ChatGPT, a text-based artificial intelligence (AI) platform, is making waves in the financial sector, providing a wide range of insights and advice on trading and investment products. What’s interesting, however, is that the platform not only offers financial advice, but can also solicit opinions.
In this case, Ray Dalio, a well-known billionaire investor and founder of Bridgewater Associates, the world’s largest hedge fund, said in a YouTube video posted on April 15, clearly He was asked by Tool about his views on the most important principles of investing.
Specifically, ChatGPT asked investors, “What is the most important lesson you’ve learned about investing throughout your career?”
In response, Dalio confided in what he calls the “holy grail of investing,” specifically diversification in managing investment risk.
He said investing in 10 to 15 good, uncorrelated assets can reduce risk by about 80% without sacrificing returns. This allows the investor to increase his return on risk by a factor of five. This is a key principle for successful investing.
“The most important principle is what I call the holy grail of investing, and it concerns diversification. <…> If you can do that, you can make a lot of money. Eliminate or reduce the downside,” he said.
Risk of betting on a single product
He added that most people think the best way to make money is to bet on a single asset or place a few concentrated bets. It often leads to huge losses and completely removes the investor from the game.
“You will be faced with one scary situation. Remember that what you don’t know is greater than what you know. I want you to understand what you know and what you don’t know, and then understand how to diversify to get a good return relative to the risk. It’s a good principle,” he added.
Dario’s Bitcoin Ownership
It is worth noting that Dalio has at one point been a strong advocate of investor diversification, revealing a small amount of Bitcoin (BTC) in his portfolio. This is in response to Dalio’s initial skepticism about cryptocurrencies.
He has previously said that Bitcoin has achieved “tremendous achievements over the past decade.” The exact number of Dario’s bitcoin holdings is currently unknown.
Dalio has invested in bitcoin but is skeptical about the sustainability of bitcoin, citing a possible crackdown by the authorities. According to his Finbold report earlier, the billionaire predicted that Bitcoin could be banned, similar to gold in 1934.
Watch the full video below.
Disclaimer: The content of this site should not be considered investment advice. Investment is speculation. Your capital is at risk when you invest.
