This thee-volume set includes useful accounts of numerous deleveragings (both inflationary and deflationary), as well as Mr. Dalio''s accounts of both the business cycle and the long-term debt cycle (also available in some of his free works that can be found on-line as pdf...
This thee-volume set includes useful accounts of numerous deleveragings (both inflationary and deflationary), as well as Mr. Dalio''s accounts of both the business cycle and the long-term debt cycle (also available in some of his free works that can be found on-line as pdf files)--accounts that are quite useful for investors and for business persons. Dalio''s grasp of credit cycles, and his research, are of such quality, so insightful, and so reflective of his intellectual independence, that he is well suited to produce classic texts.
This work, however, is ill suited to become a classic, as Dalio has written it partly as a guide for politicians and bureaucrats who wish to bail out various clients (bankers, brokers, fund managers, large asset holders, and a variety of large institutions) at the expense of the public--a task that is familiar, as they have been doing it for decades, for the benefit of persons such as Dalio, the only change being that, until recently, they intervened at the end of each business cycle rather than at the bottom of each downwave within the deleveraging phase of the longer-term debt cycle. Dalio gives these lackeys and clowns precise instructions that include nearly everything but the natural, honest choice to let debtors, companies, and governments go bankrupt so that everyone can start over. He also flatters and panders. Behold the following gem: "While being a successful investment manager is hard, it''s not nearly as hard as being a successful policy maker. We investors only have to understand how the economic machine works and anticipate what will happen next. Policy makers have to do that, plus make everything turn out well . . . . To do that requires a lot of smarts, a willingness to fight, and political savvy--i.e., skills and heroism . . . ." Accordingly, the back cover bears endorsements from four heroes--one who has long served as a great example of a well-intentioned, arrogantly delusional academic (Ben Bernanke), two who appear to be sociopaths as well as toadies (Larry Summers and Tim Geithner), and one who worked for Goldman Sachs before taking a job as U.S. Treasury secretary, also for Goldman Sachs (Hank Paulson).
As revolting as the work is in numerous places, it does contain much excellent information for honest persons who wish to navigate a deleveraging as well as they can, and I do appreciate Mr. Dalio''s taking the time to write books--these three volumes, as well as the free on-line works that he has written. It is rare for a hedge fund manager to write numerous books, and it is especially rare for one to publish works that serve partly as guides for investors. My appreciation is tempered, however, not only by the defects of this particular work (which is intended for bureaucrats and politicians as well as for investors and business persons) but also by the suspicion that he writes partly to lure additional investors toward his funds, perhaps because he is (maybe--I do not know) running a Ponzi scheme, a possibility that one commentator has raised due to the consistency of his returns, the complexity of his organization and of its accounting, and his flurry of texts geared toward investors.
I find this text useful. I think, however, that, if someone wishes to learn from a successful fund manager, his or her time might be better spent listening to Jeffrey Gundlach''s podcasts on the DoubleLine site, or to interviews with Rick Rule or Marc Faber. These other managers are fantastic teachers and observers who, unlike Dalio, merit enthusiastic and unqualified endorsements. For an account of the Weimar inflation by someone superior to Dalio, consider C. Bresciani-Turroni''s "Economics of Inflation."