📖Ray Dalio
Stress Test Your Portfolio
Test your portfolio against multiple economic scenarios.
Make sure your portfolio works in every type of economic environment. Ask yourself: what would happen to my portfolio in an inflationary depression? In a deflationary one?
🏠 Everyday Analogy
📖 Core Interpretation
Ray Dalio views portfolio construction as risk architecture. Allocation, position sizing, and rebalancing rules determine whether you can stay disciplined across market regimes.
💎 Key Insight：Resilience across scenarios beats optimization for one scenario.
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❓ Why It Matters
Without portfolio rules, decisions become reactive and concentrated. Sustainable returns come from controllable risk exposure, not one-off bets.
🎯 How to Practice
Set target allocation by risk tolerance, rebalance by rules rather than headlines, and prevent hidden concentration from dominating portfolio behavior.
⚠️ Common Pitfalls
Diversifying superficially without true risk balance
Skipping rebalancing rules and drifting style
Judging portfolio health by short-term returns only
📚 Case Studies
1
Long-Term Capital Management Turmoil (1998)
Bridgewater misjudged how central banks would react to LTCM’s collapse and related market stress.
✨ Outcome：Positions suffered from unexpected policy responses. Dalio refined stress-testing, scenario analysis, and diversification to account for extreme but plausible central bank interventions.
2
Mexican Debt Crisis Insight (1982)
Bridgewater anticipated Mexico’s debt default using macro analysis of debt, reserves, and cash flows, advising clients to reduce exposure to sovereign lenders.
✨ Outcome：Clients avoided major losses; the successful call boosted Bridgewater’s credibility and Ray Dalio’s big-picture reputation.
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