Valuetainment - October 24, 2022


What Ray Dalio Got WRONG - Why Cash Is King


Episode Stats


Length

4 minutes

Words per minute

207.86945

Word count

1,002

Sentence count

67

Harmful content

Toxicity

1

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

Ray Dalio changed his position on cash recently and now thinks it's a good time to get out of cash. Warren Buffett has $105Billion in cash and is looking to buy 22 companies. Which one should you buy?

Transcript

Transcript generated with Whisper (turbo).
Toxicity classifications generated with s-nlp/roberta_toxicity_classifier .
00:00:00.080 Ray Dalio, the founder of Bridgewater & Associates, who's worth $19 billion, who has built one
00:00:04.840 of the most powerful companies in America, a book he's written that every executive CEO
00:00:08.840 must read, principles, changed his position on cash recently.
00:00:13.820 But I first want to read to you what he said in 2020 about cash.
00:00:17.840 On January 21st, 2020, he said cash is trash, get out of cash, there's still a lot of money
00:00:23.900 in cash.
00:00:24.900 However, just recently, he changed his position and said the following. 0.81
00:00:29.180 He no longer thinks cash is trash.
00:00:32.320 He thinks that the short-term interest rate is now about right, meaning it's a good time
00:00:36.800 to have cash.
00:00:37.800 So now, if you're listening to this saying, wait a minute, how do you change your position
00:00:41.640 from cash being trash to cash not being trash?
00:00:45.040 And Buffett, when he had $128 billion in cash, everybody was saying, well, he's not doing
00:00:48.620 the right thing.
00:00:50.080 And just recently, Q2, Buffett was sitting on $105 billion of cash.
00:00:56.760 How can Dalio say something like this?
00:00:59.180 If you follow his content closely, he says the following in his book.
00:01:03.640 Here's a tweet from him in 2019, August 31st of 2019.
00:01:06.380 He says, if you don't mind being wrong on the way to being right, you'll learn a lot and
00:01:10.900 increase your effectiveness.
00:01:11.900 But if you can't tolerate being wrong, you won't grow, you'll make yourself and everyone
00:01:17.220 around you miserable.
00:01:18.780 Here's one of the principles.
00:01:20.360 Recognize that mistakes are a natural part of the evolutionary process.
00:01:24.820 And here's a man who's worth $19 billion and says cash is no longer trash, right?
00:01:29.580 So for you, if you listen to this, how do you process this?
00:01:32.400 I follow what both of them says.
00:01:34.200 I listen very closely to what Ray Dalio says, one of my favorite interviews I've done in the
00:01:37.400 past, and I follow very closely what Buffett says because Buffett's the GOAT based on what
00:01:41.460 a lot of his peers say.
00:01:42.740 What he's done is unbelievable the last 60 years.
00:01:45.520 He's somebody everybody follows, their competitors, his enemies, his peers, everyone follows.
00:01:49.820 So how do you handle this?
00:01:51.640 Both billionaires, whose advice should you take?
00:01:53.780 Here's the reality of it.
00:01:55.180 For me, I consume a lot of content.
00:01:57.900 I consume a lot of books.
00:01:58.980 I consume a lot of different philosophies.
00:02:01.140 But that doesn't mean everybody is 100% right or everybody is 100% wrong.
00:02:05.680 Now, cash is trash is right when the stock market's growing and exploding at 10, 15,
00:02:11.380 20% and a three-year run rate.
00:02:13.260 If you stay in cash, you're going to miss out on a lot of money.
00:02:15.580 But cash is also king when the economy takes a hit and it keeps going lower.
00:02:19.740 You wish you had some, you know, dry powder right now to be able to go out there and prepare
00:02:25.020 in case of a crisis happens to buy a lot of opportunities.
00:02:28.040 So which one is right?
00:02:29.320 What should you do for yourself with your investments?
00:02:31.460 This is how I process it.
00:02:32.460 There are certain philosophies I follow that I believe are evergreen.
00:02:35.360 Meaning, I prefer to stay paranoid by always having a little bit of cash because opportunities
00:02:41.060 could come up for me to buy a lot of different things.
00:02:44.360 Imagine if your name is Warren Buffett.
00:02:45.820 Say you have $105 billion today.
00:02:48.860 If you have $105 billion in cash and Berkshire Hathaway today, what would you be doing today?
00:02:55.600 Then you're like going window shopping.
00:02:57.020 You're like, oh, that's a nice pen.
00:02:58.080 That's a nice wallet.
00:02:58.860 That's a nice purse.
00:03:00.840 That's a nice jacket.
00:03:01.800 That's a nice suit.
00:03:02.500 But you can't buy anything because you don't have cash.
00:03:05.360 You know what Buffett is doing?
00:03:06.560 Oh, that's a nice company.
00:03:08.460 That should be a $28 billion company, but it's worth $6 billion.
00:03:12.760 Let's buy 12% of it.
00:03:14.620 Oh, that's a nice company.
00:03:16.460 That should be an $82 billion company, but it's worth $13 billion.
00:03:20.580 Buy 25% of it.
00:03:22.040 Oh, I love that company right there.
00:03:24.200 Look at that company.
00:03:25.360 It's sexy.
00:03:26.340 It's attractive.
00:03:27.140 The market is looking at it, and it's worse than what it really needs to be.
00:03:31.320 Let's look at the numbers.
00:03:32.900 Let's go buy 22% of that company as well.
00:03:35.480 That's what happens when you have $105 billion of cash during times like this, and while everybody
00:03:40.380 else said Warren Buffett may be losing his mind.
00:03:42.660 He's getting too old.
00:03:43.780 Warren Buffett ended up being right in this situation because he gets to buy so many different
00:03:48.280 things that's on sale today because he has cash.
00:03:51.380 So, whether it's a Ray Dalio, whether it's a Warren Buffett, whether it's anybody else
00:03:56.380 giving their philosophies, whether it's me sharing with you my content here on Valuetainment,
00:04:00.700 it doesn't matter what it is.
00:04:02.220 Still, go do your own due diligence and come up with certain specific philosophies, but
00:04:07.580 here's the reality of it.
00:04:08.700 Even your own philosophies you come up with, you could still end up being wrong at a certain
00:04:13.540 moment at a certain time because some philosophies are going to get challenged.
00:04:17.280 They may be good in a certain economy.
00:04:18.540 They may be bad in another economy, but the part of doing anything big in your life is
00:04:22.120 you're going to be wrong many times.
00:04:23.960 If you're going to be wrong being worth $19 billion, I'm sure you don't have a problem
00:04:27.020 being wrong.
00:04:27.700 And if you're going to be Warren Buffett being wrong at certain times being worth $100 billion,
00:04:31.500 I'm sure you also are not going to have a problem being wrong.
00:04:33.780 So what's the whole moral of the story here?
00:04:35.700 Get comfortable being wrong because odds are you're going to be many times.
00:04:39.500 Having said that, if you got value from this video, give it a thumbs up, subscribe to the
00:04:42.360 channel.
00:04:42.820 And if you've never watched my interview with Ray Dalio, click here to watch the interview with Ray Dalio.
00:04:48.120 Take care, everybody.
00:04:48.960 Bye-bye.