing? Is direct allocation and cash flow (DCA) a good approach, for example? Or are there other, more effective methods?

Ray Dalio:

When investing, it's important to understand the risks you're taking, not just the amount you're investing. For example, stocks are roughly twice as volatile as bonds. Therefore, to achieve a balanced portfolio, you need to adjust the weights of different assets based on their volatility to balance the overall risk. If you can properly design this risk balance, you can achieve your desired investment goals. While it may sound complex, investing regularly is a good approach because it avoids the risk of a single investment while allowing you to accumulate assets over time. However, the key lies in understanding how to construct a balanced "neutral portfolio"—one that performs reliably in various market environments.

Once again , don't try to predict market trends, as market timing is inherently a zero-sum game. Every trade involves buyers and sellers, and there are always some smart investors. Just like playing poker, you need to ask yourself: Who am I playing against? Only a very small number of people can truly succeed in the markets. Bridgewater Associates invests hundreds of millions, even billions, of dollars annually in market research, but even so, we've witnessed widespread underperformance over the past six years. Therefore, if you want consistent and positive returns, I recommend adopting an investment approach based on risk balance rather than trying to predict the market.

Once again, I mentioned not trying to time the market because you have to understand that market timing is a zero-sum game. For every buyer, there are sellers, and there are smart ones. It's like going to a poker table. Do you know who you're playing against? Only a tiny fraction of the population can actually do it well. We invest hundreds of millions, maybe even billions, of dollars every year trying to play this game. Even if you look at the history of investment managers over the past six years, the market has generally underperformed. Therefore, if you want to achieve good returns and maintain consistency, I encourage this balanced approach.

host:

Would you recommend a default all-weather portfolio for the Chinese market? I remember you provided a US-based version for Tony Robbins in 2014. What investment ratios would you recommend for Chinese investors?

Ray Dalio:

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

The pros and cons of each major asset class

5. Gold: How to view the allocation of this "non-interest-bearing" asset

host:

Gold is an asset you value very highly. It's performed exceptionally well over the past year, and over 20 or 30 years, it's also held up very well. However, many people prefer to invest in productive assets. How can we reason or convince ourselves to invest in non-productive assets like gold?

Ray Dalio:

Gold is a non-productive asset, just like cash. If you keep your money in cash, it's also non-productive; the two are very similar. Therefore, you need to think of gold as a currency. Its key characteristic is that it's an effective diversification asset; when currencies perform poorly, gold typically performs well.

I think most people view their portfolios and costs through the lens of their currency, which can lead to misperceptions because they don't realize their currency is depreciating. They see other assets going up, like gold or other assets. But if you look at these things in terms of inflation-adjusted dollars or inflation-adjusted currencies, that's the correct perspective. Gold has been money for a long time, and perhaps some digital currencies are considered alternatives. Overall, debt is money, and there's too much of it.

My point is that currencies did decline in value during this period. I want to emphasize that when I mention gold, I'm not suggesting you should hold more than an appropriate diversification percentage. I'm talking about a typical 15% gold holding in an optimized portfolio. But whether it's 10% or 5%, gold provides diversification for the rest of the portfolio. Therefore, it must be viewed as a risk-reducing tool to mitigate against a significant overall devaluation of currencies due to excessive debt and money printing. Therefore, gold should be part of a portfolio. But again, don't look at each component in isolation; consider how they fit together to form a well-diversified portfolio.

6. US Dollar and US Treasuries: Why the outlook is bearish

host:

If we look at the value of currencies, like the US dollar, I think you recently mentioned that the US economy is relatively strong 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 downturn?

Ray Dalio:

I want to emphasize the supply and demand of debt. Debt is money, and money is debt . Debt is a promise to provide you with a certain amount of money. Therefore, debt can be thought of as uncollected money. When you store your funds, you are storing them in debt. This is what I mean by "debt is money, and money is debt."

When debt is excessive and growing too quickly, it creates a debt problem. In such cases, the way to deal with these problems inevitably presents a choice: either you choose hard money, which shifts supply and demand, forcing interest rates to rise, reducing demand and causing a market crash; or you alleviate the debt problem by printing more money. In the current economic environment, this choice is a core issue.

7. Bitcoin and Gold: Dalio's Investment Perspectives

host:

You mentioned digital currencies earlier. I recall you've also held some Bitcoin in recent years. So, what do you think of Bitcoin's investment value? What are its advantages and disadvantages compared to gold?

Ray Dalio:

I've held a small amount of Bitcoin for several years now, and I've maintained that percentage. I see Bitcoin as a diversification tool, a diversification option compared to gold. What constitutes a reliable store of wealth? Bitcoin is undoubtedly very popular, but I believe it has some drawbacks. For example, I don't believe central banks would hold Bitcoin.

Gold is the second-largest reserve currency, after the US dollar, gold second, the euro third, the yen fourth, and so on. Central banks hold gold. It's said that gold is the only asset you can own that isn't a liability to someone else. This means that gold is money in itself; it doesn't rely on someone else's promise to pay you. Gold has intrinsic value and can be held without these risks. This is especially important during challenging political or geopolitical environments, such as when Russia was under sanctions or when Japanese assets were frozen during World War II. Therefore, for these reasons, gold is more attractive to me. However, despite this, I still hold some Bitcoin as an alternative.

