A recession is coming, and it is likely to be worse than most individuals anticipate. That’s the sobering evaluation from Bob Elliott, former Head of Ray Dalio’s Funding Workforce at Bridgewater Associates, when he joins us on the podcast.
Bob explains that a number of financial elements are converging to create difficult circumstances. The mixture of present commerce insurance policies, persistent inflation points, and a Federal Reserve that’s constrained in its response is creating vital financial headwinds.
Tariffs play a central position on this financial outlook. Whereas their inflationary influence stays debatable, their growth-negative results are extra sure. When imported items turn out to be dearer, shoppers have much less cash to spend on different issues. This reduces demand throughout the complete financial system.
Manufacturing and reshoring aren’t easy options both. Bob factors out that constructing new factories takes about 5 years, with payback intervals stretching 30 years. This timeline explains why CEOs hesitate to make such investments, particularly in an surroundings the place insurance policies change unpredictably.
This uncertainty has pushed CEO confidence to its lowest ranges for the reason that 2008 monetary disaster, additional complicating financial prospects.
For particular person traders, Bob presents surprisingly simple recommendation. Regardless of his subtle background managing billions, he follows a easy private funding technique: dollar-cost averaging and diversification. He even limits himself to reviewing his investments simply as soon as yearly — sometimes the Wednesday earlier than Thanksgiving.
This disciplined method prevents overtrading and removes emotion from funding choices — ideas that apply whether or not you’re investing common earnings or dealing with a windfall.
All through our dialog, Bob emphasizes that the US financial system essentially runs on client spending. When insurance policies redirect cash from discretionary spending towards requirements, the results ripple all through the complete system.
Need to hear extra of Bob’s insights on recession likelihood, funding technique, and financial coverage? Hearken to the complete episode now.
Timestamps:
Word: Timestamps will differ on particular person listening gadgets based mostly on dynamic promoting run occasions. The supplied timestamps are approximate and could also be a number of minutes off resulting from altering advert lengths.
(0:00) Introducing Bob Elliott, former head of Ray Dalio’s funding workforce at Bridgewater
(2:56) Bob discusses excessive likelihood of recession resulting from growth-negative insurance policies
(7:00) Tariffs probably progress damaging in short-term regardless of long-term manufacturing targets
(14:20) Transition from international provide chains to parallel and redundant manufacturing programs
(19:50) 4 financial levers: tariffs, tax coverage, financial coverage, and authorities spending
(26:15) Inventory market reacts to short-term expectations regardless of optimistic long-term outlook
(34:15) Bond markets performing nicely as progress slows; potential recession length of 1-1.5 years
(45:40) Lengthy-term productiveness progress creates wealth regardless of short-term volatility
(53:15) Greenback-cost averaging and diversification beneficial for particular person traders
(59:15) Bob discusses founding GiveWell to determine highest-impact charitable giving
(1:11:10) Bob explains Limitless Funds, making hedge fund methods accessible to on a regular basis traders
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