The Changing World Order:

The New Paradigm

Ray Dalio

January 2022

One Glendinning Place

Westport, CT 06880
(203) 226-3030
www.bridgewater.com
 MY CONCLUSIONS UP FRONT
The world order is changing in important ways that have happened many times before in
history, though not in our lifetimes. How the world order is changing has created the paradigm
that we are in. By “paradigm,” I mean the environment that we are in. Paradigms typically last
about 10 years, with occasional big corrections within them. They are driven by a persistent
set of conditions that takes those conditions in a swing from one extreme to an opposite
extreme. Because of this, each paradigm is more likely to be opposite than similar to the one
before it. For example, the Roaring ’20s were followed by the depressionary 1930s, and the
inflationary 1970s were followed by the disinflationary 1980s. The assets and liabilities that
you would most like to have, and those that you would most like to avoid, change with the
paradigm that exists at the time. For example, in the Roaring ’20s you’d want to own stocks
and avoid bonds, while in the depressionary 1930s it would be the opposite; in the inflationary
1970s you’d want to own hard assets like gold and avoid bonds, while in the disinflationary
1980s you’d want to own financial assets and avoid hard assets.

For reasons explained in this report, I believe the current paradigm is a classic one that is
characterized by the leading empire (the US) 1) spending a lot more money than it is earning
and printing and taxing a lot, 2) having large wealth, values, and political gaps that are
leading to significant internal conflict, and 3) being in decline relative to an emerging great
power (China). The last time we saw this confluence of events was in the 1930-45 period,
though the 1970-80 period was also analogous financially. In this piece, I will explain my
reasoning and show charts that display these things happening. For a much more
comprehensive description, read my book Principles for Dealing with the Changing
World Order.

Please review the “Important Disclosures and Other Information” located at the end of this presentation.
1
 MY CONCLUSIONS UP FRONT (CONTINUED)
What should one do in this new paradigm? This paradigm is leading to a big shift in wealth
and power. Naturally, as a global macroeconomic investor, the economic and market
behaviors in this paradigm are top of mind. I think one should minimize one’s ownership of
cash and bonds in dollars, euros, and yen (and/or one should borrow in these) and put
funds into a highly diversified portfolio of assets, including stocks and inflation-hedge
assets, especially in countries with healthy finances and well-educated and civil
populations that have internal order. These things are especially important in this
paradigm. In brief, I think one’s assets and liabilities should be well-balanced with
minimum exposures to dollar, euro, and yen currency and debt assets. During this time, it
will also pay to be short cash (i.e., borrow cash). Of course there will be corrections during
the several years in the paradigm—for example, in central bank tightenings. But I don’t
see any sustained period in which the government will allow cash returns to be better than
the returns of a well-diversified, noncash portfolio (e.g., All Weather) geared to the level of
risk you’re comfortable with because that would cause terrible problems. These
circumstances also have big geopolitical implications, which I will touch on here.

Now I will show you the reasoning behind my conclusions. Please do not just believe my
conclusions because I don’t want you to blindly follow me. I urge you to challenge my
reasoning and see how it goes. I hope the picture comes through clearly in the charts and
text that follow.

Please review the “Important Disclosures and Other Information” located at the end of this presentation.
2
 THE FOLLOWING ARE THE THREE BIGGEST ISSUES
THAT I WANT TO FOCUS ON

1) Big Debt and Debt Monetizations, Particularly in

the World’s Leading Reserve Currency
2) Internal Conflicts over Wealth and Values Gaps
3) External Conflicts, Most Importantly the Rise of a
Great Power (China) to Challenge the Existing Great
Power (the US)

The confluence of these three issues is shaping the type of paradigm we are in.
While I can’t cover them in depth in this brief report, I can hit the most important
aspects of them, particularly of the debt/money/investment issue because that’s an
area I have devoted my life to. All three issues transpire in cycles driven by
cause/effect relationships that are logical and can be understood. It is important to
understand how these cycles work and where we are in them.

