Ray Dalio’s All weather portfolio (quick-start guide 2020)

Here is the link.

The reason he chose those assets goes into his theory on economic “seasons.” According to Dalio, there are four things that affect the value of assets:

1. Inflation. The increase in prices for goods and services — and the drop in purchasing value of a currency.
2. Deflation. The decrease in prices for goods and services.
3. Rising economic growth. When the economy flourishes and grows.
4. Declining economic growth. When the economy diminishes and shrinks.

Based on these elements, Dalio says that we can then expect four different seasons that the economy can go through. They are:

1. Higher than expected inflation (rising prices).
2. Lower than expected inflation (or deflation).
3. Higher than expected economic growth.
4. Lower than expected economic growth.

If you want to build your own All Weather Portfolio but don’t know where to start, don’t worry. Here’s a suggestion for comparable securities that you can invest in yourself (courtesy of Nasdaq.com):

• 30% Vanguard Total Stock Market ETF (VTI)
• 40% iShares 20+ Year Treasury ETF (TLT)
• 15% iShares 7 – 10 Year Treasury ETF (IEF)
• 7.5% SPDR Gold Shares ETF (GLD)
• 7.5% PowerShares DB Commodity Index Tracking Fund (DBC)