Ray Dalio: Cathie Wood's $500,000 Bitcoin Forecast 'Doesn't Make Sense'

"The system is going to change greatly because there are irreconcilable differences dealing with money and wealth distribution. … Investors should think beyond the immediate two to five years ahead."

Part of that global change is the growing power and importance of China, according to Dalio, who has written a new book, "Principles for Dealing With the Changing World Order: Why Nations Succeed and Fail," due out this fall.

Investors should also try to understand China and why a communist, Marxist economy can be capitalistic and the second-largest economy in the world, producing billionaires and affecting capital markets, according to Dalio.

"If you can't resolve that, then you don't understand China," and the more the U.S. and China fail to understand each other, the more they are likely to be an existential risk to each other, he said.

Forthcoming Retirement

On a personal note, Dalio said he expects to work another year or two and then he's "done," going "quiet" and doing the things he likes to do. The 72-year-old hedge fund manager said he's entered the transitional phase of his life, when he will work to help others try to be successful.

As part of that mission, he has created free, public online versions of the methodologies used at Bridgewater Associates whereby employees routinely critique the performance of other employees in order to maximize performance. The websites, called PrinciplesYou and PrinciplesUs, are based on the same "radical truthfulness" and "radical transparency" that underlie those routine critiques.

"Knowing what you're like and knowing what others are like allows people to play to their strengths and avoid their weaknesses rather than try to cover them up with politics," Dalio said.

Pictured: Ray Dalio. (Photo: Bridgewater Associates)