3
 1) BIG DEBT AND DEBT MONETIZATIONS
The three major reserve currency empires—the United States, Europe, and to a lesser extent Japan—are in poor
financial shape. The top chart shows for the US how debt levels (black line) are high today and were high in the
1929-33 and 2008 periods. In both cases, interest rates hit 0% (blue line), and the printing of money and buying of
financial assets began in a big way (red line). More recently, the COVID-triggered downturn and the political move to
the left have led to a massive increase in debt creation and debt monetization in the US (and other countries). There
is no doubt that this will continue even after COVID disappears, as large deficits that have to be monetized will exist.
This makes everyone financially rich (i.e., they have a lot of money) and devalues money, which takes away much of
this newfound wealth.
USA Total Debt (%GDP, 6mma)
400%
When the Cycle
Changed 350%

300%
When the Cycle
Changed Debt 250%
New Order
200%

150%

100%

50%

0%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
USA Interest Rates USA Monetary Base (%GDP)
18%
28%
16%
Money Supply
14% Interest Rates Surge 24%
12% Money Supply Rise
Surge 20%
10% When the Cycle
When the Cycle Changed
8% 16%
Changed
6%
4% 12%

2%
8%
0%
-2% 4%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Please review the “Important Disclosures and Other Information” located at the end of this presentation.
4
 THIS PRINTING OF MONEY AND BUYING OF DEBT ASSETS HAS DRIVEN
INTEREST RATES SO LOW THAT CASH AND BONDS ARE STUPID TO OWN
You aren’t getting an interest rate—why would you keep your money there? You are
guaranteed to get lousy rates, particularly on cash. The charts below show that you are
basically going to get the worst interest rates ever in both inflation-adjusted and nominal terms.
Real Bond Yield Nominal Bond Yield
USA EUR JPN USA EUR JPN
9% 18%
16%
7%
14%
12%
5%
10%
Bad
3% 8%
Worst ever
6%
1% Worst ever
4%
2%
-1%
0%
-3% -2%
1900 1925 1950 1975 2000 2025 1900 1925 1950 1975 2000 2025
Real Cash Rate Nominal Cash Rate
USA EUR JPN USA EUR JPN
10% 18%
8%
15%
6%
4% 12%
Terrible
2% 9%
0%
6%
-2% Worst ever
-4% 3%

-6%
0%
Worst ever
-8%
-3%
-10%
1900 1925 1950 1975 2000 2025
1900 1925 1950 1975 2000 2025
Please review the “Important Disclosures and Other Information” located at the end of this presentation.
5
 Think about the deal. The charts below show the number of years it takes for the money one
invests in bonds and cash to be returned before one starts making a profit. The one on the top
left is in dollars and the one on the top right is in inflation-adjusted dollars. As shown, the
amounts of time are between 50 years and never. This creates more incentive to sell and
borrow this debt than to buy more. At the same time, a lot more debt will be produced and will
have to be sold. There won’t be enough demand to buy it, especially since global investors are
already overweight in it. The way this is dealt with is that the Fed prints a lot more money and
buys a lot of debt.
In Nominal Dollars In Inflation-Adjusted Dollars
Cash Bonds Cash Bonds
100 200
90 180
80 160
70 140
60 120
50 100
40 80
30 60
20 40
10 20
0 0
1900 1920 1940 1960 1980 2000 2020 1900 1920 1940 1960 1980 2000 2020

The Number of Years It Takes to Get Paid Back in US Equities

30

25

20
History has shown
that when this is 15
high, subsequent
real returns are bad
10

5
1900 1920 1940 1960 1980 2000 2020
Please review the “Important Disclosures and Other Information” located at the end of this presentation.
6
 THE GOVERNMENT’S BORROWING, WHICH WILL NEVER BE PAID
BACK IN REAL TERMS, AND THE FED’S PRINTING OF MONEY TO
MAKE UP FOR THE SHORTFALL IN FREE MARKET DEMAND WILL BE
THE HIGHEST SINCE THE WAR YEARS
The chart on the left shows the size of the deficit since 1900, and the one on the right shows
the amount of printed money. This enormous production of debt and money has pushed the
value of money down and driven the prices of all investment assets and most everything (e.g.,
houses and commodities) up, which is why the future returns of these investment assets will be
low.

