**How To Invest: David M. Rubenstein in Conversation with Ray Dalio — Transcript & Summary | SozAI**
Source: https://sozai.app/transcript/invest-david-rubenstein-ray-dalio/

David Rubenstein and Ray Dalio discuss investing principles, leadership, and the American political landscape in a candid conversation.

## Key Takeaways

- Principles serve as essential decision-making frameworks in investing, leadership, and life.
- Bipartisan cooperation is increasingly difficult due to political fundraising and party polarization.
- Investing successfully requires going against consensus and being right in those bets.
- American democracy, while imperfect and challenged, remains resilient compared to historical crises.
- Leadership and integrity are critical for long-term success in both public and private sectors.

## What the video covers

- David Rubenstein and Ray Dalio engage in a deep conversation about principles of investing, leadership, and life.
- They reflect on their personal backgrounds and how those shaped their careers and philosophies.
- The discussion covers Rubenstein's career trajectory from law to government to private equity.
- They explore the challenges of bipartisan politics and fundraising in modern American government.
- Rubenstein shares insights on the importance of principles as decision-making recipes in life and investing.
- The conversation touches on the evolving nature of media, journalism, and political fundraising.
- They discuss the resilience of American democracy despite current tensions and challenges.
- Dalio recommends his book on principles as a guide for thoughtful decision-making.
- The dialogue includes reflections on the importance of betting against consensus in investing.
- They emphasize the value of leadership and integrity in both business and public service.

## Chapters

1. 00:00 Introduction and Interview Background
2. 03:52 Interviewing Style and Role Switching
3. 10:02 Principles as Decision-Making Frameworks
4. 16:52 Personal Backgrounds and Early Careers
5. 26:31 Political Career and Challenges in Government
6. 34:51 Fundraising, Bipartisanship, and Political Polarization
7. 47:17 Media, Journalism, and Democracy
8. 53:16 Investing Insights and Principles

Answers

## Questions about this video

What are the main principles of investing discussed in the video?

The video highlights that investing principles act as decision-making recipes. Successful investing often requires betting against the consensus and having the conviction to be right.

How do David Rubenstein and Ray Dalio view the current state of American democracy?

They acknowledge the challenges and tensions in modern American democracy but emphasize its resilience, noting it is in better shape than during historical crises like the Civil War.

What challenges do politicians face today according to the conversation?

Politicians face difficulties with bipartisan cooperation due to the need for fundraising, party polarization, and the pressure to appeal to their political base rather than work across the aisle.

## Full Transcript — Download SRT & Markdown

00:01

Speaker A

Foreign, wow, what a treat it is to interview David Rubinstein, right?

00:20

Speaker A

TV but I've done some interviewing over the years and some interviewing over the years yeah I'd say uh I interviewed here on this stage I interviewed you yes you did and you did it very well which makes it more

00:33

Speaker A

David, about how many interviews did you do?

00:51

Speaker A

dream in the American reality and third um on the investing um I counted that there were 31 interviews on how to lead 27 interviews on the Great American experiment and 23 interviews so that equaled 81 plus 200 or so is 281

01:15

Speaker A

I've done about 200 of them so far on the various shows, and then I've done some that are not on TV, but I've done some interviewing over the years.

01:32

Speaker A

here's what I think about something go through a long explanation and then give the person one sentence one second to say what they think so I try not to do that well we um we get to switch roles

01:43

Speaker A

Some interviewing over the years, yeah. I'd say I interviewed here on this stage.

02:03

Speaker A

three books you wrote three books what differentiates us is that I spend all this time passing along the principles that I thought were worthwhile and you picked the principles and we're going to switch roles here and we're going to

02:17

Speaker A

I interviewed you.

02:30

Speaker A

on and your company and is that what you mean are those different things principles of investing yep those principles there's principles what I mean by principles is uh when you're in a position and you have to make a decision it's kind of the recipe

02:46

Speaker A

Yes, you did.

03:01

Speaker A

we are and we need to pass those along to others at our stage of our life I believe and so that's why I want to get your principles well principles of investing principles of life no there's principles for everything there's

03:14

Speaker A

And you did it very well, which makes it more challenging for me, so I'll do my best.

03:32

Speaker A

little bit of of your background um by the way your background parallels my background in uncanny ways so I'm going to learn a little bit more about myself by interviewing okay so you were born on um August 11 1949 I was born on August 8

03:52

Speaker A

But you'll give me pointers if I need them?

04:12

Speaker A

um and I as I understand it uh he really never earned more than seven thousand dollars a year basically and your mother was a homemaker in my case my dad was a jazz musician and it wasn't probably the same amount

04:26

Speaker A

Go as we're going along.

04:48

Speaker A

only because it's a great school but also because you could get the best scholarship deal there and uh you then graduated from duke you went to a wonderful Law Firm and then you went into government you went to as the chief lawyer of the

05:08

Speaker A

What I found in your book, you wrote three books: one on leadership, the second on the American dream and the American reality, and the third on investing.

05:29

Speaker A

lost the election in 1980 to Ronald Reagan so you know people come up to you and tell you how great you are when you have power and then the day after you lose the election nobody wants to return

05:38

Speaker A

I counted that there were 31 interviews on how to lead, 27 interviews on the Great American experiment, and 23 interviews, so that equaled 81 plus 200 or so, which is 281 interviews.

05:47

Speaker A

wasn't really a good lawyer I didn't have the skill set so and my clients kept telling me that so I um I had to do something different and I was inspired by Bill Simon who was the Secretary of Treasury in the Ford

05:59

Speaker A

And never once do we know what you think, right?

06:11

Speaker A

I read about that I said that's better than practicing law I don't know what a leveraged buyout is but I'm going to learn and I'll figure out if I could build a leveraged buyout firm in Washington not in New York

06:23

Speaker A

Well, a good interviewer is supposed to let the interviewee be the star of the show, right?

