Global macro investors make bets on countries, riding the currents of exchange rates and interest rates. Their trades often require taking a much longer-term view than the typical investor, with an eye not only to a country’s monetary and fiscal policy, but often to its politics and institutions.
Few have been as successful as Ray Dalio, who founded Bridgewater Associates five decades ago. In his latest book, How Countries Go Broke, Dalio purports to lay bare the key elements of his uber-profitable investing strategy, especially how to look for the risks of once-in-a-generation shifts that most investors — and policymakers — are oblivious to until is it is too late.
Critically, he emphasises the importance of looking at very long historical data sets in order to be able to distinguish epoch waves, sometimes a century long — including what he calls the “Big Debt Cycle” — from typical cyclical business ups and downs which are smaller and less consequential.