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CNBC Exclusive: CNBC’s Andrew Ross Sorkin Interviews Raymond Dalio from CNBC Institutional Investor Delivering Alpha Conference

WHEN: Today, Tuesday, September 12th

WHERE: CNBC's "Squawk on the Street"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Raymond Dalio, Bridgewater Associates Founder, ‎Chairman and Chief Investment Officer, live from the CNBC Institutional Investor Delivering Alpha conference in New York City on Tuesday, September 12th.

Following are links to the video of the interview on CNBC.com: https://www.cnbc.com/video/2017/09/12/ray-dalio-most-important-thing-for-investors-is-to-know-how-to-separate-alpha-and-beta.html, https://www.cnbc.com/video/2017/09/12/ray-dalio-north-korea-threat-will-have-implications-all-through-the-region.html and https://www.cnbc.com/video/2017/09/12/ray-dalio-if-gary-cohn-were-to-leave-administration-it-would-be-terrible.html.

Mandatory credit: CNBC Institutional Investor Delivering Alpha conference.

ANDREW ROSS SORKIN: Thank you, and thank you for indulging me a second time. And thank you, Ray, for being here.

We've been here together now a number of times. We were together, I don't know if you remember this, last year with the former Treasury Secretary, Tim Geithner. And as we were discussing the economy, my first question to both of you then was about what the potential growth rate in the GDP in the United States could really be, what was possible. And at the time President then -- or rather, I say, Candidate Trump was suggesting we could maybe get to 4%. You thought that was a bit high then. I'm curious a year later, today, where you think we really are and where we could possibly go.

RAYMOND DALIO: I still think we're probably in a 2 1/2% type of growth environment. I mean, the real question is, to some extent, whether you can unleash the productivity by some of the changes that a pro-business environment can produce. I think there was more hope for that, more pop in that productivity with structural changes. But I think that now the problems of the conflicts have slowed all that down. So we're looking at something like a 2 1/2 or 3% environment. But we've gotten past the worst of all the leveraging.

So I think if we look at the reasons, we have never had, still, so many obligations that are to be paid. So it's not just a matter of debt. It's a matter of pensions. It's a matter of health care, those kinds of obligations to be paid.

I think that they're going to mean that there are going to be drains on productivity. So we have the equivalent of a very, still, highly burdened economy that's a problem.

ANDREW ROSS SORKIN: Even though we just talked to the Treasury Secretary about taxes and some of the other programs that he is still very optimistic and confident about, A, do you have confidence in any of those things happening? And if they do happen, what kind -- how would that change the equation?

RAYMOND DALIO: Well, I think --

ANDREW ROSS SORKIN: You're not even --

RAYMOND DALIO: I think there are pros and cons. I think that what's going to happen will probably be a watered-down version of what was anticipated to happen. So, for example, corporate tax rate. I think it will probably come later. I don't know exactly when it will come, but maybe end of this quarter, end of the year, maybe early next year. And it will probably have something like 23% rate. I can't tell you. But it's not going to be what it was.

And so -- and that will be -- these will be one-time incidences. If you reduce government regulation, that's the next influence, and so on.

The other unknown -- part of this is, you know, let's step back. I think the most analogous period I mentioned is the late '30s.

ANDREW ROSS SORKIN: 1930s.

RAYMOND DALIO: 1937.

ANDREW ROSS SORKIN: That's scary.

RAYMOND DALIO: Well, I think, let's just look at mechanically because we can maybe handle it differently. You know, in 1929, '32 we had the downturn that was very similar to the 2008 downturn. And then interest rates hit zero, and we had a lot of debt. And at that point the government printed a lot of money, actually bought financial assets, pushed financial assets up, pushed the economy up; and that was sort of a beautiful de-leveraging because we had growth, lower inflation and so on.

We got the interest rates down to zero and -- with that quantitative easing. So when we began this cycle, most recently, there was a concerted effort to even get interest rates negative. And there were calculations as to how negative exactly they could push that, how much it was going to cost to carry money in cash and banks in vaults, and what would the vaults base be because we would push it down, they would push it down lower. And all the assets were built on a carry-off of those essentially negative interest rates. That's now stopped.