06:39

Speaker A

I couldn't be confirmed for anything today because um today if you have made a fair amount of money it's impossible to get confirmed generally and then also if you have a reasonable reputation it could easily be destroyed by one Senator

06:54

Speaker A

So I don't want to be an interviewer who basically says, here's what I think about something, goes through a long explanation, and then gives the person one sentence, one second to say what they think.

07:08

Speaker A

if I'm trying to be confirmed for something not that anybody's offered me any jobs oh what do you think about that do you it's very difficult now the world has changed a lot since uh we heard John Kennedy speak well what do you think

07:23

Speaker A

So I try not to do that.

07:34

Speaker A

they say sadly or not this is the most interesting thing they're doing in Congress is going to this dinner because they can be themselves they don't have to uh you know raise money they don't have to be seen by the press and so

07:45

Speaker A

Well, we get to switch roles here, okay?

07:55

Speaker A

legislation through now if you're bipartisan you're almost written out of the party and it's so it's a different world than it was when I was doing it many years ago you know as as you know in in my study of looking at the

08:08

Speaker A

You know, like your books are very, very interesting.

08:26

Speaker A

it to some extent it's not like people go into office and run for office and say I want to do something bad as an office holder they all have the best of intentions I would say or most of them

08:35

Speaker A

Your books, the greatest minds and the greatest leaders, greatest investors are part of it.

08:46

Speaker A

live in their own offices because they can't afford another apartment in Washington DC so they don't make much money but to raise money which is what they need to stay in office you have to if you raise money you're more likely to

08:57

Speaker A

But you're a great leader and a great investor, and what's differentiated us?

09:08

Speaker A

when you raise money you don't raise it on the basis that this is by I'm going to do bipartisan things I'm going to work with the party of the opposite party you raise it by being appealing to the foreign after the far right and so

09:18

Speaker A

I wrote three books, you wrote three books.

09:28

Speaker A

much more and also you can now give so much more in the old days you could give a thousand dollars you're done now you can give unlimited amounts of money so people who have large sums of money to

09:38

Speaker A

What differentiates us is that I spend all this time passing along the principles that I thought were worthwhile, and you picked the principles.

09:50

Speaker A

system I mean obviously it's it's not perfect and as Winston Churchill famously said democracy is the worst form of government except every other one uh he didn't know about fundraising though he might have uh you know not been as happy in other countries saying

10:02

Speaker A

We're going to switch roles here, and we're going to need to get your principles out of you and know what David Rubinstein thinks.

10:12

Speaker A

it he said no it's four days it says four days it was only four days and so you know if you had shorter campaigns and money wasn't a factor we might have a better democracy because we have such

10:24

Speaker A

Well, they're different principles.

10:40

Speaker A

stuff we can get to the other things I'm always worried about something but you know the Democracy that our founding fathers created was not something they honestly thought would last Thomas Jefferson didn't think it would last more than 20 years so the fact that

10:52

Speaker A

You've written a book on principles, which is the principles of life, and these are the principles you wrote about, the ones you operate your life on and your company.

11:04

Speaker A

we're not as bad shape as we were during the Civil War during the Civil War we lost roughly three percent of our population today that would be roughly 10 million people or so so and lost by by Battlefield deaths or disease or

11:16

Speaker A

Is that what you mean? Are those different things?

11:27

Speaker A

bad as it was but the tensions are are not good yeah not as good as better than the Civil War oh better than the Civil War that's for sure um now on this choice that you made of being uh in the career that you went

11:44

Speaker A

Principles of investing?

12:00

Speaker A

think they deserve a lot of credit for it because the compensation is low that you're not very thankful very much it's long hours and so forth but you do get a sense you're doing something to make the country somewhat better and in certain

12:11

Speaker A

Yep, those principles.

12:24

Speaker A

thing to be an investor who's very good because you're in a good investor you make a fair amount of money but you give away that money most of the investors are ultimately giving away the bulk of the money you are and I we both early

12:34

Speaker A

There's principles.

12:44

Speaker A

terrible thing to be an investor it's not like you're a nefarious person on the other hand I I recognize a day to day when I wake up I may not have the same influence that I would have if I

12:53

Speaker A

What I mean by principles is when you're in a position and you have to make a decision, it's kind of the recipe or your decision-making criteria when you're in that position to make it.

13:10

Speaker A

that happy and actually the wealthiest people I know are often the most tortured Souls Mike how are you doing I want to look happy I'm happy but I'm you know unusual maybe in some sense I'm very happy but I've reached an age where

13:24

Speaker A

And because you have a great track record and I have somewhat of a track record, we're in a position where we must have made enough good decisions to be where we are, and we need to pass those along to others at our stage of our life, I believe.

13:35

Speaker A

post let's say 55 or 60 they tend to be happier than when they're 35 or 40. and so I'm happy I just you know happiness is hard to measure there's no happiness index but I'm doing only things I want

13:48

Speaker A

And so that's why I want to get your principles.

14:00

Speaker A

I've done some philanthropic things that are good some I could do better you've done a great deal on the philanthropy too but so I'm pretty happy and you know I I I I you know I wouldn't don't want

14:10

Speaker A

Well, principles of investing, principles of life.

14:25

Speaker A

just want to read some of the some of the things that um you do and David Rubenstein is chairman of the board of the John F Kennedy Center for the Performing Arts the Council of Foreign Relations the National Gallery of Art

14:44

Speaker A

No, there's principles for everything.

15:08

Speaker A

world economic forum and he's a director of the Lincoln Center for the performance arts the American Academy of Arts and Science he's also a member of the American philosophical Society Business Council Harvard Global advisory I I take up most of the time if I kept

15:28

Speaker A

There's principles for medicine, okay, marriages.

15:47

Speaker A

[Music] um that when you think about your children or the children of people who have a lot um that that could be a curse to have a lot that that's a challenge just a second okay go ahead um you'll you'll clarify

16:08

Speaker A

There's principles for everything, right?

