- Ray Dalio said the biggest mistake investors make is equating strong performance with a good investment.
- He also named three traits that he looks for when bringing on new talent: character, competence, and creativity.
For Bridgewater Associates founder Ray Dalio, the long-time mantra in finance that past performance is no guarantee of future results still holds true.
At the Milken Institute Asia Summit in Singapore on Thursday, he was asked what he thinks is the biggest mistake most investors make.
"Believing that markets that performed well are good investments — rather than more expensive," Dalio replied, inciting laughter from the audience.
The question, posed to him during a lightning-round Q&A, was followed up with another about which three traits Dalio looks for when bringing on new hires.
"Character, competence, and creativity," he answered.
In response to a later question, Dalio also revealed that the trait he dislikes most in any person is arrogance, or the ability to be "confident and wrong."
The Milken interview largely focused on Dalio's future outlooks, highlighting key themes that he argues will drive a changing world. Among his list — which includes rising geopolitical tensions and climate change — was global debt, cautioning that rates will likely keep going up.
For this reason, Dalio said that he would not own debt as an investor right now, and sees bonds as a poor long-term investment.
And for investors looking to best adjust to future macroeconomic disruptions, they should be able to determine who best can adapt to the changes. Added to that, Dalio emphasized asset diversification:
"What I don't know is going to be much more important than what I do know. Diversification can reduce your risk without reducing your return, if you know how to do it well," he said.