Ray Dalio vs Warren Buffet on Diversification. Who is right?

Discussion in 'Risk Management' started by lovethetrade, Aug 13, 2019.

  1. taowave

    taowave

    Im not a Warren nut hugger,but he made that claim,and he wasnt referring to private equity deals.He was talking small cap..
     
    #21     Aug 13, 2019
  2. MKTrader

    MKTrader

    And I still disagree with him. As I said, this isn't like it was 40-50 years ago. Everyone is pretty much on a level playing field in terms of information, and you have algos that make things both more difficult and much more efficient. You can't just handpick small stocks that "Wall Street doesn't know about yet" any more.
     
    #22     Aug 13, 2019
  3. RedDuke

    RedDuke

    Warren basically went bankrupt during financial crisis. If he was not a league of his own, he would have nothing today (nothing in his terms, still would be a multi millionaire of course). Imagine what happened back then, rules were changed to allow managers estimates the value of their holdings themselves, removing mark to market.

    If he was marked to market, bye bye his billions.
     
    #23     Aug 13, 2019
    MKTrader likes this.
  4. taowave

    taowave

    FWIW,he made the statement in 1999..


     
    #24     Aug 13, 2019
  5. MKTrader

    MKTrader

    LOL! Would've been funny trying to see him make 50% annual returns from small caps over the next 3 years of the Dot-Com crash. Sounds like he was a bit desperate and jealous then...he'd watched a massive tech rally and had not been a part of it...
     
    #25     Aug 13, 2019
  6. taowave

    taowave

    Somehow,Warren Buffet and Desperate/Jealous dont belong in the same sentence....

    And on a related note.Brad Gerstener returned 50% over the last 3 years while trading billions..

    Peter Kolchinsky returned 41%....
     
    Last edited: Aug 13, 2019
    #26     Aug 13, 2019
  7. ironchef

    ironchef

    Great wealth came from concentration, not diversification. I am quite sure Mr. Dalio made concentrated bets/strategies to amass his wealth, similar to Mr. Buffett. Then both diversified.

    It is also survivor bias. We don't hear from losing Buffett's about how they concentrated their bet and lost.

    For us plebs, diversification is the way to go to amass a comfortable retirement fund at low risk.
     
    #27     Aug 16, 2019
    dennis86 and kj5159 like this.
  8. kj5159

    kj5159

    Buffett will do nothing for long periods and then go all in or invest heavily when he sees an opportunity he likes.
     
    #28     Aug 16, 2019
  9. Pekelo

    Pekelo

    Here is an answer to OP: Why can't they be both right? Apparently they are both billionaires, so let's settle that both approach can work well.
     
    #29     Aug 17, 2019
    ironchef and tomorton like this.
  10. tomorton

    tomorton

    Well said P, and even if they are both right, I'm not trading like either of them.
     
    #30     Aug 17, 2019