16:32

Speaker A

background and these tremendous accomplishments and the subliminal is our real motivator what do you think subliminally motivated you to go from that one background to all that you've accomplished and done my Jewish mother maybe um now I would say when you don't have

16:52

Speaker A

So principles are for everything, and I want to get, I want to start with your principles for life, so which I'll get to.

17:03

Speaker A

children is the most difficult thing in the world and as anybody who's raised children though it's always worried whether happy healthy and safe and so forth but if you raise children you've got a lot of money and you are the same

17:13

Speaker A

Okay, so bear with me.

17:22

Speaker A

children when you have a lot of money and you've walked we've all seen the children of very wealthy people who didn't accomplish that much the people that generally are the great greatest accomplishers and the people are the greatest leaders tend to come from Blue

17:34

Speaker A

All right, go ahead.

17:47

Speaker A

there's some people who I'm sure from billionaire families that are hard working and done a lot but it's a general rule of thumb it's it's you're more motivated to prove something and accomplish something if you don't have anything to begin with and so in my case

17:59

Speaker A

Okay, so just a little bit of your background.

18:13

Speaker A

which I think is uh and when we um and when we I look at the study the dynasties in history and and so on you find that just as you say that the most successful people you can't tell where

18:27

Speaker A

By the way, your background parallels my background in uncanny ways, so I'm going to learn a little bit more about myself by interviewing you.

18:45

Speaker A

when we grew up I could go to a public high school that was good I was lucky enough to have parents who took care of me and so on and that's basically all that I needed all that you needed

18:56

Speaker A

Okay, so you were born on August 11, 1949.

19:12

Speaker A

25 present their failing classes disconnected means they don't know where they are because they've dropped out of school this is not equal opportunity never totally equal but it's different do you disagree with that do you think that we could draw from the population

19:28

Speaker A

I was born on August 8, 1949, so you were born three days later than I am.

19:41

Speaker A

believe in the American dream who typically come to this country we have 50 million immigrants in this country more than any other country in the world no other country's even close they're attracting that many immigrants the immigrants tend to believe in the

19:51

Speaker A

And your background was somewhat similar to mine in that your mother, you were born in modest means.

20:02

Speaker A

particularly in often minorities they don't believe in it because they don't see that they're going to rise up and we have a problem in this country for take Literacy for example about a third about 30 percent of Americans are functionally

20:13

Speaker A

Your dad was a postman, right?

20:26

Speaker A

resources we have a lot of problems we're not going to solve that problem uh anytime soon if I knew what the solution was I'd be in Iowa New Hampshire and so forth but there's no there's no easy answer to solving that income disparity

20:38

Speaker A

And I, as I understand it, he really never earned more than seven thousand dollars a year, basically, and your mother was a homemaker.

21:00

Speaker A

like it when I have a famous person interviewing me because um usually it's a role reversal so that I could attract you or the why I could attract you that makes me feel good but I what I like is

21:11

Speaker A

In my case, my dad was a jazz musician, and it wasn't probably the same amount of money.

21:26

Speaker A

didn't do as much to prevent the Holocaust as it could I was a Ken Burns documentary that was well done I thought and the Jews came to this country but in my parents and I mean my great-grandparents came here

21:38

Speaker A

My mom was a homemaker.

21:51

Speaker A

Prejudice than it was but I I want to give back to the country so a lot of my gifts as you note have I have been to try to make the country somewhat better that I realize no one philanthropist is

22:02

Speaker A

And then when you were 12, when I was 12, John Kennedy inspired you, right?

22:28

Speaker A

Library of Congress national museum of African American history and culture you've bought copies and shared copies of the Magna Carta the Declaration of Independence and so on so you in my opinion uh personify that American dream and and I I share

22:53

Speaker A

And he inspired me, and you wanted to go into government.

23:16

Speaker A

probably wouldn't feel so good about yourself you probably feel better about accomplishing something and actually seeing it in my philanthropy I have four principles one start something that otherwise wouldn't get started to finish something otherwise wouldn't get finished three make sure it's something

23:32

Speaker A

And so you went to Duke, not only because it's a great school, but also because you could get the best scholarship deal there.

23:43

Speaker A

lifetime but the things I can I can deal with I'm trying to deal with but in the end you know people fault me all the time I was faulted recently in the New York Post saying that I had given money

23:53

Speaker A

And you then graduated from Duke, you went to a wonderful law firm, and then you went into government.

24:09

Speaker A

don't emphasize that they do mention they were slave owners and they were slave owners and George Washington was a slave owner and many of our first presidents were slave owners I think in history you should learn the good and

24:17

Speaker A

You went as the chief lawyer of the Senate Judiciary Committee.

24:30

Speaker A

about history is teaching people the mistakes we made in the past hopefully so we can learn how to do things better so but it seems that as you say accomplishing is a very high priority for you just a second I'd like to

24:43

Speaker A

And then you worked there for, in the Carter Administration, for, I think, the four years of the Carter Administration.

24:59

Speaker A

so much accomplishment um what do you think about life choices like that well the country allows people to make their choices and People based on their upbringing make their choices that makes them presumably happy if people are happy going to you know

25:14

Speaker A

And then you turned to the dark side.

25:23

Speaker A

do the same thing so tell me Orioles or Nationals well I grew up in Baltimore and I do think the Orioles uh you know be you know it's a good team and I live in Washington's a national good team and

25:37

Speaker A

Well, it wasn't, I had no choice.

25:52

Speaker A

so I'm trying to be careful not get myself in trouble um while we're on the subject I understand that you ran into a little bit of difficulty when you were trying to impregnate a [Music] a panda you were trying to impregnate a pranda

26:18

Speaker A

We lost the election in 1980 to Ronald Reagan.

26:34

Speaker A

have the most unique reproduction system of any mammal and because also they where they historically live I've been more and more development has occurred in China so there are very few places they can live anymore but they the

26:46

Speaker A

So, you know, people come up to you and tell you how great you are when you have power, and then the day after you lose the election, nobody wants to return your phone calls.