USA Budget Deficit (%GDP)

USA Monetary Base (%GDP, 12mma)
30%
10%

5% 25%

0%
20%
-5%

-10% 15%

-15%
10%
-20%

-25% 5%

-30%
0%
1900 1925 1950 1975 2000 2025
1900 1925 1950 1975 2000 2025

Estimates based on Bridgewater analysis. Please review the “Important Disclosures and Other Information” located at the end of this presentation.
7
REMEMBER THAT ONE PERSON’S DEBTS ARE ANOTHER PERSON’S
ASSETS, AND IMAGINE WHAT WOULD HAPPEN IF THE ASSET
HOLDERS SOLD BECAUSE THE DEBT ASSETS WERE UNATTRACTIVE
(WHICH THEY ARE)

That would lead to either a big increase in interest rates or a huge increase in the printing
of money to buy the debt to artificially hold interest rates down. The chart below shows the
amount of debt assets relative to GDP, which means that a lot can be sold if the holders
lose their taste for it.

USA Debt and Credit Liabilities as a % of GDP

%NGDP %PGDP

400%

350%

300%

250%

200%

150%

100%

50%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

Estimates based on Bridgewater analysis. Please review the “Important Disclosures and Other Information” located at the end of this presentation.
8
THE AMOUNT OF FINANCIAL ASSETS RELATIVE TO REAL ASSETS IS
DANGEROUSLY HIGH, WHICH COULD LEAD TO A “BANK RUN”-TYPE
MOVE FROM FINANCIAL ASSETS TO REAL ASSETS

I am not saying this will happen, but I am saying that there is a much higher probability of
this happening than is reflected in market pricing. Think about it. There is only one
purpose of investment assets, and that is to sell them to get cash to buy the real goods
and services that one wants. Throughout history, whenever there were far more claims on
real assets than there were real assets, a crisis eventually occurred when many holders of
these financial assets went to sell them and discovered that there were far too many of
them. That led to a “run on the bank”-type dynamic. Right now, there are vastly more
financial assets than there are real assets, so if there was a move to convert them into
real assets, that would lead to a “run on the bank”-type dynamic, which central banks
would certainly respond to by printing a lot of money to allow people to get the money, but
it would be of much less value.

9
 Making financial asset prices go up by creating a lot of money and debt makes people
financially richer, but it doesn’t make them actually richer. It also leads to periods of bad real
returns. This is shown in the following charts. The top chart shows financial asset values as a
percentage of all assets, the second chart shows financial net worth relative to GDP, and the
third chart shows rolling returns of the 60/40 stock/bond portfolio since 1910.
USA Financial Assets Relative to Total USA Assets
65%
Dot-Com
1929 Stock
Bubble 60%
Market Bubble
Nifty Fifty
FDR 1970s 55%
Devaluation
50%
Housing Bubble
WWII 45%
Volcker Tightening/
WWI Reagan Revolution
40%
1900 1920 1940 1960 1980 2000 2020
USA Personal Financial Net Worth (%GDP)
350%

300%

250%

200%

150%

100%

50%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
USA 60/40 Rolling Return (Trailing 10-Year, Real, Ann)
20%

15%

10%

5%

0%

-5%

-10%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Financial asset measures sourced from the World Inequality Database. Personal Financial Net Worth represents gross personal financial assets minus private debts. USA 60/40 refers to a portfolio with a 60% allocation to US equities
and a 40% allocation to US government bonds. Please review the “Important Disclosures and Other Information” located at the end of this presentation. 10
 PERIODS LIKE THESE PRODUCE TERRIBLE RETURNS
FOR HOLDING CASH
In my opinion, the four periods circled in the chart below are the analogous periods to today,
each of which produced analogous paradigms to what we’re experiencing.

