Ray Dalio says this investment strategy can help you weather a financial crisis

It's been a bleak week or so for the markets. Stocks have plunged, putting the S&P 500 on pace for its worst year in a decade. On Monday, former Federal Reserve chair Janet Yellen expressed fear about another looming financial crisis.

But booms and busts are all part of a larger economic cycle, according to Ray Dalio. And the billionaire Bridgewater Associates founder says there is a way to invest that will help you weather any economic environment.

"You can immunize yourself from the cycle by holding a balanced portfolio of assets," Dalio told CNBC Make It in September.

And Dalio has a simplified "all-weather" asset allocation formula that just about any investor can use.

This all-weather portfolio, which Dalio created for the Tony Robbins book, "Money: Master the Game," involves a mix of 30 percent stocks, 40 percent long-term U.S. bonds, 15 percent intermediate U.S. bonds, 7.5 percent gold and 7.5 percent other commodities. The portfolio needs to be re-balanced annually, Dalio notes.

"When you look at most portfolios, they have a very strong bias to do well in good times and bad in bad times," Dalio says in Robbins' book. The typical portfolio has somewhere around 50 percent bonds and 50 percent stocks, according to the book, and will just rise and fall with the market. By contrast, Dalio's formula produces a diversified portfolio and balances risk rather than wealth.

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