# Dalio uses diversification to manage what he cannot know

Markdown copy of https://realalpha.app/s/dalio-uses-diversification-to-manage-what-he-cannot-know/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Ray Dalio](https://realalpha.app/people/ray-dalio/) · Ray Dalio is a global macro investor, founder of Bridgewater Associates, and author. · Founded Bridgewater and developed investment approaches like risk parity and All Weather for global institutions.
- Host: [Scott Galloway](https://realalpha.app/people/scott-galloway/)
- Host: [Ed Elson](https://realalpha.app/people/ed-elson/)
- Show: Prof G Markets
- Episode: [How America Goes Broke — ft. Ray Dalio | Prof G Markets](https://realalpha.app/v/PV_JLSAat94/), Sep 5, 2025
- Moment: 48:37 to 52:05 of the episode (3 min), playing on https://realalpha.app/s/dalio-uses-diversification-to-manage-what-he-cannot-know/; the episode from there: https://realalpha.app/v/PV_JLSAat94/?t=2917

## Quote

> “whatever success I've had in life has been more due to my knowing how to **deal with what I don't know** than anything I know.”
> — [Ray Dalio](https://realalpha.app/people/ray-dalio/) at [50:36](https://realalpha.app/v/PV_JLSAat94/?t=3036) · Prof G Markets

## Takeaways

1. He says managing what he does not know has driven his success.
2. Avoid concentrating bets; diversify across assets.
3. Gold can offset losses elsewhere, but should not dominate the portfolio.

## About this segment

Ray Dalio says uncertainty is a reason not to concentrate portfolio bets, and explains gold’s role as a diversifier. He frames risk management as protecting wealth when other assets may struggle.

From “How America Goes Broke — ft. Ray Dalio | Prof G Markets”, Sep 5, 2025. [Watch the full episode](https://realalpha.app/v/PV_JLSAat94/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[48:49](https://realalpha.app/v/PV_JLSAat94/?t=2929) on this. I'm wondering if you would object to my landing there. And if you think that's kind of the situation we're in, what do we do about that? What do we do about that as investors, as young people, as professionals? What do we do about that? I think that we are most probably headed in that type of a direction, but we also know that there are things we can do and um there are things that are happening that uh should make us um not view that as a surety what we should do is continue to use my measures our measures that show these things and deal with it um well i have a um and that's by the way what we should do I think, is inject some understanding and worry into the situation, which we're doing now today.

[49:50](https://realalpha.app/v/PV_JLSAat94/?t=2990) I have a principle. If you worry, you don't have to worry. And if you don't worry, you need to worry. Because if you worry, then you will take care of the things that you're worrying about. I agree. And we have the capacity today to deal with all of these things. If the parties involved can worry enough and rise above their self-interests to be able to deal with them well. That's a reality. There's still choice. However, I agree with what you said. It's not likely. And then there are possibilities. You know, what does AI do? What do the other things do? Okay. So the answer to the last part of your question is what does a person do? Okay.

[50:39](https://realalpha.app/v/PV_JLSAat94/?t=3039) I think what a person does is, first of all, they know how to diversify well. In other words, I'd say whatever success I've had in life has been more due to my knowing how to deal with what I don't know than anything I know. And so for that reason, I would say you don't want to concentrate bets. You want to have certain proper diversification of your bets. that's a whole other subject. One of the aspects of that is, yes, you do want to have a certain amount of gold in your portfolio or the equivalent of an alternative.

[51:19](https://realalpha.app/v/PV_JLSAat94/?t=3079) But not so much that it's your big dominant bet, but it diversifies your portfolio in an effective way because if the things we're talking about happen, it also will mean that the other assets in your portfolio that you're holding, which won't do well, will be protected by that position. So you can structure your portfolio well. Now, that's a whole other session to discuss, you know, how to structure a portfolio that's well diversified in many things.