So now we are in an environment which, very similar to 1937 in terms of the early stages of perhaps the beginning of a tightening.

At the same time during that period of time, there was a big wealth gap because of these circumstances. Up two-tenths of 1% of the population of today's net worth is equal to the bottom 90% of the population's net worth, and there's a great tension.

And if you look at the bottom 60%, what the economy is like for the bottom 60% of the population -- so still there's a lot of tension, right? And that has -- and that kind of an environment creates populism. It's a word that we didn't hear much of --

ANDREW ROSS SORKIN: Right.

RAYMOND DALIO: -- until basically in the '30s. And that populism means the electing of people who are strong characters in one segment in a battle against the other segment. And so we're now in an environment of a lot of conflict. In other words, conflict within the administration, conflict between parties, conflict between other countries and so on. I think it will be very important, you know, how that conflict is handled.

This is very important. This is even more important than how the tax changes are going to take place.

I think the most important thing is there must not be a downturn in the economy. Because if there's a downturn in the economy, with this kind of a wealth gap, imagine what that would be. I think the Federal Reserve has done a much better job of realizing such things. And so I think we're in this kind of environment in which there are these cross-currents. Economy is not too hot, not too cold, and assets are kind of there, and we just hope that we are conscious --

ANDREW ROSS SORKIN: Let's put a fine point on it. When you talk about the 1930s, this ends in war.

RAYMOND DALIO: The circumstances can be handled differently. Destiny does not mean -- there are lessons to be learned from history. Okay?

So I think the real question from this relating to conflict is how we deal with each other. In other words, do the principles that bind us together, are they stronger than the ones that divide us? Are we going to get -- how are we going to deal with this in a principled way?

ANDREW ROSS SORKIN: Okay.

RAYMOND DALIO: I think -- so I think in terms of monetary policy. There are lessons to be learned by the Federal Reserve or the Central Banks. So I don't think that it means -- but I do think we are in a situation where those -- that situation is set up similarly.

ANDREW ROSS SORKIN: Okay. But you've written about this relatively extensively recently on LinkedIn and some of your notes to investors. And I have to say, you freaked out a lot of people with this.

What I'm trying to understand is, given this view of the world, what do you do about it as an investor?

RAYMOND DALIO: Well, you know, there's alpha and there's beta. We are in an alpha conference, right?

ANDREW ROSS SORKIN: Yeah.

RAYMOND DALIO: There's alpha and beta. The most important thing is to know how to separate those two things. In other words, know what your strategic allocation mix is. Right? That's your data portfolio. And know how to achieve balance, because that's where you're still heading.

ANDREW ROSS SORKIN: You've talked about buying gold, for example.

RAYMOND DALIO: That's essential -- I think, an essential part of the balance. We're in a monetary -- gold is an effective diversifier of assets and an effective diversifier also in terms of currency regimes. We have a situation where gold's position in the world as a reserve currency started with Brentwood's monetary system, you know, 1944. And we now have a dollar-denominated system. And that dollar is very much subject to the demand around the world and the positioning of the United States.

So it's a -- you know, it's a fiat paper currency. It's also something in which there's -- when there's conflict. So it's an alternative version of cash. It should be part of everybody's portfolio, between 5 and 10%. Not just -- not because it's necessarily the best thing. It's most importantly because of how it serves as an effective diversifier, particularly at a time when we're looking at the United States and the role in the world.

The United States' position in the world is now one of a few countries that -- powerful countries. And, you know, it's unique in many ways. But it's role -- what's actually happening and the dollar's role in the world, you know, can't be taken for granted.

ANDREW ROSS SORKIN: Let me ask you, one of those other powerful countries, China. The "Wall Street Journal" on Friday, also the "New York Times," Bridgewater planning to launch a China investment fund three decades in the making. What can you tell us about this?

RAYMOND DALIO: Well, I started to go to China in 1984. Not for money, but because of curiosity. They invited me over to teach them about the financial markets. And I developed wonderful relationships with people there.