Real Return of Cash (vs CPI)

USA GBR DEU FRA ITA JPN CHE ESP NLD
300%

250%

200%

150%

100%

50%

0%

-50%

-100%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030

Estimates are based on Bridgewater analysis. Please review the “Important Disclosures and Other Information” located at the end of this presentation.
11
 PERIODS LIKE THESE EVENTUALLY PRODUCE BAD REAL RETURNS
FOR STOCKS AND BONDS
Real Cumulative Drawdowns Real Cumulative Drawdowns
USA Cash GBR Cash USA 60/40 Portfolio GBR 60/40 Portfolio
0% 0%
-43% -20%
-10% -10%
-21% -20% -20%
-48%
-11%
-55% -55% -30% -47% -30%
-40%
-40% -40%
-62% -54%
-50% -68% -50%
-27% -60% -60%

-70% -70%

-80% -80%

-90% -90%
1900 1920 1940 1960 1980 2000 2020 1900 1920 1940 1960 1980 2000 2020

Real Cumulative Drawdowns Real Cumulative Drawdowns

USA Equities GBR Equities USA Bonds GBR Bonds
0% 0%

-10% -10%

-20% -20%
-29%
-30% -30%
-52% -40%
-49% -48%
-40% -51% -40%
-62% -50% -50%
-56%
-64%
-77% -60% -60%

-70% -70%
-80%
-80% -80%

-90% -90%
1900 1920 1940 1960 1980 2000 2020 1900 1920 1940 1960 1980 2000 2020

60/40 portfolio refers to a portfolio with a 60% allocation to the respective country’s equities and a 40% allocation to their bonds. Please review the “Important Disclosures and Other Information” located at the end of this presentation.
12
 AT SUCH TIMES, LIQUID, PORTABLE, AND GLOBALLY ACCEPTED
ALTERNATIVE MONIES SUCH AS GOLD, INFLATION-LINKED BONDS,
AND POSSIBLY DIGITAL CURRENCIES ARE GOOD HEDGES, THOUGH
THEY ORDINARILY HAVE POOR RETURNS LIKE CASH. THEREFORE,
THEY ARE MORE EFFECTIVELY USED AS OVERLAYS.

13
GOLD RETURNS HAVE BEEN STRONG WHEN THE 60/40 STOCK/BOND
PORTFOLIO MIX HAS BEEN BAD
The chart below shows how gold returns have been strong when the 60/40 stock/bond mix has
been bad. That makes gold a good diversifier but generally a poor investment.
Gold Returns During 60/40 Drawdowns
Gold (in Global FX) Returns Global 60/40 Drawdowns
200%

150%

100%

50%

0%

-50%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

For that reason, it pays to hold an overlay of gold (about 15% of one’s portfolio) on top of one’s
financial assets.
Global 60/40 Plus Gold (in Global FX) Overlay, Risk, and Return
0.50 5.1%
16% gold overlay
4.9%
0.48
4.7%
0.46
Portfolio Ratio

Portfolio Return
4.5%
0.44 4.3%

More 4.1%
0.42
gold 3.9%
0.40 Each dot represents an
60% equities, 3.7%
additional 4% overlay of gold
40% bonds
0.38 3.5%
8.0% 8.5% 9.0% 9.5% 10.0% 10.5% 11.0% 11.5% 12.0% 12.5%
Portfolio Volatility
Global 60/40 refers to a portfolio with a 60% allocation to equities and a 40% allocation to bonds, with each asset allocated geographically in line with the following weights: USA – 40%, EUR – 20%, JPN – 20%, GBR – 20%, and is
shown in USD-hedged terms. Please review the “Important Disclosures and Other Information” located at the end of this presentation.
14
 INFLATION-LINKED BONDS, ESPECIALLY WHEN LEVERAGED,
ARE A GOOD INVESTMENT FOR DIVERSIFYING AGAINST
THIS ENVIRONMENT
IL Bond Returns During Global 60/40 Drawdowns
US IL Bond Returns Global 60/40 Drawdowns
60%

40%

20%

0%

-20%

-40%

-60%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

Global 60/40 Plus USA IL Bond Overlay, Risk, and Return

0.60 13%

0.58 12%
11%
0.56
10%

Portfolio Return
More IL
Portfolio Ratio

0.54 9%
bonds
0.52 8%

0.50 7%
6%
0.48 60% equities,
Each dot represents an additional 5%
0.46 40% bonds 15% overlay of IL bonds
4%
0.44 3%
7% 8% 9% 10% 11% 12% 13% 14% 15% 16%
Portfolio Volatility