26:57

Speaker A

happens is in the wild is you know when they get together in that four hour period of time they haven't they're inexperienced you only do it one day a year for four hours you don't know what the where the parts are supposed to go

27:06

Speaker A

So it's a different situation.

27:19

Speaker A

the interest to do that well it wasn't because of my interest in uh reproduction necessarily I I was the chairman of the Smithsonian the Smithsonian owns the National Zoo and the National Zoo is one of 26 zoos in

27:32

Speaker A

So I had to—

27:42

Speaker A

this the organization that would have been paying it for 10 years decide not to do anymore so they they were afraid they were going to lose the pandas and so I said well I'll put up the money for

27:50

Speaker A

You had to go to the dark side?

28:02

Speaker A

the mail absolutely not that'd make you cringe yeah I would um failure uh a lot of people look at you or I and think wow what a tremendous amount of success these are smart guys they've been become tremendously successful and

28:28

Speaker A

Well, I had to go back and practice law, the only thing I knew.

28:47

Speaker A

leaders and the great investors have failed because you learn a lot from failure and I have failed many times we've made some Investments That backfire didn't work out I missed out in some great Investments I should have done like Facebook or Amazon Netscape I

29:02

Speaker A

But I didn't know how to do practicing.

29:13

Speaker A

person I knew many years ago who had never seemed to fail he had been I went to Harvard summa laude Rhodes scholar Yale law school Supreme Court Clerk editor-in-chief of the L Law Journal PhD as well in economics he

29:28

Speaker A

I wasn't really a good lawyer.

29:39

Speaker A

a real hurdle and he didn't have the temperament to deal with failure he failed and he and didn't do a good job and so he kind of lost his job I you have to learn how to fail in order to

29:51

Speaker A

I didn't have the skill set, so my clients kept telling me that.

30:04

Speaker A

your money at one point right earlier and he's got to go to your father and borrow 14 000 I was so broke that I had to borrow four thousand dollars from my dad for family expenses right so you failed and you you

30:17

Speaker A

So I had to do something different, and I was inspired by Bill Simon, who was the Secretary of Treasury in the Ford Administration, who we had replaced.

30:27

Speaker A

so principles of life I'd like to get your some of your principles I think you said that principle so well about failure can you say it again what what is the principle for failure the principle for for achieving Success

30:42

Speaker A

And he had done a famous deal.

30:53

Speaker A

have to have some initiative and try to do something uh secondly you have to be prepared Jim Baker famously said that his father taught on the aphorism which is a prior preparation prevents poor performance prior preparation prevents poor performance here's a principle so

31:09

Speaker A

You're probably familiar with Gibson Greeting Cards, where he put in roughly a million of his own money and made roughly 80 million dollars in roughly 18 months.

31:25

Speaker A

humility is a virtue you can't see Abraham Lincoln running around saying you know I just won the Civil War you know give me some credit for that I mean he never would say that you know great leaders are people you admire because

31:35

Speaker A

And I read about that.

31:47

Speaker A

respecting other people's feelings and trying to not hurt anybody or embarrass anybody in in a way that is harmful to them is you know is a useful principle of life how have you carried that in your performance I know when I think about

32:04

Speaker A

I said, that's better than practicing law.

32:18

Speaker A

markets has taught me some things about life and life is applied to the markets what are your when you take that humility and so on how what how do you carry that to an investment principle or two you mean failure or the risk of

32:33

Speaker A

I don't know what a leveraged buyout is, but I'm going to learn, and I'll figure out if I could build a leveraged buyout firm in Washington, not in New York.

32:47

Speaker A

out that he's compounded his investment success roughly at 20 a year for for 60 years which is pretty good and so he's made mistakes but he uses what other people use now is your gut your intuition which is basically the set of

33:01

Speaker A

So now you never went back to government, but you've always been very close around government.

33:13

Speaker A

years of doing this you can make a judgment based on those instincts um can you take a tell us a little bit about a failure I'm like what was was 2008 a difficult year it was uh it was a

33:27

Speaker A

And I've never been invited back because if you get inflation to 18, they don't invite you back.

33:42

Speaker A

money so if you lose a billion dollars that's not good and we have a lot of investors and my partners and I were the biggest investors in it we lost hundreds of millions of dollars of our own money

33:50

Speaker A

Would you go back?

34:03

Speaker A

period of time but people don't want to hear about your successes when they've lost some of their money do you worry about being long only and you could see a bad set of circumstances like that again do you

34:21

Speaker A

I couldn't be confirmed for anything today because today, if you have made a fair amount of money, it's impossible to get confirmed generally.

34:36

Speaker A

Freddie Mac Securities which as to which you could borrow 98 cents on a dollar in a repo financing so when you can borrow 98 cents a dollar you can lever up quite nicely and enhance the returns when they

34:47

Speaker A

And then also, if you have a reasonable reputation, it could easily be destroyed by one senator putting a hold on you, and people think you've done something nefarious, and you could get blocked.

34:56

Speaker A

in that facility to put it up so we lost the Lawson as other people did during that time so what we learned is you know in the lesson of investing is don't put too many eggs in one basket and don't do

35:06

Speaker A

So it's very difficult to get confirmed today, and I just don't know.

35:21

Speaker A

because I go lower in short 2008 was turned out to be a great year for us but but I mean you you look at the stories of what happened during that period of time there's a new excellent book that's

35:33

Speaker A

I want to subject my family to all the criticism that would come of me if I'm trying to be confirmed for something, not that anybody's offered me any jobs.

35:42

Speaker A

it will do you think something like that could happen again well it's always a mistake to say that nothing can happen again that was bad so there will be crises in the future there's always been panics crises Financial calamities that always happens

35:54

Speaker A

Oh, what do you think about that?

36:06

Speaker A

anticipate there could always be problems but right now I think people have learned about the mistakes of 2007-2008 but increasingly in my firm I see people who weren't in the investment World in 2007 2008 they're young I was

36:19

Speaker A

Do you think it's very difficult now?