When they formed the financial markets in 1989 and 1990, there were seven people in a run-down hotel room put together by these various companies who make financial markets. And over that period of time, I've been lucky enough to have those people as friends and build relationships and help them to develop some of their financial markets.

So naturally, an extension of that is that when they're opening up to the world for investment, that it's something we want to do. We've been managing money since 1993 for Chinese institutions outside, and now their capital markets are developing, and we want to invest inside, for investors on IBM side, and for Chinese investors who want to invest.

ANDREW ROSS SORKIN: What do the Chinese think of us, the U.S. right now, of President Trump, of the politics of the moment and our economy?

RAYMOND DALIO: Well, I don't know that it would be appropriate for me to speak for the Chinese other than to say "quizzical."

I found the Chinese leadership to be intelligent, having equanimity and like good chess players. And so I think they are in the process of figuring out what the new administration is like and what we're going to be like. And I think the administration itself is in the process of figuring out what it's like.

ANDREW ROSS SORKIN: How concerned are you about the situation in North Korea, both itself, but also in terms of our relationship, the United States' relationship with China and how that's going to affect businesses like yours?

RAYMOND DALIO: Well, it's all going to be a function of how they're going to be together. It's a big question. Let's take North Korea. I think the North Korean question, the world is looking at United States and what its power will be. You know, there's, "Speak softly and carry a big stick." Are we doing that?

ANDREW ROSS SORKIN: Are we doing that?

RAYMOND DALIO: Are we doing that? Are we doing the opposite of that? What is the power?

ANDREW ROSS SORKIN: You ask some very good questions. What's the answer?

RAYMOND DALIO: I'm not finished with my answer.

[LAUGHTER]

And I think that this has geopolitical implications. In other words, Korea can reshape what the whole Asian region is like. Countries in that region think, Who am I going to be affiliated with? How does that work?

So this will have implications all through the region. So...

ANDREW ROSS SORKIN: And your sense, though, of how -- for example, everybody here is trying to figure out, in terms of putting percentages on it, can you trade around this? Is there a trade? Is there a way to hedge this, if you think there's a -- how do you at Bridgewater think about that?

RAYMOND DALIO: Well, we always think about hedging risk. And there's a beta component to this. And what we think about is how to take it off the table, and you think of using of options, you think of hedges in terms of structures, in terms of gold. You know, basically, in our alpha portfolio, we want to have a least correlation with anything. So we want to try to minimize that.

ANDREW ROSS SORKIN: But North Korea is clearly taken into account, and I ask because there are other people who say, look, it's a binary event. There's no way to think it through. There's no way to actually hedge it in any meaningful way. So why the --

RAYMOND DALIO: Well, I don't think that's true. If you look at the market behavior, you could basically calculate, essentially, the betas to the North Korea event by just watching how the market reacts. We see it every day.

So you could say that. You know, of course, there are many betas to many different things. You know, you have Brexit. Before that you have this and that, and these things have been flowing. They happen immediately. So you can achieve greater degrees of hedges. It's certainly mechanically possible, but you can't do it perfectly.

ANDREW ROSS SORKIN: One of the big questions around the market is the future of the Fed -- once said that Bridgewater may have better information than the Fed.

A, I'm curious about what information you think that you have that they don't, but also what you think about the future of the Fed and who's going to run it?

RAYMOND DALIO: Well, it will be a very important -- I don't have any particular insights. It will be a very important decision because a lot of [inaudible], not only the head of the Fed are up, and I think that it's very important that a Fed chairman have a combination of the technical skills, wisdom, and a global perspective. You know, there aren't many people who have those things, and you have to put together a committee of such people who will have those qualities.

ANDREW ROSS SORKIN: You know Gary Cohn. Does he have those things?

RAYMOND DALIO: I think Gary Cohn is a very capable man who also has his greatest strength in being able to know who also to speak to. And he's open-minded. And so that ability to draw upon the best thinking, particularly people who have thoughtful disagreement, you know. That is my big thing, how you can have thoughtful disagreement, sort through that disagreement to get to the right answer. I think Gary Cohn has that. So...