Global 60/40 refers to a portfolio with a 60% allocation to equities and a 40% allocation to bonds, with each asset allocated geographically in line with the following weights: USA – 40%, EUR – 20%, JPN – 20%, GBR – 20%, and is
shown in USD-hedged terms. Please review the “Important Disclosures and Other Information” located at the end of this presentation.
15
 2) INTERNAL CONFLICTS OVER WEALTH AND VALUES GAPS
In the US (and a number of other countries), wealth and income gaps are the largest since the
1930s.
USA Wealth Shares USA Income Shares
Top 0.1% Bottom 90% Top 10% Bottom 90%
50% 80%

45%

70%
40%

35%
60%

30%

25% 50%

20%

40%
15%

10%
30%

5%

0% 20%
1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

Source: World Inequality Database

Please review the “Important Disclosures and Other Information” located at the end of this presentation.
16
 AND THE POLITICAL GAPS ARE THE GREATEST EVER
This chart shows that the US Republican Party (red lines) is more right-leaning and the US
Democratic Party (blue lines) is more left-leaning than at any time since 1900, so the gap
between them is enormous. There is great internal conflict going on in the United States
now, which makes it a risky place. For example, it is entirely possible that neither side will
accept losing the 2024 election. Such political clashes hurt productivity and create an
inhospitable environment, which hurts capital flows.
Ideological Positions of the Major Parties
House Republican Senate Republican House Democrat Senate Democrat
0% 60%

-5%
50%
-10%
More Conservative

-15% 40%

-20%
30%
-25% Greatest Gap...

-30% 20%

-35%
10%
Less Conservative
-40%

-45% 0%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030

Based on data from voteview.com. Please review the “Important Disclosures and Other Information” located at the end of this presentation.
17
 GOVERNMENT SPENDING WILL INCREASE A LOT. TAX RATES WILL
RISE A LOT, BUT NOT ENOUGH TO COVER THE SPENDING. SO
WEALTH WILL BE REDISTRIBUTED THROUGH BOTH TAXES AND
DEBT MONETIZATIONS.
The tax rates are rising because money is needed for the government to fund its programs.
Also, worker compensation is rising quickly, which will shrink real profit margins and raise
inflation. The environment is becoming less hospitable for capitalists, which will affect capital
flows.
Effective Tax Rates on Top 0.01% of Income and Wealth
(as a % of Total Lifetime Income + Asset Returns)
Effective Biden Plan (as Proposed)
85%

Great WWII 75%

Depression, Reagan
FDR Cuts

WWI Bush Cuts 65%

Increase from many

more people impacted Est range
by estate taxes of 77%, 55%
along with tax changes Hit from financial crisis and
from LBJ and Nixon swift recovery, along with
expiry of Bush tax cuts and 45%
new Obamacare taxes

Biden plan as originally proposed would be

35%
the biggest tax increase on very wealthy
since FDR, though tax rates still lower than
in the ’70s
25%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030

Please review the “Important Disclosures and Other Information” located at the end of this presentation.
18
 3) EXTERNAL CONFLICTS DUE TO THE RISES AND DECLINES OF
GREAT POWERS
The chart below shows indices of the strengths and weaknesses of the leading world powers since
1500. Note the Dutch, British, American, and Chinese cycles. The Dutch guilder was the world’s
reserve currency when the Dutch Empire was on top, the British pound was the world’s reserve
currency when the British Empire was on top, and the US dollar is the dominant reserve currency now
that the US is on top. Note how things are changing. These cycles are transpiring for archetypical
reasons.
Rough Estimates of Relative Standing of Empires
Major Wars United States China United Kingdom Netherlands Spain
Germany France India Japan Russia Ottoman Empire

The American 1.0

The British
The Dutch 0.8

Level Relative to Other Empires

The Chinese

(1 = All-Time Max)
0.6

0.4

0.2

0.0
1500 1550 1600 1650 1700 1750 1800 1850 1900 1950 2000

Please review the “Important Disclosures and Other Information” located at the end of this presentation.
19
 This chart is a simplified version of what you just saw for these four empires. The gray
shaded areas are the periods of great internal and external conflicts and restructurings via
depression, revolution, and war (typically lasting 10-25 years). They are followed by more
extended periods of peace and prosperity in which order is brought about by the existence
of a dominant power that no country wants to fight because it’s too strong, leading people
to work harmoniously together.
Reserve Empire Transitions of the Past Four Centuries
(Simplified Representation)
NLD GBR USA CHN