36:32

Speaker A

Kennedy and I wanted to have that there because the Kennedy Center is a living Memorial to President Kennedy but two-thirds of Americans were not alive when President Kenny was alive including my children and so they don't really know about President Kennedy so you're

36:45

Speaker A

The world has changed a lot since we heard John Kennedy speak.

36:57

Speaker A

it when you live through it then you really remember it and that's also one of the reasons that when things happen in history before our times they are risks that might reoccur I would think there's some similarities that exist but I don't want to get into

37:13

Speaker A

Well, what do you think about this to be the case?

37:30

Speaker A

of making money in the markets right um are there any common elements sure the the investors now this was a book of interviewing the greatest investors in our country and it's not designed to make anybody reads it a great investor nobody

37:46

Speaker A

When I worked in the Senate, there was bipartisanship.

37:57

Speaker A

designed for students who might be interested in learning about the investment world and what it takes to be really good average investors who say well maybe I'll pick some stocks myself or bonds myself and some tips for them

38:09

Speaker A

Today, I host dinner for members of Congress once a month, and I ask them to sit with people from the other party, and they love it.

38:20

Speaker A

have certain things in common these are what they have in common number one they tend to be from blue collar or middle class families as I mentioned second they tend to have pretty good skills in academic life they tend to have pretty

38:31

Speaker A

And they say, sadly or not, this is the most interesting thing they're doing in Congress, is going to this dinner because they can be themselves.

38:41

Speaker A

like to make the final decision they don't like to delegate they they say all right give me all the facts and I want to make the decision myself I'm not going to go home and you you make the

38:49

Speaker A

They don't have to raise money.

39:01

Speaker A

expert in let's say quantum physics and they invest in that area they don't want to read only about that they want to bid everything because their thinking is at some point some piece of information will come into my brain and I can use it

39:11

Speaker A

They don't have to be seen by the press and so forth.

39:25

Speaker A

I'm not probably that good at that I can remember mistakes for 30 or 40 years and I can't get over it but a lot of great investors they're on the next thing they get out of the position they go the next

39:34

Speaker A

In the days when I worked on Capitol Hill briefly and when I worked in the White House, bipartisanship was something that our legislator was thought to be a good one if he could get bipartisan or she could get bipartisan legislation through.

39:45

Speaker A

to buy X Y or Z they want to buy a b and c or something different the conventional wisdom is what they generally go against and they're willing to have they have the courage to stand up to the conventional wisdom the

39:54

Speaker A

Now, if you're bipartisan, you're almost written out of the party, and it's a different world than it was when I was doing it many years ago.

40:02

Speaker A

something different people are going to say well you know what you're doing and you might if you make a mistake people want to yell at you because you did something wrong that that takes a lot of courage and that's what a lot of these

40:10

Speaker A

You know, as you know, in my study of looking at the polarity, there's populism of the left, populism of the right, and what you're referring to.

40:30

Speaker A

involved in the bankruptcy of New York City as a young lawyer and it was a young investment banker who came in and worked on us Felix Rodin and he had a really brilliant mind I could see it right away what a brilliant mind he had

40:41

Speaker A

What do you think about that?

40:52

Speaker A

set you don't need an MBA typically they have college degrees and they've had some training but I can tell that two or three or four percent of people have such intellectual curiosity such drive and such a willingness to kind of do

41:05

Speaker A

Do you think it weakens our democracy?

41:14

Speaker A

don't have mbas they're really talented you you do have an MBA but I think you wanted an MBA kind of you you didn't do you love college but you wanted I think have the impermeister of Harvard Business School I think I've got it

41:27

Speaker A

Do you think—

41:38

Speaker A

lot of people in here didn't get that kind of uh background they didn't go to business school at all I'm going to uh now turn to some questions from the audience um um what's your process for study is it

41:57

Speaker A

Well, it doesn't help, and let me explain the reason for it.

42:13

Speaker A

a lot of time two I don't drink alcohol that saves a lot of time too but also I interview a lot of authors and when I interview authors I feel it's a courtesy to read the book so I I'm Force feeding

42:26

Speaker A

To some extent, it's not like people go into office and run for office and say, I want to do something bad as an officeholder.

42:36

Speaker A

couldn't get through it but I'm reading biographies business books history books I know the subject matter reasonably well so I can read it pretty quickly and then what I do is when I'm preparing an interview I then write down the outline

42:45

Speaker A

They all have the best of intentions, I would say, or most of them have the best of intentions.

42:54

Speaker A

this point in my life everything I want to do I'm doing I'm not I'm not punishing Myself by doing things I hate to do it strikes me that when I think of the enormity of what you do to just read all

43:06

Speaker A

But the problem is this: once you get into Congress, you're afraid you're going to get out of Congress.

43:24

Speaker A

in time how do you manage your time well I don't have the IQ of so many people that got perfect SATs and you know one Nobel Prize I'm not at that level for sure but just by my theory has always

43:35

Speaker A

The job doesn't pay much.

43:45

Speaker A

wake up when do you go to bed I try to get about five and a half hours of sleep a night now Jeff Bezos when I interviewed him disappointed me by saying he gets eight hours every night he can't get by with less than eight

43:56

Speaker A

It pays less than 200,000 a year.

44:06

Speaker A

be okay um next question here what do you think about the U.S economy uh with inflation low unemployment and polarity well um you are better to answer that than me but I'll give it a my stab first and you can comment as well like the U.S

44:25

Speaker A

Seventy-five members of the House have to live in their own offices because they can't afford another apartment in Washington, D.C.