ANDREW ROSS SORKIN: How important is he in the administration? If he were to leave, would that be a signal of any sort to you?

RAYMOND DALIO: First of all, I'm not, you know, inside, and I wouldn't -- if I was inside --

ANDREW ROSS SORKIN: You wouldn't tell us.

RAYMOND DALIO: In terms of my reaction, though, I would say if he was to leave, it would be terrible, because -- it would be terrible in two dimensions. It would undermine the future progress of economic with foreign -- and it would also represent in challenge in putting together the administration, which you probably know in terms of the number of jobs that are filled in this organization, Treasury Department is short of people. And the capabilities, the time and attention. And then I think it becomes also representative of what it might be like to be in the administration. It might be difficult to get the quality people in the administration. I would be concerned about the leadership. So I think it would be terrible if Gary left.

ANDREW ROSS SORKIN: And terrible for the market?

RAYMOND DALIO: Oh, yeah.

ANDREW ROSS SORKIN: Oh, yeah, and it would manifest itself --

RAYMOND DALIO: I think it would -- yeah, I think it would be bad for the market.

ANDREW ROSS SORKIN: When President Trump was first elected, you called it broadly positive -- I think was the quote -- "broadly positive" in terms of what it could mean for the markets and the economy. Do you still feel that way?

RAYMOND DALIO: Yeah. We're in the process of figuring this out. But I think we're faced between a pro business -- look, there are a lot of policies that I disagree with and choices I would make that would be different. However, there's a notion of a pro business environment and, of course, then it's just the mechanics. You lower a tax rate, you cause the stocks to be worth more.

So it's positive, because everybody's -- lump sum payment and the investment is a lump sum payment for future cash flows. Those future cash flows would be initially enhanced by those kinds of stimulus.

They're a two-edged sword. If you lower regulations, you have -- maybe you have a boost to the economy, a boost to profit, and then maybe you have something else to pay. If you eliminate, you know, let's say climate, that might have a cost in terms of the environment, but it could also be profitable for businesses.

So I'm not saying that it's -- how the negative that is other than to say that that pro business environment. I think that if we can have a pro business environment, like it's okay to make money, it's a good thing to make money and make jobs and all that, and you have that at the same time as you have togetherness, work pool, pooling the American dream, you know, for all Americans. How do you do that for all Americans?

A big element is going to be how we deal with the bottom 60%.

ANDREW ROSS SORKIN: I want to turn to "Principles" in just a moment. But I have two other questions.

As a risk manager, when you wake up in the morning, what are you most worried about? What's the single thing?

RAYMOND DALIO: There's -- there are the risks, like, North Korea. I don't think that that's probable. I think as a manager, over the longer term, I'm worried more about the wealth and social gap and the conflicts that we're going to have with each other. I worry about the very large burdens that we have in the form of debts and pensions and other things that are not going to be adequately be surfaced.

I'm not worried -- unlike 2007, anticipated the financial crisis. Went through the calculations, and we could say -- we could see who couldn't pay their debts.

ANDREW ROSS SORKIN: They structuralized that.

RAYMOND DALIO: There's nothing right now that I can see. We're in the part of the cycle and we have the cash flows to support our debts for the time being.

I'm expecting a slow squeeze, there's going to be an increasing squeeze. There's social tensions. That's what worries me.

ANDREW ROSS SORKIN: How about the ETF market? You guys use ETFs very frequently, aggressively. There is a concern out there among many that the ETF market unto itself is dangerous, especially the levered ETF market. Do you believe that structurally there's a problem?

RAYMOND DALIO: I think those types of problem -- it's not a systemic problem. I don't think it's a systemic problem. It's a market moving. It could be a market moving thing. And that's always the case. Right?

ANDREW ROSS SORKIN: Right.

RAYMOND DALIO: You know, and you always have those things come along. You have a pop. You have opinion. You know, I don't know, there's a bunch of those things. I'm not particularly worried about those. I'd like to try to find them out and play them.

