In 1981-82 Dalio publicly predicted a debt-driven economic disaster, was proven wrong, lost money for himself and clients, had to lay off his whole staff, and was forced to borrow $4,000 from his father.

1:07like remember that conversation? So I started Bridgewater in 1975 and in 1981 and 82 interest rates were not the emerging countries had a lot of debt and I calculated that those countries were not going to be able to pay their debts and and they were going to have big debt crisis and that was a very controversial point of view and then Mexico defaulted in August of 1982. So, I was asked to

1:36testify to Congress about what this is all about and and what might happen to the economy. I thought the economy was going to be a disaster. I couldn't have been more wrong. Okay? So, I lost money for me. I lost money for my clients and I had to lay off everybody. I was so broke I had to borrow $4,000 for my dad. So then my choice was am I going to, you

2:00know, put on a suit and tie, go in, commute, and work for somebody in that capacity. And I knew that I wasn't very good at working for people. Now, that was painful. That changed everything in my life. That created the bottom at Bridgewater. And then it just kept going up because of what I learned. I learned two things. First of all, I I learned humility to balance my audacity. Okay, I

2:28didn't have much humility. I'd say I'm right. I'm going to be right and all that. And then I learned how to diversify my bets and substantially reduce my risk without reducing my returns because I didn't want to have reduce the upside. I I knew that I had to reduce the downside. And so um I really learned and taught myself really my mantra. Okay, here's the mantra for

2:55investing. You want to be successful th this will um this is the uh holy grail of investing. Find 15 good uncorrelated return streams. >> How did you come up with 15? >> Well, I just looked at the math of it. Okay. So in other words, what are the marginal benefits of diversification given the different levels of correlation? And I I have that on a chart that keeps reminding me. Okay, if