Ray Dalio: I Predicted The 2008 Crash, I Know What Comes Next

**Steven Bartlett** (0:00)
Are you seeing signs that were in an AI bubble and therefore an economic collapse?

**Ray Dalio** (0:04)
They're classic signs, and that has implications for the economy and it's bad for the society, and everybody loses money. But we also have some other things that are going on that happen around the same time.
And I can go through things if you want.

**Steven Bartlett** (0:19)
Please.

**Ray Dalio** (0:20)
So what I'm saying is clear, because I'm a global macro investor.

**Steven Bartlett** (0:25)
And you were one of the few managers to foresee the great financial crisis.

**Ray Dalio** (0:29)
And so right now, we're very excited about AI. And we should be very excited, because it's going to be revolutionary changes. But it's creeping into almost everything. The way I look at it is I look at the human body, and I see like it's replacing the body and so on. And then it replaces some aspects of the mind, levels of thinking and reasoning. But at the same time, we have another problem that's existed, geopolitics. I mean, China is a larger trading partner with most countries and the United States is.

**Steven Bartlett** (1:01)
And that's a changing of the world order.

**Ray Dalio** (1:03)
That is one of the ingredients, right? And then also, you've got large wealth gaps. The government don't have enough money. And so when you have the downturn, then you have people at each other's throats.

**Steven Bartlett** (1:14)
So a lot of people, they're thinking about how to sort of secure their future. How do they all prepare?

**Ray Dalio** (1:19)
Let me say that history has shown that it's not the most intelligent people that are the most successful. But the key thing to keep in mind is...

**Steven Bartlett** (1:29)
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Ray, for people that might not know who you are, you founded Bridgewater Associates in a two-bedroom apartment in 1975, and you grew it to the world's largest hedge fund. What was the total amount of cumulative net gains that you delivered for those investors over that period?

**Ray Dalio** (2:21)
I think it was something like 53 billion. We produced about a 12% return with no, never any significant losses, and it was uncorrelated with other investments.

**Steven Bartlett** (2:34)
And you were one of the few managers to foresee the great financial crisis, which allowed Bridgewater to post positive returns of 9.5% in 2008, while the S&P 500 plunged by almost 40%.

**Ray Dalio** (2:48)
Yeah.

**Steven Bartlett** (2:50)
Let me start with the thing that I'm most curious about, because I sat here with an investor called Jeremy Grantham, who you might know. He told me that we're staring in the face of an AI bubble and therefore a economic collapse potentially.

**Jeremy Grantham** (3:02)
If you look at the data, it would be compatible with history for the peak to be very soon.

**Ray Dalio** (3:09)
Everything is in line.

**Steven Bartlett** (3:10)
This is, I think, the biggest investment bubble in American history. What's your perspective on that?

**Ray Dalio** (3:17)
He's right. I don't want to jump to conclusions. As much as I want to explain reasonings that lead up to conclusions. I'm at a stage in my life that I want to help people understand cause-effect relationships. What they call a bubble is when the price goes up a lot and companies do very well and then it collapses. And that has implications for the economy, that has implications for the markets. Like 1929 bubble, okay? Or the 2000 bubble, okay? Which is the.com bubble.

**Steven Bartlett** (3:50)
Does it impact real people as well? Cause you said the economy.

**Ray Dalio** (3:53)
Did 1929 bubble bursting impact real people? Yes, the Great Depression followed. Because what happens is there's a new technology that comes along that's revolutionary. the.com bubble, which was 2000 All the stuff that we have, that's wonderful new technology. People get into that technology. They say, that's miraculous. I can bet on that. I'm sure it's going to be successful. And then they bet on it. And sometimes they borrow money to bet on it. And they lose sight that the price of it matters. So it goes up and up and it's everybody's thing, you know? It's like right now we're very excited about AI. And we should be very excited because it's going to be revolutionary changes. And then at the same time, oh, I want to buy some of that.