I’ve really enjoyed reading Bridgewater’s commentary throughout this unique interest rate cycle. Reason being is they are probably one of the best-equipped investors to make commentary on a macro basis. They also simplify dramatically to make their commentary digestible. Alas, as I previously wrote in May 2022:
My opinion is, unfortunately, while Greg is not absolutely wrong in what he is saying, he likely speaks so eloquently and simply that the listener tosses out the hardcore fact that the economy is far too complex to simplify and make accurate predictions on. There are likely 25+, maybe 100, legitimate economic inputs whose relative importance vary by the day / month / year. In hindsight, it becomes obvious which few factors drove certain outcomes, but looking forward at the potential performance of a complex and constantly adapting system is somewhat futile to do with any accuracy (and precision).
In this case, Jensen (CIO of Bridgewater), returned to Odd Lots just over one year later to relay that he was right for a period of time in 2022 (namely when stocks went down and yields peaked in October), but has been very wrong over the past six months. I appreciate how he said “we have been wrong…I mean, I have been wrong.” There’s humility in that conclusion versus socializing blame. He continued on to say that the view hasn’t much changed and he expects deterioration in the economic environment again.
Relying on other people’s analysis tends to be futile because you’ll never have the confidence to stay the course nor the mental flexibility to know when to change your mind. However, few have the proper resources that folks like Bridgewater have, let alone the time. So understanding alternative views is a great way to diversify the powerful pull of authorities like Bridgewater.
Renmac is a group with a very different makeup than Bridgewater. They focus on technical analysis, macroeconomics, and politics. Contrary to Bridgewater, they have been very “right” in their upbeat view since November. That isn’t to say they are the star and one should listen to them going forward. Look no further than Mike Wilson, CIO at Morgan Stanley, who was very right about the rate cycle but has been dead wrong since. Just that it’s worthwhile to listen to opposing views versus latching on to one view.
All told, despite the discussion of various macro views, I continue to find that the only real strategy for a small punter like us is one of the old “richest guy and best investor around,” whom I generally dislike mentioning. That is, to stay overcapitalized and wait for the market to serve up opportunity versus predicting it.