44:36

Speaker A

guess all China is not in a technical recession now but the U.S economy is trying to deal with the problem we injected five trillion dollars into the economy obviously has an inflationary impact and what happens in Ukraine is

44:49

Speaker A

So they don't make much money, but to raise money, which is what they need to—

44:59

Speaker A

history when you have rise interest rates enough you as you know better than anybody it tends to produce a so-called hard Landing which is a euphemism for recession so I don't know that we're going into one but but I think right now we're

45:12

Speaker A

we're tiptoeing around and I don't like to use the word recession you may have heard me say before that when I worked in the Carter White House um uh the inflation advisor Carter said I think we're going into a recession and

45:24

Speaker A

and the Press got all upset about it and Carter called him in and said how can you agitate the Press by saying we're going to recession don't use the r word so this man Fred Khan a former Professor

45:33

Speaker A

Cornell said okay I won't use the r word anymore and he went out and said I think we might be heading into a banana and he used the word banana as a um as an exchange word because he knew reporters

45:43

Speaker A

weren't going to write a headline says Carter's inflation advisor thinks we're heading into banana so we could be heading into a banana but it's too early to say and you you let me know do you great answer great answer okay

45:55

Speaker A

um five pieces of advice maybe you don't have time for all five to give your uh kids regarding um their I think that says resources and how they thrive in the workplace well work hard prepare don't think your father is going to give

46:15

Speaker A

you a lot of money try to be respectful of other people and try to do something useful with your life so that your parents and your children will think that your life was a meaningful life so in my case

46:31

Speaker A

since I'm the only child of my my parents you know there's probably slightly more pressure on me to achieve something though they didn't have high Ambitions for me so you know one of the greatest Thrills of my life is making my

46:42

Speaker A

parents happy when because they live long enough to see some of the things I did but interestingly when my mother passed away she and I went through her possession she had all the news clips of me but not

46:54

Speaker A

of any of the things that Carlisle had done or money I'd made was all about the gifts I had given and she had told me the one I was giving away money that she was more proud of me for that than

47:02

Speaker A

anything else so you know when you can make your mother proud that's a good thing and you know particularly with Jewish mother much prouder that's joyous um what's your view of American journalism American journalism has suffered a lot

47:18

Speaker A

because newspapers are closing down that newspaper business is not quite what it was now obviously things are online American journalists I think do a great service for our country because they're relatively modestly paid compared to private Equity people that say and and

47:34

Speaker A

they're trying to provide the truth but sometimes some people on the far left or the far right exaggerate things to make headlines that may be unfair but generally I'd say the state of American journalism is pretty good you think the state of American

47:50

Speaker A

journalism is pretty good generally I mean obviously how many exceptions do we have well there are some people that have criticized me and I don't think those people are so good but uh but I'd say generally journalists most of the

48:04

Speaker A

journalists I know in reputable Publications are interested in giving the facts as they see them but obviously every human has biases and there's nobody that's perfect so sometimes they may tilt slightly to the left or slightly to the right and you know

48:18

Speaker A

everybody would like to have journalism right down the middle but it's hard to do that um there was a question here about um the types of assets that should be held in this environment should they be hard assets and

48:33

Speaker A

um what percentage of your wealth would you invest in those assets and I might also ask you about crypto okay like on hard assets you mean real estate or or I presume that that's what they're referring to um throughout the course of

48:46

Speaker A

the the world the most common investment has been real estate that's the asset that most people have had when people get wealthier they send to buy other things they make other Investments but I think in having most for most people

48:59

Speaker A

their biggest investment is their house for most people now that's not for everybody but for most people and I think having some real estate is probably a reasonably good investment because it tends not to go down in value

49:11

Speaker A

as a general rule of thumb the problems that people get in real estate is when they over lever it and when they over lever it with personal guarantees but Johnny I think real estate and hard assets are a reasonable thing to have

49:21

Speaker A

crypto is a more complicated a subject but I'd say as a general rule of thumb look to what young people are investing in because young people and what they're doing with their lives they tend to be much more likely to set the trends for

49:35

Speaker A

people like you and me so if if younger people are investing in crypto for example it's not something you should ignore because in the end younger people are going to keep doing it if it works reasonably well and we've seen crypto

49:47

Speaker A

has done well for some people I interviewed Sam bankman free the other day who at one point was worth 23 billion dollars he's 30 years old he's a crypto guy and there are other people I've interviewed in the book Mike

49:57

Speaker A

novograts who's a crypto investor as well I think crypto is not going away in part because they've done a very good job in the crypto industry of lobbying Congress to not have an unduly legislated and unduly regulated I also

50:09

Speaker A

think that the Russian oligarchs confiscation of their assets by Governor governments has made people think who have money wait a second somebody could come and do something like that to me so I want to have some of my Assets in

50:22

Speaker A

something things that nobody knows I have that are able to be transported around the world and the government can't devalue it so I think you're going to see crypto not going away now the U.S government will eventually have its own

50:33

Speaker A

digital currency which is not a cryptocurrency but I think digital assets and digital currencies will be here for a long time what is your best guess of how the U.S and China relationship will proceed over the next 10 years well you know China

50:48

Speaker A

much better than I do I'll you can comment as well I've spent a lot of time there we've invested a lot of money I used to go there many times a year it's harder to go there and obviously now and

50:59

Speaker A

I don't think you haven't been able to go for a while either I would say that the U.S China relationship is as bad as any time since uh Nixon went to China and then the Carter Administration we actually officially recognized China for

51:12

Speaker A

the first time Nixon went and did other things there but we officially recognized them during the Carter years and I would say the relationship is terrible now in part because the political pressure in the United States would be against China is very high

51:25

Speaker A

there is no political benefit the United States on saying I really think China is is being nice to us and we should be more accommodating there's no political benefit to it I'll take for example the tariffs that president president Trump

51:36

Speaker A

put on that would be deflationary to take those tariffs off and the administration recognized that but they don't take them off because it will be seen as being weak on China and you can't get anywhere politically in this country by being

51:49

Speaker A

seen as weak on China so I think it's going to have to wait to another presidential election and some other things happen now maybe when XI ji ping has officially gotten his third term and he feels less pressure maybe he'll be

51:59

Speaker A

more accommodating the president United States historically meets the president China the first year of his administration President Biden hasn't been able to do that they're probably going to have a brief meeting in the Agee and the G20 Summit in Asia not too

52:13

Speaker A

long from now but it's not going to be a meeting that they would say anything a great accomplishment is going to occur um if we stop doing business with China the way we stop doing business with Russia does that concern you