ANDREW ROSS SORKIN: I want to turn to "Principles," a new book that's coming out next Tuesday. I believe everybody here may be getting a copy.

RAYMOND DALIO: You're welcome, too.

ANDREW ROSS SORKIN: I think.

RAYMOND DALIO: Thank you.

ANDREW ROSS SORKIN: Here's the question for you. The idea of the "Principles," you tell a story about getting a memo from your top three lieutenants. It's effectively a performance review of you. This is back in 1993. And the performance review, as great as the positive parts were, the bad parts were pretty -- pretty bad. And they all took you to dinner. And it seems to me that that moment in the book explains the principles better than anything else.

What happened at that dinner?

RAYMOND DALIO: I was told that my process of being, like, totally radically truthful was hurting people's morale. So -- and, I mean, that's basically what they said to me. Basically what they said to me is that whole total straightforwardness was causing people to be demoralized or whatever it is, and I didn't know that.

And these principles of being radically transparent -- I should explain to you in a minute -- those principles -- how we would deal with disagreement. And the biggest issues, I think, that we all face as individuals is not knowing whether we're right or wrong and not being straightforward with each other.

And the ability of being able to have disagreement. Can you have straightforward disagreement without it being a problem was the dilemma. And I was demoralizing people.

And so what it struck me as, we should then have a discussion. What could I do about that? I didn't want to demoralize people, and I particularly wanted to have great relationships with these people.

ANDREW ROSS SORKIN: You also didn't want to sugarcoat things.

RAYMOND DALIO: And I didn't want to sugarcoat things. So what it led me to do is to start to write down -- reach mutual agreement. How am I going to be with you? How should you be with me?

In other words, should I tell you what I really think? Can you be free to tell me what you really think? Or should I not do that? And we would have those conversations of people I worked with. And then we would write down -- I would write down the principles.

And, by the way, these principles, not me, has been the basis of whatever success I've had. It's not -- principles. And that mostly about the idea of how to have thoughtful disagreement, which I think people don't know how to do very well. And then I'd like to maybe take a minute and explain this, if you'll let me do that.

ANDREW ROSS SORKIN: I will, but I want to understand this. I want to understand about criticism, accepting criticism. Do you think you take criticism well, personally?

RAYMOND DALIO: I try. It depends on the moment. I know that I want it. And I think that if I don't, in the moments that I don't do it well, what I do is, afterwards I try to reflect. I get -- I force it on people. I force people to give it to me, right, at Bridgewater. I know it's always welcome. So that's --

ANDREW ROSS SORKIN: Are you ever hurt by it?

RAYMOND DALIO: Sorry?

ANDREW ROSS SORKIN: Are you ever hurt by it?

RAYMOND DALIO: No. No, no. It depends if the person has -- look, it's either one of two things. They either have good intentions or they have bad intentions. If they're hurt -- if they're bad intentions, I'm angry, not hurt. And if they have good intentions, I really have learned that I need to reflect on that. And the market's told me that.

Like, in my early years -- you know, it's a mix of confidence and then humility. And I remember, like, in 1980s, I was so wrong in talking about and expecting the worst economic conditions. And it was -- anyway, I was terribly wrong, and it hurt me. And, you know, you can read about it in the book.

But what it does -- hugely mistake.

ANDREW ROSS SORKIN: Right.

RAYMOND DALIO: And it shifted my mentality from thinking I'm right, to asking myself: How do I know I'm right? And the only way I know I'm right is by being able to have thoughtful disagreement.

So in my opinion there are three things -- be an IBM meritocracy. That's the reason of whatever success we have. In order to be successful, we have to have independent thinkers, so independent that they'll bet against the consensus. But when you bet against the consensus, you're going to be wrong a lot. So I need a bunch of independent thinkers who are operating with me, and we need a process of working ourselves through that.

So the three steps that you need to do to have an IBM meritocracy is first, you have to put your honest thoughts on the table. And a lot of people won't do that because I don't -- it's not --

ANDREW ROSS SORKIN: Because it hurts.