Standing Relative to Other Powers

100

80

Likely 60
revolution/war
periods 40

20

0
1600 1655 1710 1765 1820 1875 1930 1985 2040

End of the Old, Beginning of the New

(e.g., Dutch to British)
- Great Internal Conflicts
- Large Transfers of Wealth
(from the “haves” to the “have-nots”)
- External Wars
- Debt and Currency Crises
Please review the “Important Disclosures and Other Information” located at the end of this presentation.
20
 THE ARCHETYPICAL BIG CYCLE
I will begin taking you through the typical cycle at the point that the new order is created. After revolutions
and wars, a new order—i.e., a new system run by new leaders—is created. For example, the last world
order to be created came after WWII, in 1945. At that point in the cycle there is a dominant power, and
nobody wants to fight the dominant power, so this part of the cycle is typically peaceful and, if managed
well, prosperous. It is economically rewarding, which leads people to borrow and bet on it continuing,
leading to over-indebtedness. Because economic opportunities are naturally distributed unevenly, large
wealth gaps develop. Also, with time, competitors emerge and grow in power. Over-indebtedness and
declining competitiveness eventually lead to financial problems at the same time as there are large
wealth and political gaps. This produces more internal conflict and people demanding more money,
which leads governments to create more debt and print a lot more money, which weakens the currency
and raises inflation. As the dominant power weakens and other powers get strong enough to challenge it,
there are greater internal and external conflicts that lead to revolutionary changes in who has what
wealth and power. That ends the old order and leads to the next new order. That is now happening.
The Typical Big Cycle
Behind Empires’ Rises and Declines
Big Wealth Gap Debt Bust
100

Standing Relative to Other Powers

Debt 80
Bubble Printing Money
and Credit
60
Big Internal and
Well-Financed External Conflicts
Prosperity 40
Wealth and Political
Restructuring
20
New New
Order Order
0 20 40 60 80 100 120 140 160 180 20 0 220
0
Time

Please review the “Important Disclosures and Other Information” located at the end of this presentation. 21
As explained in my conclusions up front, I believe that important wealth and power
shifts are underway, creating a new paradigm in which 1) it is undesirable to hold
dollar-, euro-, and yen-denominated credit assets, especially short-term debt assets,
because they will have significantly negative real returns, and 2) it is desirable to
hold a well-diversified portfolio of currencies, countries, and asset classes.

22
What I’ve given you above is an inadequately brief overview of that which is covered
comprehensively in my book Principles for Dealing with the Changing World Order. If
you are interested in this subject, I urge you to read it.

23
Important Disclosures and Other Information
Please read carefully the following important disclosures and other information as they provide additional information
relevant to understanding the assumptions, research and performance information presented herein. Additional
information is available upon request except where the proprietary nature of the information precludes its dissemination.

24
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Certain information contained herein constitutes forward-looking statements (including projections, targets, hypotheticals, ratios, estimates, returns, performance, opinions, activity and other events contained or referenced herein), which
can be identified by the use of terms such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue” or “believe” or other variations (or the negatives thereof) thereof. Due to various risks, assumptions,
uncertainties and actual events, including those discussed herein and in the OM, actual results, returns or performance may differ materially from those reflected or contemplated in such forward-looking statements. As a result,
prospective investors should not rely on such forward-looking statements in making their investment decisions. Any forward-looking statements contained herein reflect Bridgewater’s current judgment and assumptions which may
change in the future, and Bridgewater has no obligation to update or amend such forward-looking statements.
Bridgewater’s investment process seeks to understand the cause and effect linkages that drive markets over time. To assess and refine its understanding of these linkages, Bridgewater performs historical stress tests across a wide
range of timeframes and market environments. From these stress tests, Bridgewater is able to simulate how its strategies would have performed prior to their inception. For strategies that include active decision making, Bridgewater
often “humbles” its simulated alpha returns (by systematically adjusting downward the simulated results that Bridgewater’s current alpha investment logic produces) to account for the possibility that it could be wrong. Because this stress
testing is a core component of Bridgewater’s investment process, it shares these simulations with current and prospective investors to demonstrate its thinking. However, because they do not demonstrate actual results, these
simulations are inherently limited and should not be relied upon to make an investment decision.
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO
ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS
SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.
ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE
FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO
ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER
FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL
PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.
Bridgewater believes that a particular return stream should be evaluated against its expected performance or its benchmark. To that end, Bridgewater demonstrates whether its strategies are operating as expected via a cone chart,
which shows the performance of a particular strategy over time relative to the strategy’s benchmark and also within bands of standard deviation from that benchmark. Separately, to demonstrate the impact of market conditions on the
strategies it manages, Bridgewater explains the macro-economic pressures and market conditions that effected performance in the context of client letters, account reviews, or other publications that Bridgewater provides to each current
and prospective investor on a regular basis. Additional information about how Bridgewater thinks about setting expectations for its strategies via a benchmark is available upon request.

