Dalio
Posted: Tue Mar 14, 2023 3:53 pm
Dalio's response could definitely be cited as partial support for the Permanent Portfolio.
Vinny
Q:If technology is deflationary and wants to bring prices of everything lower forever, how does that work over time with our current debt based money system that requires prices to rise forever. Who are the winners and losers if we don't move to a money system that can allow for deflation?
A:While most people have strong temptations to answer questions even when they don't have good answers so they give guesses, we are more sensible to recognize that what we don't know is greater than what we do know. I know that whatever success I had in life has been more due to my knowing how to deal with what I don't know than anything I know. You and I agree that great technological advances are deflationary, and these are likely to come at the same time as the debt and will likely create a debt problem that will probably be dealt with a lot of printing of money that will be inflationary. You ask the question of which one of these forces will dominate the other. I don't know. So, to me the question is: if we don't know how those forces will eventually net out, what should we do?
In my opinion we should be well-diversified. Keep in mind what I call the holy grail of investing, which is to have 10 to 15 good, uncoordinated return streams. Simply said: hold a well-balanced portfolio that holds both assets that do well when there are great productivity gains (equities, especially those that produce benefit from new technologies that produce leaps in productivity) and assets that do well when there is the devaluation of money.
Vinny
Q:If technology is deflationary and wants to bring prices of everything lower forever, how does that work over time with our current debt based money system that requires prices to rise forever. Who are the winners and losers if we don't move to a money system that can allow for deflation?
A:While most people have strong temptations to answer questions even when they don't have good answers so they give guesses, we are more sensible to recognize that what we don't know is greater than what we do know. I know that whatever success I had in life has been more due to my knowing how to deal with what I don't know than anything I know. You and I agree that great technological advances are deflationary, and these are likely to come at the same time as the debt and will likely create a debt problem that will probably be dealt with a lot of printing of money that will be inflationary. You ask the question of which one of these forces will dominate the other. I don't know. So, to me the question is: if we don't know how those forces will eventually net out, what should we do?
In my opinion we should be well-diversified. Keep in mind what I call the holy grail of investing, which is to have 10 to 15 good, uncoordinated return streams. Simply said: hold a well-balanced portfolio that holds both assets that do well when there are great productivity gains (equities, especially those that produce benefit from new technologies that produce leaps in productivity) and assets that do well when there is the devaluation of money.