Ray Dalio: A Long and Painful Depression

This guy is one of the few that actually made money for his investors last year, up about 9%. I pretty much agree with his expectations including that later this year the US stock market will be the buy of the century (how about some optimism from me for a change).-Lou

Ray Dalio: A Long and Painful Depression

Here are some of Dalio's key thoughts:

This is no recession - it's a "D-process." (Dalio wants people to understand it's a process, not a phenomenon.) "Now you can ask yourself, OK, when was the last time bank stocks went down so much? When was the last time the balance sheet of the Federal Reserve, or any central bank, exploded like it has? When was the last time interest rates went to zero, essentially, making monetary policy as we know it ineffective? When was the last time we had deflation?" Essentially, when incomes aren't enough to service unmanageable debt, the reversal process begins.

Today is very similar to the '30s. "In the bear market from 1929 to the bottom, stocks declined 89%, with six rallies of returns of more than 20% - and most of them produced renewed optimism. But what happened was that the economy continued to weaken with the debt problem."

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