The correct approach to investing is to build a strategic asset allocation mix (a balanced portfolio with no opinions) and then make tactical bets relative to it, understanding that cash is the worst long-term performer.
Dalio advocates for first creating a well-balanced, diversified strategic portfolio, then making tactical bets relative to that baseline. He warns that cash, while perceived as safe, has the worst long-term performance. ✦ AI generated
Ray Dalio · My First Million · 2026-07-17 · original ↗
starts at this moment · 46:57
I believe that one should create a strategic asset allocation mix meaning what is my best balance portfolio if I have no opinions. What is it's not going to be cash because cash always is the worst performing over a period of time. People think it's the safest. It's the shest to do poorly over the longest period of time. ... So what you want to have the best thing to do is have a well-balanced portfolio of assets because you can lower their risk as by through the diversification.
verbatim transcript · starts at 46:57
46:57portfolio on getting that 15 uncorrelated difference. Uh that's they should have something like that and they should have it overweighted if they're tactically doing it. Tactically means let's say there's a certain time to own it and a certain time not to own it. certain time to own it is um particularly when there's a debt crisis and the government is flooding with money. Uh that's that's an ideal time to
47:22own it. So there's a timing question. So I believe that one should create a strategic asset allocation mix meaning what is my best balance portfolio if I have no opinions. What is it's not going to be cash because cash always is the worst performing over a period of time. People think it's the safest. It's the shest to do poorly over the longest period of time. So >> high certainty, low performance.
47:46>> So what you want to have the best thing to do is have a wellbalanced portfolio of assets because you can lower their risk as by through the diversification because if you have one, it goes like this. But if you have another that does the opposite with it, you can have that. So there's a strategic asset allocation mix and then you make your tactical bets relative to that and and so on. But
48:11here's what I would describe the mechanics. Let's say uh there is such a thing as bubbles. What is a bubble? A bubble is not whether the stock will pay off in the long run because in bubbles even the most successful companies go down 80% or something along those lines. So typically when there's uh borrowing of money or whatever and there's an increase in wealth relative to money.
48:35Okay, wealth and money are two different things. Okay, wealth is um you can make up wealth. If if you have a 50 billion a $50 million offering on a billion dollar valuation, um then all of a sudden you're tech you're called a billionaire and it was $50 million but and and then the world has a billion dollars in wealth. But what happens is as wealth builds up, you