Getty Images To Help Put Recent Economic & Market Moves in Perspective Published on December 26, 2018 Ray DalioFollow Co-Chief Investment Officer & Co-Chairman of Bridgewater Associates, L.P. A number of people have asked me to explain what’s now going on in the markets and economy. As you probably know by now, I believe that everything (i.e., all reality) works like a machine with cause-effect relationships that drive what happens, and that to be effective it’s essential to have a good mental model of how those machines/realities work and to have good principles for dealing with them well. So, I believe that economies and markets work like machines with basic cause-effect relationships (including human nature) interacting to cause their movements. Since economies are the aggregates of the markets that make them up, to understand how economies work one has to understand how markets work. My mental model of how markets and economies work is described in brief below and is conveyed more simply in my 30-minute animated video “How the Economic Machine Works” (located here). In order to help you understand what’s happening now, and more importantly to give you the template I use so that you can use it to figure out what’s happening without me, I’d like you to see it within the context of how the market and economic machines work because if you understand that, you can understand these things on your own. https://www.linkedin.com/pulse/help...rket-moves-perspective-ray-dalio/?published=t
Let me suggest... the market and the economy are not as closely tied as everybody likes to think. That is, the market leads the economy by such a long lead time, focusing on the "economy"... while trying to "catch a turn" is futile. In the "middle" of a big market move the economy may seem to correlate, but that's not much use to traders. IOW... If you're looking to the "economy" for a clue as to when to go "risk-on" or "risk-off", you're going to be waaaayyyyy late.
%% Good points; but if there is a 200 day......... trend of tariffs.Smoot Hawley can repeat-not a prediction.Like Blair Hull noted ;ignore the news + get the facts.