 Good day fellow investors! One of the most important things for an investor to know is what's going on in the economy, in the global economy, in the credit cycle, what's going on with the productivity of the country he is invested in. You might not think that is important because those are very long-term trends, however if you take a look at those your returns can really be extraordinary in the long term. One of the persons that's very focused on such long-term trends and he studies humans history for thousands of years back to see what has been going on with humanity, with financial markets, with culture is Ray Dalio. Ray Dalio, hedge fund manager, pretty famous and especially got famous when Tony Robbins based his book practically around Ray Dalio and the all-weather portfolio strategy. The all-weather portfolio strategy looks at what's going on in economics and makes a portfolio that is all-weather. That's whatever happens, you are protected and you make good returns. I'll make a video on how to create an all-weather portfolio in this environment but first let's look at the economic environment through Ray Dalio's eyes. He is very famous for creating a YouTube video that has more than four million clicks, how the economic machine works. That's a half an hour video, it's better to read the 300-page report on his website. I have of course read the report and I'll shortly summarize it here in this video. So stay tuned for essential economic knowledge that will improve your investment returns. There are three major things that impacts an economy. First and most important two-thirds of GDP and growth and economic is impacted by productivity. So how productivity goes so will the economy. The other one third is impacted by short-term and long-term debt cycles. As you can see in this figure in the long-term the economic growth is pretty stable and short-term and long-term cycles are creating these balances but as the productivity grows so grows the economy almost at a straight line. So the main factor is productivity. We'll come back to that later. Let's now see the short-term and the long-term debt cycles. The short-term debt cycles is mostly influenced by monetary policy and the short-term situation in the economy. When the economy is expanding the central bank in this case the Fed is forced to trim interest rates which eventually leads to a short-term contraction which out the bank businesses and then recovery starts again especially when monetary policy is eased. This happens every 10 years, 5 to 10 years on average. So we should according to history expect a recession in the next few years. The long-term debt cycle is something completely different. This is really coming from Delio's historical research that goes back centuries. The long-term debt cycle explains how countries enter long-term 75-year debt cycle. The last time the US economy and other developed world economies were at the top of the debt cycle was during the Great Depression of the 1930s. Now we're already 85 years later and we can see how US total debt as a percentage of GDP has been booming in the last 30 years. This is of course unsustainable and somewhere in the future this cycle will go bust and then it will be very painful long-term deleveraging for the US. On top of it house called debt service is very high almost unbearable in the long term in relation to historical levels. So if we look at what has been going on interest rates have been growing up to a certain point in the last 70-80 years and then steadily declining in order to save ourselves from the deleveraging process. In the last eight years the Fed has kept interest rates low so that it keeps the situation as is. However sooner or later when there is a recession the Fed won't be able to lower interest rates it will be only possible to print money thus we will have economic stagnation and inflation. The worst possible outcome come for an economy thus or the so-called stagnflation. At the end of the cycle that's usually what happens and there are other issues for developed economies and they are coming from emerging markets. If we look at the future expected productivity per country we can see that India will grow its productivity at more than 10 percent, Thailand at six seven percent, China at seven percent, Mexico at around five percent, Singapore, Korea, Russia, Argentina, Hungary and then the US will probably grow its productivity at two percent which is still good. European countries are fried I'm sorry to say that but it's the truth. And let me show you another piece of history that's very important and that gives an indication of what expects us in the next 20 to 30 years. I always want to know what will happen in the next 10-20 years because I want my money to have the tailwinds of inevitable economic trends. Don't go against economic trends. This table shows the share of global GDP per country or continent and you can see that from the 1500s to 1870 the largest economical share of the world was in Asia, much larger than in Europe. Only later the US became more important, reached a peak in the 1950s and has been slowly declining since then. When the effects of colonization in India and communism in China, difficult political environment in India stopped having an impact on the economy we can see how their share, their GDP global share has been booming and given their productivity growth explained before it will continue to boom in the future. So economic trends for the future 10-20 years are clear. How will that affect our investments? Well the problem is that I don't know when will something change in financial markets around the world. For now we have extremely expensive developed world assets, relatively fairly priced emerging market assets, cheap commodities. That's the situation. As long as the Fed keeps interest rates low, prints money, European Central Bank prints money, Japan prints as much money, we will have inflated developed assets. I don't know when that will change and that's always the problem with such long-term trends. So the only thing I can do is be prepared. And thankfully it doesn't cost much to be prepared. If you are overweight, developed markets, look at emerging markets, you will have lower valuations, higher dividend yields. That's the cost of being prepared by increasing your exposure to emerging markets is even lower. Commodities are cheap and we have been eight years without inflation, low inflation. When inflation picks up, eventually it has to pick up thanks to the huge amount of money that has been printed, you want to be in commodities. So they are cheap, the downside risk is low, the potential is very high. Precious metals also similar situation with commodities. So you might want to increase your exposure and you want to do it now when the cost is low. Later, when things already start to change, it will be too late. Then it will be again interesting to look at developed markets. So it's all about finding mispricings, finding low-cost exposures for high potential rewards. I'll be making a video about how to create an all-weather portfolio in this environment, how to make a portfolio strategy. So please subscribe for more content, leave your comments below. I'm very interested in seeing how do you see this environment, how do you see these long-term macroeconomic changes and trends. I'll see you in the next video.