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- Ray Dalio compares investing to poker and a diversified portfolio to a casino in a new interview.
- The billionaire investor casts doubt on crypto's value as a store of wealth or means of exchange.
- Dalio compares life to playing a video game, and the lessons from solving problems to precious gems.
Ray Dalio compared markets to poker and portfolios to casinos in a recent episode of the Richer, Wiser, Happier podcast.
The billionaire investor and Bridgewater Associates founder questioned cryptocurrencies' value as stores of wealth and mediums of exchange, and predicted superior coins will be launched in the future. He also compared life to a video game, lessons to precious gems, and meditating to ninja training.
Here are Dalio's 7 best quotes, lightly edited for length and clarity:
1. "The markets are a zero-sum game. It's like poker — somebody's going to take money away from somebody else. And it's more difficult to compete in than the Olympics."
2. "If I have 15 good, uncorrelated bets, I will reduce my risk by 80% without reducing my return. And that means I improve my return-to-risk ratio by a factor of five. It is like a casino, they have so many tables and so on. It's not any one of them on any one night." (Dalio was comparing a diversified portfolio to a casino, which might lose money on some games but overall should make money, especially over time.)
3. "All the digital currencies basically do not replicate anything. They move up and down for all. It's not an inflation hedge, it's not an effective storehold of wealth. You almost have nothing to hang your hat on. And it's tiny. Bitcoin right now probably has a a total value of maybe a quarter of what Microsoft stock is and so on. It becomes a preoccupation by people that is disproportionate with its true reality." (Bitcoin's market capitalization is about $480 billion, while Microsoft's market capitalization is around $1.9 trillion.)
4. "Everybody's tracking what you're doing so it is not private. And as a medium of exchange, it is not very effective. It's not like you can go and easily buy stuff with it. So it wouldn't be my favorite storehold of wealth. I own a tiny bit of it just because of the element of "Who knows?" But I do think that in time there will be better digital currencies."
5. "Life is more like a video game than it is like school. You're going out there, you encounter these things, you learn and so on, rather than you sit there and remember what you're taught."
6. "Pain plus reflection equals progress. I learned that every time I have an encounter, that it's like a puzzle. If I can solve the puzzle, I get a gem, and the gem is a new principle or learning that improves my life."
7. "The meditation process gives you an equanimity, a calm centeredness. It's a little bit like in the ninja movies — they're having a fight and everything's going very fast, but then they put it in slow motion because for the ninja protagonist, it just seems in slow motion, that this is coming at you, and they calmly deal with it." (Dalio was underscoring the value of transcendental meditation.)