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Home » WTF is Finance #Ep 2: Ray Dalio on Money, Bubbles, and Playing the Game (Transcript)

WTF is Finance #Ep 2: Ray Dalio on Money, Bubbles, and Playing the Game (Transcript)

Here is the full transcript of American hedge fund manager Ray Dalio’s interview on WTF is Finance Podcast #Ep 2 with host Nikhil Kamath, December 20, 2025.

Brief Notes: Ray Dalio joins Nikhil Kamath to break down what money and wealth really are, why bubbles form, and how young investors should think about playing “the game” without getting wiped out. Starting with his own story—caddying on golf courses, making his first lucky stock pick at 12, and learning painful lessons with leverage and futures—Ray explains how to separate emotion from decision-making by turning every trade into clear, back-tested rules.

He then dives into gold, Bitcoin, and fiat currencies, arguing why gold remains his preferred store of value, how to think about portfolio construction if you can’t beat the market, and why most people should still hold 5–15% in alternative money. Finally, he warns about today’s high “wealth-to-money” ratios, rising populism, and debt-fueled asset prices, and shares specific advice for 18–30-year-old Indians on choosing a game they love, finding great mentors, and building resilient portfolios that survive big economic cycles.

Introduction

NIKHIL KAMATH: Hi Ray. Thank you for doing this. As a trader myself, I’ve been trading now a long time, about 21 years. I think there will be a lot I can learn from you and many others back home in India like me can also learn from you.

If I can contextualize the audience we are talking to today: they are young Indian want-to-be entrepreneurs, investors, want-to-be traders, people who want to make a living in the stock markets. I would say between the ages of 18 and 30.

RAY DALIO: Wonderful. That’s exactly the group that I would like to speak to at this stage in my life because I’ve learned a lot and I just want to pass what I’ve learned along to those people. So thank you for allowing me to do that.

Early Life and First Steps in the Market

NIKHIL KAMATH: No, thank you for doing this. Everybody knows you. But if we could go through the big events of your life and very briefly, just to set context again, could you tell us how you look at your life from the very beginning, from when you were younger up until today?

RAY DALIO: Okay. My dad was a jazz musician. My mom was a stay-at-home mom. I was raised in a—I didn’t have any brothers or sisters. It was a loving family. It was not poor, it was lower middle class.

I did jobs when I was young. One of those jobs was caddying at a golf course. And because I caddied at a golf course at the time when there was a stock market boom, the people I caddied with, I would have conversations with. And I took the money I earned—$6 a bag. I carried two bags, $12 for a round. When I got $50, I would put it in the stock market.

And so I started playing around in the stock market much like you’re describing our audience does. And the first stock I bought, I bought only because it was the only company I ever heard of that was selling for less than $5 a share. And I thought, well, then I can buy more shares, so if it goes up, I’ll make more money—which of course made no sense.

But it was a company that was about to go bankrupt, but another company acquired it and it tripled in value. And I thought, “This is easy.” It’s not easy, but I got hooked on the markets at 12.

The Role of Luck in Early Trading

NIKHIL KAMATH: Do you think it’s like that? I often think about this. When I was 17, I bought this company called Marsoft, a defunct software company in India. And the share price again doubled or tripled. The first experience of the stock market—the people who tend to continue are the ones who get lucky. Do you think so?

RAY DALIO: I think positive reinforcement works. Yeah, sure.

NIKHIL KAMATH: If you lost money on your first trade, you would never have done it.

RAY DALIO: Maybe, probably. You know, you put your hand on a hot stove—how many times do you do that? And then you react to it. So I can’t say for sure, but probably.

But I got into the game. And it was a game. It’s a great game. If you play it, you think of it as a game, and if you play it well, it pays you money.

Emotion vs. Logic in Trading

NIKHIL KAMATH: Do you think the stock market has emotion? Does it treat you a certain way at the beginning?

RAY DALIO: I think it’s unemotional. We are emotional and we certainly have emotions. And that’s one of the reasons the way I learned to invest was to write down my criteria when I was making a decision.

Every time I’d make a decision, I would then think, “Why am I making that decision?” And then I’d write down the criteria and see how it would have worked in the past. It took me a while to do this because of my experiences.

And also, you know, when you’re wrestling with positions, particularly a position that goes against you, you’re wondering, “Am I missing something? And how long do I hold that position and what do I do?”

So emotions and intellect and lack of perspective is a problem. So when you have a decision rule that you know how it would have worked all through time, now you’re just playing that decision rule and it helps.

Early Experience with Leverage and Futures

NIKHIL KAMATH: Did you trade on leverage at the very beginning?

RAY DALIO: I didn’t trade on leverage in the beginning, but very early in my age, I bought futures because it would give me leverage. I decided very—nobody traded futures.

NIKHIL KAMATH: Right.

RAY DALIO: Okay. There were no commodities. Very little. But I realized that it would give me leverage. And so I figured if I was going to be good in the markets, I would want to have that leverage because I’d make more money.