RAYMOND DALIO: But if you get past it, it's healthy. Anyway, it's healthy to put your honest thoughts on the table.

ANDREW ROSS SORKIN: Okay.

RAYMOND DALIO: Second, you have to have thoughtful disagreement. In other words, there's an art to be able to listen and take in. And you have to have protocols for doing that well, so that that disagreement can create a better decision than you can make individually.

And, third, if you have, still, disagreements, you have to have IBM meritocratic ways of getting around them. Because you can either have an autocracy, in other words, the boss tells people how it's going to be; or you can have a democracy, one man, one vote. Both of those are bad. The best thing you can do is have believability-weighted decision-making.

If you want to know the key to whatever Bridgewater's success has been, it's not me. Okay? It's not what's in my head. It's -- my ability to deal with my not knowing is better than my ability to defend things that I have that I know. And it's through that process and that kind of a community that it's powerful, because the power of great collective decision-making is so much greater than the power of any individual's decision-making.

ANDREW ROSS SORKIN: I told you this before. I read the book and I took an enormous amount away on a very personal level in terms of how to think and be humble and try to understand the other side and hope that everybody has good intentions. But the question I was left with is really about the scalability of this in other large and even small organizations, which is to say, you record the meetings at Bridgewater so that everybody can see them. People are on apps judging each other.

And in an environment right now where people are apparently searching for safe spaces and calling other people "snowflakes" if they disagree, it's hard for me to see how this works on a broader level.

RAYMOND DALIO: Well, I think two things. First, you want an IBM meritocracy, or not. That becomes the first question.

Then the second question about scale, I think it's coming at you whether you want it or not. In other words, what's happening is we're now living in a world of radical transparency; that all the data that you have on each of you out there, that the world could know about you, you are leaving all this data all over, and they could know very personally what you're like.

And the question is how that's felt together in terms of --

ANDREW ROSS SORKIN: Creating an AI.

RAYMOND DALIO: That's what I'm saying. Algorithms is what my TED Talk was about. Algorithms and radical transparency. So radical transparency is coming at you fast. You're not going to be able to view it. You can't avoid it.

And then the algorithms are going to be part of your life. And those algorithms are going to be used in you transparency. Now, do you want to do that openly? Do you want to -- do we want to agree on what those algorithms and rules of the game are? Do you want to do it, or do you want to do it behind the scenes? I want to do it out in the open because that enhances an IBM meritocracy.

ANDREW ROSS SORKIN: Let me ask you a separate question. What is the role of privacy in this world? And let me also say in your piece over the weekend that suggested only ten people inside Bridgewater know actually about the investments at any one time.

For all the radical transparency that may go on inside the firm, there's an argument that maybe the public isn't necessarily -- we're not all radically transparent to each other.

RAYMOND DALIO: When I mean radical transparency, I don't mean total transparency.

[LAUGHTER ]

Total transparency, I mean radical transparency. I'm not going to tell what trades, what particular decision rules that we're using. I'm not going to tell proprietary stuff. And I'm not going to try to offend anybody in terms of privacy. You know, in other words, if there's a personal question, it's not transparent -- it's not transparent. There are certain things.

The question is, by and large, can you be radically forthright with each other? If you don't show people things, you're going to have manipulation. You're going to have politics by it. You can't have an IBM meritocracy. I don't care the exact way. I describe it in the book.

The real question is: Do you know what somebody else is really thinking? Do you know what they're like? Do they know what you're really thinking? Do they know what you're really like?

Think about how much better that would be, how much more efficient it would be. And then also, you know, that's straightforwardness. You might cut through it, it's a very powerful tool.

It's worked. It's the reason for success for 42 years, so it's got some reason behind it, you know?

ANDREW ROSS SORKIN: When people say that -- when people question and say: Is Bridgewater successful because of this remarkable social experiment? Or they say: Is it so successful that it can afford to pay for this social experiment, you think what?

RAYMOND DALIO: I never had any money. I started it from a two-bedroom apartment. I had the approach and learned the approach through painful mistakes over there. And that brought the success. It wasn't the other way around. I didn't start with anything, right?