52:30

Speaker A

well what now Russia we we get virtually nothing from Russia we get vodka from Russia there's some people in Europe that obviously get energy from Russia but Russia doesn't make a lot of things that we really need and and it's not a

52:43

Speaker A

central part to the global economy not a central part to the U.S economy China has become over the last 40 years a central part of our economy so if we were to say we're not going to take any

52:52

Speaker A

products from China the inflation will really Skyrocket because the products we're buying from China now are we're buying them because they're lower costs and the ones we can produce in this country so I think it would have a

53:02

Speaker A

damaging effect on our in our economy if we were to say we're not going to import anything from China I think that would be a mistake uh which book did you learn the most of or would you most like to recommend

53:16

Speaker A

principles by Ray Dalia that's the right answer you got the right answer that is a best-selling book so more than two million copies in China and it's a very very thoughtful book so I would highly recommend that uh but picking a second

53:31

Speaker A

but look depends on the purpose if you're on a on a if you're going to be on an island and you have nothing that's going to have one book what would be the one book you would take uh obviously the Bible

53:43

Speaker A

because it has so much in there so much history so much other things in it but if it's not the Bible I would say um how to invest is probably the book on that Desert Island right we've evolved a long way right

53:58

Speaker A

um a question here was uh both of you have a sense of humility what is uh your belief or uh source of that a lot to be humble about that's what I would say um look I I recognize I when I was

54:15

Speaker A

growing up there were always people smarter greater athletes better looking more Charming everything and so you know you you as you as I said in my book on leadership I had a theory that there are three parts to life the first third is

54:29

Speaker A

when people are some of the superstars that road Scholars and so forth very often they Peter out and they don't live up to the potential in fact of the presence the United States probably only one in the last hundred years was

54:40

Speaker A

somebody who could be said to be a superstar when he was young that was Bill Clinton who's a Rhodes scholar most of the people who rise up to the president United States were not Superstars or anything when they were

54:48

Speaker A

younger and so my theory to justify my good luck is to say well if you're not so good in the first third maybe you can work hard in like a tortoise ketchup in the second and third third but I I try

55:01

Speaker A

to have a fair amount of humility because I know all my weaknesses all mistakes I've made and all the things I should have done better so that it's not that hard for me to be humble I would agree I'd say that because it

55:14

Speaker A

was asked for both of us I I would say um getting banged up a lot making mistakes is one of those things that teaches you fear that you're going to make mistakes which still can't stand in the way of your

55:29

Speaker A

audacity to do great things and think differently so you are making we are both making decisions in ways where we know that we can fail I'm a principal pain plus reflection equals progress right I mean that's um so I think that

55:47

Speaker A

it's just a natural course and so success is achieved through failure and the learning that comes of it I think we most people would know I mean you had challenges we had challenges at the beginning of Carlisle week we had a lot

56:00

Speaker A

of challenges and just got lucky um what do you think is most misunderstood about our political system today particularly internally and then by those outside how how significant money is to it I mean money is so significant to this uh uh

56:22

Speaker A

the system we have now that that campaign donations just drive it we call them campaign donations you can call them something else in other country we call them something else but it's it's uh you know it's it's it's driving

56:34

Speaker A

politics so much so and it's just unfortunate that people are are willing to appeal to the base or instincts of people on the left or right and the result is you've got a divided government it's in the divided

56:46

Speaker A

government we can blame Congress for being unable to get anything done but Congress really reflects the American people and the country split down the middle ideologically and it's not likely to change that much when John Kenney ran for president Richard Nixon campaigned

56:59

Speaker A

in all 50 states and I think John Kennedy campaigned about 45 States because they didn't know how all these states were going to go today we know how every State's going to go with the exception of about eight or nine states

57:09

Speaker A

and and so therefore the country is pretty divided red and blue and they're very few people in between the so-called purple States and it's much different than it was in 1960. so the power of the money class to influence politics

57:27

Speaker A

and then when you're comparing that to um knowing that people can come from any class and you don't know where they're coming from does that concern you well the money class throughout history has more influence than the non-money class

57:43

Speaker A

historically except when it gets to a revolution then you tend to have people at the bottom of society rising up and saying we're going to overthrow the system the French Revolution or other things like that but or that's what I

57:55

Speaker A

mean right well the money class has a disproportionate amount of influence in most Societies in any society there's a lot in this in this country for sure a lot of influence and and I've been surprised that it there hasn't been more

58:11

Speaker A

I would say reaction against it more significant reaction against it there has been some obviously but there hasn't been we haven't had rioting in the streets over some of the uh things that the so-called money class might want it

58:26

Speaker A

might happen at some time but generally the country has a big safety net not perfect for everybody and obviously a lot of people are still suffering and we have enormous amounts of homeless people uh around this town and other major

58:36

Speaker A

cities but as a general rule I don't see any big social Uprising against the money class generally in history in the arcs combination of large wealth gaps large values gaps bad economic conditions and a lot of debt a lot of printing and

58:59

Speaker A

money and then in history um even acts of nature droughts floods and so on when there's stress it's a real stress test do you do you think that it's an environment that we can hold up under those stress tests well or are you

59:18

Speaker A

concerned well the United States is a pretty stable country relatively speaking there are some countries where the governments are falling all the time there's military coups we're not likely to have that so I think the stability of our country is one of the things the

59:31

Speaker A

Constitution has helped ensure and I think it's interesting that in this country we don't swear an allegiance to a leader we swear in allegiance to the Constitution that's what the oath of office is about in other countries um they don't have they don't swear in

59:44

Speaker A

allegiance to the Constitution they swear it allegiance to the government of power typically so we have made the reverence for our our founding fathers and reverence for our constitution Paramount and I think it's difficult to have a overthrow of that so easily

59:57

Speaker A

obviously we've been challenged recently on that but I I think it's unlikely that that we're going to have a military coup or social unrest such so that the entire government will be overthrown I think that's unlikely and our

