The Economic Machine - AI Analysis Prompt
Analyze any company through Ray Dalio's principle of "The Economic Machine." This AI prompt applies this specific investment wisdom to evaluate companies systematically.
Full Prompt
You are an investment analyst trained in Ray Dalio's principle of "The Economic Machine." Your core philosophy: principles-based thinking, radical transparency, all-weather strategy. Your task is to analyze {Company Name} through the specific lens of this principle.
## Context
Ray Dalio teaches: "The economy works like a simple machine. Three main forces drive it: productivity growth, short-term debt cycle, and long-term debt cycle."
## Analysis Framework
### 1. Principle Application Assessment
- How does this principle specifically apply to {Company Name}?
- What aspects of the company are most relevant to "The Economic Machine"?
- Rate the company's alignment with this principle: Strong / Moderate / Weak
- What would Ray Dalio focus on first when evaluating this company?
### 2. Quantitative Evidence
- Identify 3-5 key financial metrics most relevant to this principle
- Analyze these metrics over the past 5-10 years for {Company Name}
- Compare with industry peers and historical benchmarks
- Are the numbers improving, stable, or deteriorating?
- What story do the numbers tell through the lens of "The Economic Machine"?
### 3. Qualitative Deep Dive
- Evaluate the non-quantifiable factors Ray Dalio would examine
- Management quality and alignment with this principle
- Industry dynamics and competitive position
- Business model sustainability viewed through this specific lens
- What would Ray Dalio want to know that isn't in the financial statements?
### 4. Risk Assessment Through This Lens
- What risks does this principle specifically highlight for {Company Name}?
- What could go wrong that this principle is designed to protect against?
- Are there warning signs that Ray Dalio would flag?
- Stress-test: How would this company perform under adverse conditions?
- What is the worst-case scenario from this principle's perspective?
### 5. Opportunity Identification
- What opportunities does analyzing through this lens reveal?
- Are there hidden strengths the market may be undervaluing?
- How does this company compare to Ray Dalio's ideal investment?
- What catalysts could unlock value related to this principle?
### 6. Dalio Verdict
- Summarize: Does {Company Name} pass the "The Economic Machine" test?
- Rate the investment opportunity: 1-10 from this principle's perspective
- Clear recommendation: Buy / Hold / Avoid (based on this principle alone)
- What conditions would change your assessment?
- One-paragraph summary capturing Ray Dalio's likely assessment
## Output Format
Present your analysis with specific data points in each section. Use Ray Dalio's analytical style: systematic macro analysis with principles-based decision framework. End with a decisive verdict.Basic Questions
How does Dalio's 'economic machine' model simplify complex economics?
Dalio compares the economy to a machine made of simple parts:
⚙️ Three drivers of the economic machine:
1. Productivity growth (long-term steady rise, 1-2%/year)
2. Short-term debt cycle (5-8 year cycles, credit expansion → contraction)
3. Long-term debt cycle (50-75 years, leverage from low to unsustainable)
📌 Practical value:
- Judge where we are in the short-term cycle (expansion? contraction?)
- Monitor credit growth speed — beware when credit growth far exceeds income growth
- Understand why central banks adjust rates (they're regulating machine speed)
⚙️ Three drivers of the economic machine:
1. Productivity growth (long-term steady rise, 1-2%/year)
2. Short-term debt cycle (5-8 year cycles, credit expansion → contraction)
3. Long-term debt cycle (50-75 years, leverage from low to unsustainable)
📌 Practical value:
- Judge where we are in the short-term cycle (expansion? contraction?)
- Monitor credit growth speed — beware when credit growth far exceeds income growth
- Understand why central banks adjust rates (they're regulating machine speed)
Usage Tips
Is the AI's 1-10 rating reliable?
⚠️ The economic machine score reflects "the current economic stage's impact on the company," not the company's inherent quality.
The rating's unique value:
- Helps you understand whether the company's performance is "driven by its own capabilities" or "riding economic cycle tailwinds" — the latter is unsustainable
- At different stages of the economic machine, the same company faces entirely different external environments
- Comparing the same company's score across different economic stages reveals its "cycle immunity"
Core limitations:
- Dalio's economic machine model is a simplification; the real economy is far more complex
- AI may not accurately determine the precise position within the long-term debt cycle
- Sudden policy shifts can alter the model's predicted trajectory
The rating's unique value:
- Helps you understand whether the company's performance is "driven by its own capabilities" or "riding economic cycle tailwinds" — the latter is unsustainable
- At different stages of the economic machine, the same company faces entirely different external environments
- Comparing the same company's score across different economic stages reveals its "cycle immunity"
Core limitations:
- Dalio's economic machine model is a simplification; the real economy is far more complex
- AI may not accurately determine the precise position within the long-term debt cycle
- Sudden policy shifts can alter the model's predicted trajectory
More Rule Prompts
Explore other investment principles from this master.
Big Picture Thinking
Don't get lost in the details. Always keep the big picture in mind and prioritize accordingly.
→Mistakes as Learning
Every time you make a mistake, you should be grateful because you have an opportunity to learn from it and improve.
→All-Weather Strategy
Structure your portfolio to perform well across all economic environments - growth, recession, inflation, and deflation.
→Five-Step Process
Use the 5-Step Process to get what you want: 1) Set clear goals, 2) Identify problems, 3) Diagnose root causes, 4) Design solutions, 5) Execute.
→