In this our first official new BCM Blog post, you better pour some coffee (or an adult beverage depending on the time of day) and get comfortable! This simple (but not simplistic) 30-minute video by Ray Dalio, Founder of Bridgewater Associates, shows the basic driving forces behind the economy, and explains why economic cycles occur by breaking down concepts such as credit, interest rates, leveraging and deleveraging. Watch the video below or here. We think you will find it compelling.
If you had bought an S&P 500 index fund thirty years ago, and somehow had not opened your statement until recently – you would have made two discoveries. 1) Each dollar you would have invested would now be worth more than $23. And, 2) you would rank as one of the greatest investors of all time, having outperformed virtually every single mutual fund and money manager in existence.
As we all know, one of the outcomes of the Great Recession of 2008 was a collapse in interest rates. With short-term rates still hovering just above 0%, and longer-term, 10-year rates holding at just above 2.5%, there can be no argument that rates remain amazingly (and for some, uncomfortably) low.