[PaulHoule]

90% of the time Ray Dalio has an interesting opinion and good analysis, and he does this here.

I did an analysis based on the same premise (Bitcoin competes with gold) and came to basically the same conclusion.

Dalio's writings about how the "All Weather" fund works are based on a premise a lot like the "Permanent Portfolio" advocated by Libertarian presidential candidate Harry Browne but Dalio took out the "gold" component and replaced it with "treasury inflation protected securities."

Circa 2000 I bought a lot of TIPS and they did very well despite there being little inflation. Dropping interest rates had something to do with it, but I still don't understand exactly why they did so well.

(My stockbroker fired me as a client because I went to a presentation and asked why I needed the product they were selling when I bonds were yielding so well and had all the tax benefits they had)

I don't know how TIPS will do now, but I am sure that getting into TIPS at the right time is part of why Dalio is a legend. Maybe these days he thinks gold is better than TIPS.

[hankthecat]

dropping interest rates had everything to do with it. the 10yr treasury was at 6% in 2010 and now it's at 1.15%. your TIPS did well because rates dropped. Also those are mostly paper gains unless you sell...

fyi the "all weather" portfolio's name is stupid given it's mostly backward looking and benefited from a commodities supercycle and rates dropping from QE. With the 10yr at 1% putting 30-40% of your portfolio in long dated treasuries is insane. Let's use the TLT etf as an example (20 yr treasury). It has a duration of 19 years. That means for every 1% increase increase in rates, the value of your bonds will go down 19%....yikes. Let's say you are going to buy individual bonds and hold to maturity. Ok, you are protected from that price drop assuming you don't sell, but you've also just made a 20 year bet you don't think interest rates will go higher from here.

[okprod]

> (My stockbroker fired me as a client because I went to a presentation and asked why I needed the product they were selling when I bonds were yielding so well and had all the tax benefits they had)

That's interesting the broker didn't want to sell any other products to you.

> I don't know how TIPS will do now, but I am sure that getting into TIPS at the right time is part of why Dalio is a legend. Maybe these days he thinks gold is better than TIPS.

I think Buffett has also recommended TIPS.

[marcrosoft]

My guess is TIPS would outperform gold for low to moderate inflation and get absolutely crushed for high or hyper inflation.

[paulpauper]

they would only get clobbered if the fed is ahead of the curve. If the CPI is 4% a year and interest rate is 2%/year, then TIPS are very good cuz you are getting a 2% real return even with high inflation.