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 IMPORTANT DISCLOSURES
Any tables, graphs or charts relating to past performance, whether hypothetical, simulated or actual, included in this presentation are intended only to illustrate the performance of indices, strategies, or specific accounts for the historical
periods shown. When creating such tables, graphs and charts, Bridgewater may incorporate assumptions on trading, positions, transactions costs, market impact estimations and the benefit of hindsight. For example, transaction cost
estimates used in simulations are based on historical measured costs and/or modeled costs, and attribution is derived from a process of attributing positions held at a point in time to specific market views and is inherently imprecise.
Such tables, graphs and charts are not intended to predict future performance and should not be used as a basis for making any investment decision. Bridgewater has no obligation to update or amend such tables, graphs or charts.
Statements regarding target performance or target ratios related to assumed risk budgets, liabilities, volatility, target volatility, tracking error or other targets should not be considered a guarantee that such results can or will be achieved.
For example, Bridgewater may adjust returns to match, for instance, the annualized standard deviation of two or more return series but this adjustment does not suggest that the returns or assets are similar with respect to other aspects
of the risk such as liquidity risk. Any statements with respect to the ability to risk match or risk adjust in the future are not a guarantee that the realized risks will be similar and material divergences could occur. All performance and risk
targets contained herein are subject to revision by Bridgewater and are provided solely as a guide to current targets.
Discussions related to the risk controlling capabilities of low risk portfolios, diversification, passive investing, risk management, risk adjusting, and any other risk control theories, statements, measures, calculations and policies contained
herein should not be construed as a statement that Bridgewater has the ability to control all risk or that the investments or instruments discussed are low risk. Active trading comes with a monetary cost and high risk and there is no
guarantee the cost of trading will not have a materially adverse impact on any account, fund, portfolio or other structure. Bridgewater manages accounts, funds and strategies not referred to herein. Additionally, even where accounts,
funds or strategies are traded similarly, performance may materially diverge based on, among other factors, timing, the approved instruments, markets, and target risk for each strategy or market. The price and value of the investments
referred to in this presentation and the income, if any, derived from there may fluctuate.
Statistical and mathematical measures of performance and risk measures based on past performance, market assumptions or any other input should not be relied upon as indicators of future results. While Bridgewater believes the
assumptions and possible adjustments it may make in making the underlying calculations are reasonable, other assumptions, methodologies and adjustments could have been made that are reasonable and would result in materially
different results, including materially lower results. Where shown, targeted performance and the abilities and capabilities of the active and passive management approaches discussed herein are based on Bridgewater’s analysis of
market data, quantitative research of the underlying forces that influence asset classes as well as management policies and objectives, all of which are subject to change. The material contained herein may exhibit the potential for
attractive returns, however it also involves a corresponding high degree of risk. Targeted performance, whether mathematically based or theoretical, is considered hypothetical and is subject to inherent limitations such as the impact of
concurrent economic or geo-political elements, forces of nature, war and other factors not addressed in the analysis, such as lack of liquidity. There is no guarantee that the targeted performance for any fund or strategy shown herein
can or will be achieved. A broad range of risk factors, individually or collectively, could cause a fund or strategy to fail to meet its investment objectives and/or targeted returns, volatilities or correlations.
Where shown, information related to markets traded may not necessarily indicate the actual historical or current strategies of Bridgewater. Markets listed may or may not be currently traded and are subject to change without notice.
