With events like Brexit and Trump’s election, public sentiment toward financial markets seems increasingly negative. And yet, markets have kept climbing, breaking record after record. Some cheer, some worry, and some proclaim the end is near. The recent essays by Ray Dalio and George Soros feel timely, but do they confirm these “doomsday prophecies”?

In the past few days, Dalio’s and Soros’s pieces have been widely circulated, often accompanied by dramatic commentary about impending market crashes.

I agree that Brexit will have a long-term negative economic impact, and that Trump’s presidency has added another layer of uncertainty. But using these as proof of an imminent market crash feels like a stretch. Let’s not forget: in the long run, economic growth and market returns are barely correlated.

So, what about these so-called “doomsday declarations” by Soros and Dalio? Frankly, I don’t think their articles reflect their actual market positions. Even if they do hold a negative view of the markets over the medium to long term, it doesn’t necessarily mean their current portfolios align with those views.

Dalio and Soros are both titans of global macro investing, and highly educated, highly original thinkers. But I suspect very few people truly understand how they invest.

Let’s start with Dalio. While he’s known for his macro insights, his positions don’t always mirror his views. What he really practices is systematic global macro. You could even call Bridgewater a quant fund. He often critiques how heavily other managers lean on equity risk premium while ignoring other return drivers. His approach is to identify 20+ uncorrelated sources of return and balance risk across them using risk parity.

That might sound reasonable so far. But here’s the kicker: for Dalio, no matter how markets change, his investment strategy stays the same: always balancing risk across different return streams. Not just the approach, even the position sizes stay fixed. He doesn’t increase or cut positions based on market ups or downs. Are there exceptions? Technically yes, but 99% of his trades are systematic and unaffected by subjective judgment. So is Dalio really confirming a market apocalypse? I don’t think so.

Now, Soros. Unlike Dalio, Soros is a discretionary macro manager. His investment decisions rely on human judgment, not algorithms. He’s argued that China will experience a hard landing, that Brexit could unravel the EU, and that Trump’s rise marks a regression of social systems with serious consequences for financial markets. But does that mean Soros is shorting indices in the near term? I don’t think so. If anything, probably the opposite.

Here’s the S&P 500 chart over the past three months—clearly in an upward trend.

Now, take a look at this breakdown of Soros’s returns from my other article Clone Buffett? Outperform Buffett!

Of Soros’s 20.3% annualised return, 17.1% came from trend-following. He’s a trend investor at heart, and that aligns perfectly with his theory of reflexivity. His own words make that clear:

So would Soros let his gloomy worldview cloud his investment decisions? I doubt it.

Another point: Soros is known for being emotionally detached from his trades. No matter how compelling the narrative behind a position, if the market goes the other way, he’ll cut it without hesitation. That’s because he believes price action—no matter how irrational—can itself trigger feedback loops and trends.

Also, for discretionary macro managers, positions don’t always reflect their opinions.

I also believe Soros is simply defending his Open Society ideal; he’s disheartened by the world shifting toward a Closed Society. He’s not declaring that disaster is imminent.

There are plenty of forecasts out there: calling market tops, bottoms, levels, and so on. But markets are inherently uncertain, and their complex nature makes predictions practically useless. Great trades aren’t necessarily based on predictions but they often stem from understanding the consequences after something has already happened.

It’s not hard to answer fundamental questions. But pinpointing market turning points? Nearly impossible. Still, people keep chasing predictions and idolising forecasters.

Robert Shiller warned about the tech bubble back in 1997. But he wasn’t predicting a market top; he was simply expressing a view that long-term equity returns might decline (which turned out to be factual). Yet markets surged for several more years. Those who shorted on Shiller’s warning got wiped out. At the height of the bubble, Jeremy Siegel released an updated edition of Stocks for the Long Run, fueling another wave of retail euphoria, only for the bubble to burst shortly after. Was Siegel saying the stock market would keep going up? I don’t think so. He was stating a fact: over the long term, the equity risk premium is attractive. People love to retroactively “debunk” experts using future market moves, but the truth is, the experts never made predictions to begin with.

What I’m saying is: market predictions are close to impossible, and neither of these two giants was trying to make one. If you treat their opinions as tradable “information,” you're really just trading on “noise”—without even knowing it.

So what can we take away from this? Probably the same thing professional investors have said a thousand times, though no one listens: diversify and think long term.

Just a little ramble.

References

• Peterson, R.L., 2016. Trading on Sentiment: The Power of Minds Over Markets. Wiley.

• Rozanov, A., 2012. Global Macro: Theory and Practice. Risk Books.

• Schwager, J.D., 2012. Hedge Fund Market Wizards: How Winning Traders Win. Wiley.

• Shiller, R.J., 2015. Irrational Exuberance. Princeton University Press.

• Siegel, J., 1994. Stock for the long run: a guide to selecting markets for long-term growth. New York: Irvin.

• Soros, G., Wien, B. and Koenen, K., 1995. Soros on Soros: Staying Ahead of the Curve. Wiley.

Disclaimer: The data and information mentioned are from third-party sources, and accuracy is not guaranteed. This article shares information and views, not professional investment advice. Consult professional advice before making investment decisions.

This article was originally written in Chinese and posted on my WeChat platform in 2017. The Chinese link can be found here