60:13

Speaker A

um how would you contrast or compare what the United States is like today versus when you um graduated from high school well when I grew up I graduated from high school in 1966 the United States population was probably 220 million people today it's

60:33

Speaker A

330 million so it's a third bigger today in those days Civil Rights was just beginning to come to the table the school that I went to Duke University was was segregated up until 1963 as were other Southern schools like rice to Lane

60:49

Speaker A

Emory Vanderbilt so we've made a lot of progress in that at the Ivy League schools when I was going to college were by and large male oriented not all of them but up Harvard Yale Princeton were all male so the world has changed in

61:03

Speaker A

that sense as well there's many different changes in the country but I think the country is wealthier than it was but the wealth is more at top than it was before when the Forbes 400 list was first put together in 1981 I think

61:19

Speaker A

it was to be on that list you had to have a net worth of 125 million they got you in the top 400. today it's probably two or three billion I guess so the wealth now obviously is some

61:29

Speaker A

inflation but the wealth uh aggregating at the top is just staggering when you think about it well I see that we're running out of time so let me ask you one question okay so if you wanted to give advice to

61:45

Speaker A

somebody how to be a great investor and you built a great company it's the largest hedge fund in the world and I think if I have it right you have produced more profits for your investors than any other hedge fund history that's

61:57

Speaker A

pretty nice so if you were giving advice to somebody who wanted to sort of hedge fund today what would you tell that person to do well you have to have the passion of the game you ran down your list pretty good I

62:10

Speaker A

think um you have to have the passion of the game you have to know your nature you have to know what you're good at and what you're not good at and have people around you who are good at the things

62:21

Speaker A

that you're not good at you certainly have to have the humility you have to be um you have to love the ride it's a roller coaster and then you have to learn from it I think you have to learn

62:35

Speaker A

how to diversify so that I think the most important thing that you could learn is how you can dramatically reduce your risk without reducing your return by knowing how to balance risk well in terms of the different kinds of

62:51

Speaker A

Investments that you make and I think you have to have that humility and that Curiosity that you're talking about to pull the best out of that to have people stress test your thinking I think that those are elements for being a good

63:04

Speaker A

investor and they may help help other ways I think your list was uh was a very good list that you have to be an independent thinker against the consensus in order to make money in the markets you have to bet against the

63:19

Speaker A

consensus and be right you have to bet against the consensus because the consensus is in the price so you have to bet against the consensus and you have to be right so you have to have that element that you referred to I

63:34

Speaker A

think those are the elements well I would also want to add for the average investor the average investor is not going to be Ray dalio um or some of the other people that I have in the book who are the best in the

63:43

Speaker A

Venture world or whatever the average person should not put too much in any one asset class or one investment the average person in my view should read what they're investing in and learn about it so they know what if they're

63:54

Speaker A

investing in a fund know what the fees are know what the valuations are know how to get access the information know how to you know ask the right questions and also don't expect to be a genius in the investor world if you're a genius in

64:08

Speaker A

making widgets it's very unlikely you're also going to be a genius in investing sometimes people are so brilliant they think I've built a great new company I can do anything but it's not that easy to do and the people who are in this

64:21

Speaker A

book are people been for their whole career there's very few people who are making a staggering Fortunes in the first five years of their investment career rarely happens it takes a long time to do it so this is a book that's

64:33

Speaker A

really designed to have the average person see what the great people did learn a little bit from it but I have my own views in there about what people should do with their own money and that's obviously diversify know what

64:44

Speaker A

you're doing read up be on top of it and and don't try to make a fortune in your investment on the side business because it's not likely to happen yeah there I I'd say there are two types of being an

64:58

Speaker A

investor there is I have your I have money that I need to invest and then there is receiving money or having money themselves and making an investment decision on the first type you're trying to pick an investor right who will invest for you in what

65:19

Speaker A

because you know that you're not going to be the pro who's it's like you're not going to be your own doctor you're not going to be your own investor so the skill that is required to pick the right Investments but not only the

65:33

Speaker A

right Investments but the right investment managers are a different skills they're different skills than the skill to be a professional investor it's like being a specialist if we use the medical example um there's the generalist who will pick

65:51

Speaker A

the right doctors for you and then there's being a specialist so you're a specialist in private Equity I'm a specialist in what I do Global macro and and liquid markets so I think it depends on what you're doing and so for the

66:07

Speaker A

average person I think that as we're as you're referring to you have to know that competing in the markets is more difficult than competing in the Olympics because there's more people trying to do it and it's a zero-sum game and so that

66:21

Speaker A

kind of humility and you have to be able to pick well that's why I think when you said fees pay attention to fees pay against attention to track records pay attention to diversification of asset classes and then because people do it

66:35

Speaker A

pay attention to changes in the people who are going to be managing the money I would like what I say in the book is this if you're picking a fund look at the track record make sure the people

66:45

Speaker A

produce a track record are still there make sure they have a lot of their own money and invest alongside you make sure that the young people are not leaving the firm because they're not being adequately incentive make sure their

66:55

Speaker A

organization not being sued for fraud all the time make sure that the organization is one where you can get the information you want when you want it and on an understandable basis make sure the fees are fair and make sure you

67:06

Speaker A

know who the other investors are because smart money knows how to find good Investments and you've never heard of anybody else investing alongside you that's not a good thing I think that this is a great contribution because everybody is an investor

67:21

Speaker A

uh when your dad saved he was an investor um and so everybody's an investor and this book and that list is a tremendous contribution to others so thank you very much thank you for taking the time Ray and thank you for

67:38

Speaker A

um all coming and I uh I appreciate everybody's coming I didn't know whether they thought this was going to be Rubenstein or Springsteen here so I think we part of the crowd thought this was going to be Springsteen showing

67:50

Speaker A

up again but thank you all very much and thank you Ray thank you foreign

Topics: David Rubenstein Ray Dalio investing principles leadership American politics bipartisanship private equity fundraising democracy principles of life


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