Markets used for illustrative purposes may not represent the universe of markets traded or results available and may not include actual trading results of Bridgewater. Other markets or trading, not shown herein, may have had materially
different results. Attribution of performance or designation of markets and the analysis of performance or other performance with respect to scenario analysis or the determination of biases is based on Bridgewater’s analysis. Statements
made with respect to the ability of Bridgewater, a fund, a strategy, a market or instrument to perform in relation to any other market, instrument or manager in absolute terms or in any specific manner in the future or any specified time
period are not a guarantee of the desired or targeted result.
Bridgewater research utilizes data and information from public, private and internal sources, including data from actual Bridgewater trades. Sources include the Australian Bureau of Statistics, Bloomberg Finance L.P., Capital
Economics, CBRE, Inc., CEIC Data Company Ltd., Consensus Economics Inc., Corelogic, Inc., CoStar Realty Information, Inc., CreditSights, Inc., Dealogic LLC, DTCC Data Repository (U.S.), LLC, Ecoanalitica, EPFR Global, Eurasia
Group Ltd., European Money Markets Institute – EMMI, Evercore ISI, Factset Research Systems, Inc., The Financial Times Limited, GaveKal Research Ltd., Global Financial Data, Inc., Haver Analytics, Inc., ICE Data Derivatives,
IHSMarkit, The Investment Funds Institute of Canada, International Energy Agency, Lombard Street Research, Mergent, Inc., Metals Focus Ltd, Moody’s Analytics, Inc., MSCI, Inc., National Bureau of Economic Research, Organisation
for Economic Cooperation and Development, Pensions & Investments Research Center, Refinitiv, Renwood Realtytrac, LLC, Rystad Energy, Inc., S&P Global Market Intelligence Inc., Sentix Gmbh, Spears & Associates, Inc., State
Street Bank and Trust Company, Sun Hung Kai Financial (UK), Totem Macro, United Nations, US Department of Commerce, Wind Information (Shanghai) Co Ltd, Wood Mackenzie Limited, World Bureau of Metal Statistics, and World
Economic Forum. While we consider information from external sources to be reliable, we do not assume responsibility for its accuracy.
None of the information related to a fund or strategy that Bridgewater may provide is intended to form the basis for any investment decision with respect to any retirement plan’s assets. Any information Bridgewater provides should be
independently and critically evaluated based on whatever other sources deemed appropriate, including legal and tax advice; it is also not intended to be impartial investment information or advice as Bridgewater may recommend one or
more Bridgewater products in connection with such information, which would result in additional fees being paid to Bridgewater. Bridgewater’s status as an ERISA fiduciary with respect to the management of any existing or future
Bridgewater product(s) in which you invest would be (or continue to be) set forth in that product’s applicable governing instruments. You are responsible for ensuring that your decision to invest in any Bridgewater product does not violate
the fiduciary or prohibited transaction rules of ERISA, the U.S. Internal Revenue Code or any applicable laws or regulations that are similar. On and after June 9, 2017, the information provided herein is being made available only to
“independent fiduciaries with financial expertise” (within the meaning of the Definition of the Term “Fiduciary”; Conflict of Interest Rule – Retirement Investment Advice, 81 Fed. Reg. 20,946 (Apr. 8, 2017), available at
https://www.gpo.gov/fdsys/pkg/FR-2016-04-08/pdf/2016-07924.pdf), and this presentation should not be accepted by any person who does not meet such requirements.
This presentation was written in connection with the promotion or marketing of a Bridgewater fund or strategy, and it was not intended or written to be used and cannot be used by any person for the purpose of avoiding penalties that
may be asserted under the U.S. Internal Revenue Code.
In certain instances amounts and percentages in this presentation are approximate and have been rounded for presentation purposes. Statements in this presentation are made as of the date appearing on this presentation unless
otherwise indicated. Neither the delivery of this presentation or the OM shall at any time under any circumstances create an implication that the information contained herein is correct as of any time subsequent to such date. Bridgewater
has no obligation to inform potential or existing investors when information herein becomes stale, deleted, modified or changed. ©2021 Bridgewater Associates, LP. All rights reserved.

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