I looked at the biggest institutions in the world. I looked at the biggest institutions in the world because of an IBM meritocracy. Like what's so wrong with being radically truthful, radically transparent with each other and having this meaningful work and meaningful relationships because you are in it together? In one word it's an IBM meritocracy which the goal is to have meaningful work and meaningful relationships through radical truthfulness and radical transparency.

ANDREW ROSS SORKIN: One of my favorite principles in the whole book is pay north of fair. How much is that?

[LAUGHTER ]

ANDREW ROSS SORKIN: Is it a 10% premium?

RAYMOND DALIO: No. What I do is give people great opportunity. So here's my basic philosophy: Make your -- whatever you're earning, comfortable to take care of whatever you need to take care of, those are your basic things, not the luxuries. Okay? And then come for opportunity. Enter this thing and then take a big share of the opportunity and make everybody rich if they together make the pie bigger. Don't worry about slicing the pie precisely.

ANDREW ROSS SORKIN: Final question. When you were introduced, we talked -- there was a brief mention of your philanthropy. And you agreed to be part of the giving pledge to give half your money away.

There's a fascinating line in the book about a realization you've had that even people with enormous amount of money realize that they actually can't do all the things that they wish they could do. What do you mean by that?

RAYMOND DALIO: Well, when I started off, you know, obviously, as I say, I was -- I started off as a, you know, middle class kid -- middle class kid, maybe, and I made an enormous amount of money. Even then when I had it, and I decided I was going to give a significant amount away, I thought I had a lot of money.

And then when I started to get involved with some of the things that we got involved with to try to help in terms of education or health care or whatever it is, I started to realize that I had nothing, very little, in relationship to the enormity of the things that needed to be done. And then I started to -- before I would be almost, you know, very generous of this, this and this and then I realized the enormity what has to be done. It's enormous, right? So we have very little.

Some people think that when you have a lot of money -- you never have enough in terms of the goals and the aspiration. The aspirations change, you know? At this stage of my life my aspirations are very different than my aspirations before.

I am now at a stage of my life -- that's why I wrote the book. This is a year of transition from my second stage of my life in which I'm working and helping others who are dependent on me to passing along whatever I have to help them. And that includes money, and that includes these others.

So when you start to get into that stage of your life, you know, it's -- it's a different perspective, including realizing you don't have enough.

ANDREW ROSS SORKIN: We wish you luck with the third act. And we appreciate your time very much. Thank you, Ray.

RAYMOND DALIO: Thank you.

[APPLAUSE]

TYLER MATHISEN: Before you go, can I ask you a question?

A lot of what you guys fascinatingly just talked about was the idea of radical transparency between one another. How do I know -- am I willing to say what I really think? Am I willing to -- for you to tell me what you really think?

But how do you know what you really think, internally? How do you know and what level of confidence do you have that what I think is right?

RAYMOND DALIO: That's exactly -- that's exactly the issue. If you watch this TED Talk, it's 16 minutes.

TYLER MATHISEN: I will.

RAYMOND DALIO: It will explain the tools that we do it. What happens is the only way that you're going to know that it is through high-quality triangulation. In other words, like you think something.

The greatest tragedy of mankind, or one of them, is that people needlessly hold long opinions in their minds. And so they don't know if what they're thinking.

TYLER MATHISEN: They don't know what they're thinking. They have anti-confidence --

RAYMOND DALIO: It's so easy, okay, if you're going to put it out there and triangulate with believable people, particularly people who disagree with you, and you work that through. And that's what -- how you can raise your profitability of being right. I mean, I learned it in the markets. I could raise my profitability of being right if I could put those ideas that might be wrong out there and stress test them. And you learn a lot. You learn a lot because there are perspectives that weren't in your head. What you don't know is so much greater than what you do know.

ANDREW ROSS SORKIN: I wrote that down.

RAYMOND DALIO: So, anyway, it's -- anyway, put it out there, triangulate. Right?

TYLER MATHISEN: Thank you so much. You can be my shrink, okay?

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