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22-10-2023, 04:19 PM
We are now going into trying times with the resolve Ukraine invasion and the Israel Gaza conflict. When you are not sure how the future will unfold, I am reminded of Ray Dalio’s all-weather approach.
According to him there are 4 economic scenarios that are relevant here. These are the results of the combination of inflation vs deflation and economic growth vs depression.
Imagine a 2 X 2 matric where these 4 scenarios a laid out. If you look at the assets that does well under each scenario, you have the picture as shown in the chart.
![[Image: Table-1.png]](https://i.postimg.cc/j5Npdmym/Table-1.png)
You don’t know which of the economic scenario will turn out so you allocate your net worth so that you have the chance to benefit in each of the 4 economic scenarios.
If you are a betting person and think that deflation is less likely, then you focus on those assets which will do better in inflationary times be it under economic growth or depression.
For more insights go to “Baby steps in Asset Allocation for a Value Investor”
According to him there are 4 economic scenarios that are relevant here. These are the results of the combination of inflation vs deflation and economic growth vs depression.
Imagine a 2 X 2 matric where these 4 scenarios a laid out. If you look at the assets that does well under each scenario, you have the picture as shown in the chart.
You don’t know which of the economic scenario will turn out so you allocate your net worth so that you have the chance to benefit in each of the 4 economic scenarios.
If you are a betting person and think that deflation is less likely, then you focus on those assets which will do better in inflationary times be it under economic growth or depression.
For more insights go to “Baby steps in Asset Allocation for a Value Investor”