Bridgewater's Interest Rate System
A while back, I was reading Ray Dalio's "Life and Principles" when I stumbled across a PDF on page 106 in the app. The PDF was a research paper from Bridgewater, and it was to put it simply a method of predicting FED action regarding the federal funds rate.
Here is a link to the full paper
I then decided to create a google sheet to mimic the system and to make my own predictions. Keep in mind, this was before I actually learned to use excel proficiently so the whole sheet looks pretty rough. Funnily enough, I got the predictions correct before the shift towards an "unlimited QE" policy by the Fed.
https://docs.google.com/spreadsheets/d/12IdOCE93J_sHhQuOnsw7rlJzReL_S-hhnjFNV6iRMXE/edit?usp=sharing
The main problem with this system (this is pointed out in the research paper as well) is that it has an assumption that there is a "wise" Fed chairman holding the reigns. In my opinion, QE4 was highly irresponsible, the cutting of rates before the pandemic was unwise and potentially politically charged.
So for now this system will not work. However, if you want to take more guesswork out of the equation in the future when the economy normalizes, I have included a link to the updated model in a google sheet format. Just make sure to download and open in excel.
https://docs.google.com/spreadsheets/d/1_sJtIwZqp-Z-fkQmUIS4qx2kF2vL9mI1rwvs4CPbomg/edit?usp=sharing
*Just as a side note, some of the data that the system tracks have been discontinued, so I only included the data points available at the present time.
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