The biggest mistake in investing is believing the last three years is representative of what the next three years is going to be like.

~ Ray Dalio, Bridgewater Associates

Recency Bias | Ray Dalio

Earnings Bounty Never Came for Stocks….

From Lu Wang at Bloomberg:

The potential for politics to ruin everything was on the mind of Ray Dalio, the founder and co-chairman of Bridgewater Associates, in an essay published yesterday on LinkedIn. They will probably play a greater role in markets than any time in our lifetimes, he wrote.

“While I see no important economic risks on the horizon, I am concerned about growing internal and external conflict leading to impaired government efficiency (e.g. inabilities to pass legislation and set policies) and other conflicts,” he wrote.

Economically, it was a stellar quarter for profits. Operating income in the S&P 500 rose 11 percent, building on a 14 percent increase in the previous three months for the first back-to-back gains exceeding 10 percent since 2011. Companies surpassed estimates by almost 1 percent on the sales line and 4.5 percent in profits, among the higher beat rates of the bull market.

You wouldn’t have known it in the market. S&P 500 companies fell an average 0.6 percent the day after announcing results, data compiled by Bloomberg show. Individual stocks also sat still after the release of better-than-estimated results, the first time since 2000 that positive surprises were not rewarded, according to Bank of America Corp…..

Source: Earnings Bounty Never Came for Stocks Caught Up in Trump Tumult

Ray Dalio Explains The Rare Set Of Circumstances That’s Making Him Bearish On Markets | Business Insider

Joe Weisenthal reports on hedge fund guru Ray Dalio’s outlook:

His novel set of circumstances he sees is an economy that faces austerity (due to the Fiscal Cliff, etc.) coupled with a Fed that’s mostly blown its bazooka, and can’t get much more juice out of QE.

  • Yields can’t go down anymore.
  • Austerity is coming.
  • Economy is running out of steam.
  • QE is losing its efficacy.
  • Rate turn probably finally coming late in 2013.

Read more at Ray Dalio Explains The Rare Set Of Circumstances That's Making Him Bearish On Markets – Business Insider.

Ray Dalio: Market Insights | CNBC

Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, discusses his biggest worry — social disruption due to mismanagement of the de-leveraging by governments — and other market insights.

Also PIMCO’s Mohammed El-Erian on the benefits and risks of ECB intervention in the eurozone debt crisis.

Ray Dalio on global deleveraging, growth and inflation

Ray Dalio, founder and co-chief investment officer of Bridgewater Associates, speaks with Matthew Bishop, US business editor and New York bureau chief for The Economist: