{"id":23574,"date":"2011-07-18T13:18:31","date_gmt":"2011-07-18T17:18:31","guid":{"rendered":"http:\/\/www.hedgeco.net\/news\/?p=23574"},"modified":"2011-07-18T13:23:02","modified_gmt":"2011-07-18T17:23:02","slug":"new-yprker-review-how-ray-dalio-built-the-world%e2%80%99s-richest-and-strangest-hedge-fund","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/07\/2011\/new-yprker-review-how-ray-dalio-built-the-world%e2%80%99s-richest-and-strangest-hedge-fund.html","title":{"rendered":"New Yorker Review: Ray Dalio And His Hedge Fund"},"content":{"rendered":"

\"\"<\/a>New York (HedgeCo.net) – In the July 25, 2011, issue of The New Yorker, in \u201cMastering the Machine<\/a>\u201d, John Cassidy talks to Ray Dalio and gets an exclusive look inside Bridgewater Associates, the world\u2019s biggest hedge fund, of which Dalio is the founder.<\/p>\n

Dalio, in the tradition of George Soros and Julian Robertson\u2014famous speculators who ranged across markets\u2014is a \u201cmacro\u201d investor, which means that he bets mainly on economic trends, such as changes in exchange rates, inflation, and G.D.P. growth, and he has made a number of spot-on predictions (in late 2007, he told the Bush Administration that many of the world\u2019s largest banks were on the verge of insolvency\u2014a warning that was ignored).<\/p>\n

Dalio insists that what he calls Bridgewater\u2019s culture of \u201cradical transparency,\u201d in which he encourages people to challenge one another\u2019s views openly, regardless of rank, is central to the firm\u2019s success. \u201cI believe that the biggest problem that humanity faces is an ego sensitivity to finding out whether one is right or wrong and identifying what one\u2019s strengths and weaknesses are,\u201d he tells Cassidy.<\/p>\n

His philosophy\u2014which he\u2019s summed up in \u201cPrinciples,\u201d a hundred-page text that is required reading for Bridgewater\u2019s new hires, and, Cassidy writes, is \u201cpartly a self-help book, partly a management manual, and partly a treatise on the principles of natural selection as they apply to business\u201d\u2014has \u201ccreated a workplace that some call creepy,\u201d and some critics refer to Bridgewater as a cult.<\/p>\n

Dalio says, however, that the specific culture of Bridgewater is \u201cwhy we made money for our clients during the financial crisis when most others went over the cliff. . . . Our greatest power is that we know that we don\u2019t know and we are open to being wrong and learning.\u201d<\/p>\n

Dalio \u201cdoesn\u2019t pretend that Bridgewater is a typical workplace, but he is sensitive to criticism,\u201d Cassidy writes. \u201cI\u2019ve been surprised that there\u2019s been so much controversy about us having such clearly set-out principles, especially since they\u2019re all about being truthful and transparent to do good work and have meaningful relationships,\u201d Dalio says. \u201cMost of the people who don\u2019t like us having them haven\u2019t read them\u2014they just assume that us having a lot of principles makes us a cult.\u201d<\/p>\n

James Comey, Bridgewater\u2019s top lawyer who is a relatively new hire, tells Cassidy that it took him a while to get used to dealing with Dalio. \u201cIt took me three months to realize that when Ray says, \u2018I think you are wrong,\u2019 he really means \u2018I think you are wrong.\u2019 He\u2019s not trying to provoke you, or anything else.\u201d Comey was initially struck by how long it took Bridgewater to make decisions, because of the ceaseless internal debates. But, he says, laughing, \u201cthe mind control is working. I\u2019ve come to believe that all the probing actually reduces inefficiencies over the long run, because it prevents bad decisions from being made.\u201d<\/p>\n

Part of Dalio\u2019s innovation, Cassidy writes, has been to build a hedge fund that caters principally to institutional investors rather than to rich people; of the roughly one hundred billion dollars invested in Bridgewater, only a small proportion comes from wealthy families, with the rest coming from public and corporate pension funds and government-run sovereign wealth funds. \u201c<\/p>\n

Making money on a constant basis is the holy grail, and Ray and Bridgewater have done that,\u201d Ng Kok-Song, the chief investment officer of the Government Investment Corporation of Singapore, which invests with Bridgewater. \u201cThey are consistently innovating\u2014constantly soul-searching and asking, \u2018Have we got this right?\u2019 . . . I am constantly asking myself, \u2018If Bridgewater is doing this, shouldn\u2019t we be doing the same thing?\u2019?\u201d Dalio is in constant communication with his clients.<\/p>\n

\u201cWhen a lot of folks were very, very secretive, Ray could see the value in creating something that was more open, something that was attractive to very large streams of money,\u201d Robert Johnson, a former senior executive at Soros Fund Management, who now runs the Institute for New Economic Thinking, says. \u201cIn that sense, he was a visionary.\u201d Cassidy writes that after the near implosion of the financial system brought about a deep recession, some policymakers came to respect Dalio\u2019s analysis as well.<\/p>\n

This spring, Dalio told Cassidy that economic growth in the United States and Europe was set to slow again; now that the slowdown appears to have arrived, Dalio thinks it will be prolonged. \u201cWe are still in a deleveraging period,\u201d he says. \u201cWe will be in a deleveraging period for ten years or more.\u201d He believes that some heavily indebted countries, including the United States, will eventually opt for printing money as a way to deal with their debts, which will lead to a collapse in their currency and in their bond markets.<\/p>\n

\u201cPeople concentrate on the particular thing of the moment, and they forget the larger underlying forces,\u201d he says. \u201cThat\u2019s what got us into the debt crisis. It\u2019s just today, today . . . I think late 2012 or early 2013 is going to be another very difficult period.\u201d<\/p>\n

Editing by Alex Akesson
\nFor HedgeCo.net<\/a>
\nalex@hedgeco.net<\/a>
\nHedgeCo.Net<\/a> is a premier hedge fund database<\/a> and community for qualified and accredited investors only. Membership in HedgeCo.net<\/a> is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds<\/a>!<\/p>\n","protected":false},"excerpt":{"rendered":"

New York (HedgeCo.net) – In the July 25, 2011, issue of The New Yorker, in \u201cMastering the Machine\u201d, John Cassidy talks to Ray Dalio and gets an exclusive look inside Bridgewater Associates, the world\u2019s biggest hedge fund, of which Dalio […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,16022],"tags":[],"class_list":["post-23574","post","type-post","status-publish","format-standard","hentry","category-hedgeco-news","category-opinion"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/23574","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=23574"}],"version-history":[{"count":5,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/23574\/revisions"}],"predecessor-version":[{"id":23576,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/23574\/revisions\/23576"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=23574"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=23574"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=23574"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}