8. The truth about stablecoins: Are they suitable for holding?

host:

I noticed you hold Bitcoin because it serves as a store of value. These days, many are interested in stablecoins, which appear to offer similar functionality. What are your thoughts on this?

Ray Dalio:

Stablecoins peg a currency to a stablecoin. In other words, they represent a claim to the pegged currency, but typically do not offer interest. From a financial perspective, they are less attractive than holding an interest-bearing monetary asset. However, stablecoins do offer significant advantages in transactions, especially internationally. They can almost be considered a clearing tool, streamlining cross-border fund flows. Therefore, they are particularly popular with those who are less concerned with interest rates and are willing to forgo interest in exchange for transaction convenience.

In countries with high inflation, where interest rates may be negligible, people may be more inclined to choose stablecoins for transactions. For example, in places like Argentina, where interest-bearing reserve currencies are unavailable, stablecoins may become an alternative. This is how stablecoins operate, but they fail to fulfill their primary function of being a currency with a limited supply and stable correlation to other currencies. Inflation-indexed bonds, by contrast, are a better asset class.

China currently doesn't have inflation-indexed bonds, but they are an excellent way to store funds. They provide compensation based on inflation while also carrying a real interest rate. They offer low risk and are an ideal investment option.

host:

After listening to your analysis, I began to wonder how great the demand for stablecoins will be. Can they really solve the US debt problem?

Ray Dalio:

This question still needs time to be observed. The basic logic of stablecoins is that buyers will buy them, especially in emerging market countries where economic instability is higher and buyers don’t care much about interest rates, and they will buy stablecoins for transaction purposes.

Stablecoin producers are legally required to back their holdings with government bonds and government debt. Therefore, the purchase of stablecoins will lead to the purchase of US government debt, but therein lies the question: where will these funds come from? If they hold US debt, they will transfer it to stablecoins. So what is the new demand? I don't believe stablecoins are a good storehold of wealth.

The underlying logic of family wealth

9. Dalio’s Family Finance Class: Insist on giving gold coins to your children and grandchildren instead of toys?

host:

In a 2019 interview, you mentioned some significant challenges facing individual investors. Could you offer some practical investment advice to the general public? I also heard that you've been educating your grandchildren about investing and managing their personal finances.

Ray Dalio:

I think everyone needs to realize the importance of saving. I personally calculate how many months my lifestyle could sustain without any new income. Then, I double that number to cover unexpected situations, such as a major economic downturn.

Savings provide a foundation and a sense of security, and that sense of security gives you freedom. This is incredibly important. What I do for my children (now adults) and grandchildren is give them a gold coin for each birthday and Christmas. I tell them you can't sell the coin. You can only pass it on to the next generation on the day the monetary system collapses. That way, they can see the value of the coin being passed down through generations. I find this more meaningful than simply giving toys. Of course, I still give toys occasionally, but not too many, because toys quickly lose their appeal. Gold coins, on the other hand, help them understand the process of saving and building wealth.

My core point is that ensuring basic financial security for individuals and families is paramount. To achieve this, it's crucial to learn about investing and implement a well-diversified asset allocation. Only after ensuring a basic standard of living can one consider taking on more risk and attempting to earn higher returns. To me, this high-risk investing is more like a game, and I thoroughly enjoy the process because it's both challenging and exciting.

When saving, it's crucial to consider the impact of inflation on your funds. Simply put, you're saving not just the money itself, but its purchasing power. For example, if the interest rate is 4% and inflation is 3%, your actual return is only 1%. These are my recommendations for the average person, principles that I and my family consistently practice. Only after mastering these fundamentals can you explore higher-risk investment opportunities.

host:

This is why many people now choose to build different investment portfolios, such as a safe investment bucket and a riskier market investment bucket.

Ray Dalio:

However, I would like to remind everyone that the investment market is like a game of poker. You face many intelligent opponents who may have invested hundreds of millions, or even billions, of dollars. Therefore, it is best for beginners to start with small investments and gain experience through practice. This way, you can observe the performance of professional investors and review their strategies and results over the years, rather than being blindly confident. Understanding this and maintaining humility are the keys to successful investing.

10. The Importance of Rebalancing: Overcoming Emotional Investing

host:

Last time, you gave me some very interesting advice: to go against your intuition. I imagine that's difficult for most people. So, how should you adjust your portfolio?

I note that the Pure Alpha fund performed well in the first half of this year, and also outperformed the global hedge fund industry last year. However, it also returned some cash to clients. Furthermore, China's OS Fund took a similar approach earlier this year after achieving a six-month return of over 15%.

Can you share some experiences or lessons learned about rebalancing? How do you think about this?

Ray Dalio:

The core of rebalancing is setting a strategic asset allocation target to achieve a balanced portfolio. When certain markets perform well and asset prices rise, while other markets underperform, rebalancing can help you adjust your portfolio to your established goals. This allows you to profit from selling at highs and buy at lows, maintaining investment discipline. Therefore, rebalancing is crucial in investing.

host:

It does sound like it requires a lot of discipline and mental control.

Ray Dalio:

This is the nature of the game, and like so many things in life, it requires self-control. For decades, I've documented my decision-making rules and organized them into a set of "principles." I've then transformed these principles into a computer program that systematically executes my investment plan. This allows me to avoid emotional interference because I know the expected outcomes of my plan.

You must have a game plan. If you are going to do this, your game plan should be backtested so you can understand how it performs. Then, you will be able to avoid emotional decisions that lead to bad choices.

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