December 14, 2012

Bridgewater’s Dalio: Expect Austerity, Rising Interest Rates in 2013

Next year will bring austerity and rising interest rates, predicts Ray Dalio, founder of Bridgewater Associates, the largest hedge fund manager.

Plus, the Fed is out of bullets.

Speaking at The New York Times DealBook conference, Dalio said austerity is coming due to Washington's inability to solve the fiscal cliff, Business Insider reported.

The Fed, meanwhile, has fired its “bazooka” and its continuing quantitative easing will have little impact.

Yields, already at rock-bottom levels, can't go down any more and will begin rising next year, probably in late 2013, he said, according to Business Insider.

"We're facing austerity. And growth is flagging. This is an unprecedented risk the economy is facing — a slowdown with very little room to maneuver."

Still, Business Insider reported that Dalio predicts stocks will outperform bonds next year.

Dalio agrees with other top investors who believe interest rates will pop a bond bubble and create a moneymaking opportunity when the finally increase, CNNMoney reported.

Source: MoneyNews

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

December 10, 2012

Ray Dalio talks about countries with good expected economic growth

According to Ray Dalio, economic growth depends monthly on debt and competitiveness. There are many factors that influence the level of competitiveness as well as of debt but according to him the best countries for growth are: India, China, Mexico, Russia while the worst are Japan, France, Italy, Spain and USA is somewhere between with expected 2% growth in the coming years.

In one of his research papers Ray Dalio explains about the cycle of countries and how they develop and reach certain point where growth weakens:

-In the early stages, people know they are poor and thus have limited resources and savings. The economy has reduced debt because they have no insurance.

-In the subsequent stage, the wealth is increasing, but psychology is still the same. They save, work hard, and maneuver cautiously. But investment and exports increase and their assets, like gold and real estate, expand.

-Now comes the part where they realize that they are actually rich. Their per capita income breaks records. The psychology shifts as the generation is replaced by new people who like to spend and enjoy more. Working hours go down, while expenditures on luxuries goes up.

-In the next phase, the economy gets poorer, but the psychology of people and governments does not budge. Debt to earning ratio increases, incomes are high but spending is even higher, payment and government deficit expands. Infrastructure weakens and productive investments lose steam.

-The bubble of being wealthy bursts and deleveraging and austerity measures come in play. They print more money and lower interest rates to help GDP growth. The previously powerful economies now start competing with developing and emerging economies.

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

October 19, 2012

Ray Dalio – BridgeWater Associates Q2 Letter

The developed world remains mired in the deleveraging phase of the long-term debt cycle. The European deleveraging has been badly managed and is escalating, bringing Europe closer to either a debt implosion or a monetization and currency collapse. The impact of the European deleveraging has spread to the emerging world through diminished capital flows which have weakened their growth rates and undermined their asset prices. In the US, the deleveraging is progressing in a more orderly fashion but continues to weigh on the economy's ability to grow without the monetary support of the Fed. Our studies of deleveragings have proven to be invaluable through this period (let us know if you would like a copy of the expanding library). Because the dynamics of deleveragings are understandable and observable throughout history, one can reasonably assess the nature of their outcomes over time. But because highly-indebted systems that are in deleveragings are also inherently unstable, the timing of discrete events is always highly uncertain (e.g., the shift from austerity to monetization, an exit from the euro, etc.). Through these studies we have continued to refine the indicators we use to measure how the forces of deleveraging are impacting various economies and markets, and we continue to make the relevant adjustments to our investment process that both allow us to anticipate these shifts and to control our risks through the unpredictable twists and turns.

At this point in time Europe is in the most critical stage of the deleveraging process, without a credible plan that will allow a transition from an "ugly" deleveraging, where incomes fall faster than debts decline, to a "beautiful" one, where income grows faster than debts. A transition from an "ugly" to a "beautiful" deleveraging requires an acceptable mix of default, redistribution and monetization. Steps have been taken in this direction, but they remain well short of what is necessary. The range of potential outcomes for Europe and the impacts on the global financial system are wide, so navigating this environment will require flexibility and an understanding of how new policy decisions will affect the path of the deleveraging.

The unresolved European imbalances and the differences in their impacts on each country have produced widening differences in the self-interests of these countries, which have led to political divergences that have magnified the risks. Unlike a year ago, Germany and France no longer stand in solidarity as backstops behind the euro system, but have been divided in their self-interest by divergent financial conditions which are leading to conflicting rather than unified political orientations. France's deteriorating finances and economy have shifted its self-interest toward alliances with "recipient" (lower credit rated) countries like Italy and Spain and away from "contributor" (higher credit rated) countries like Germany and the Netherlands, leaving Germany more isolated as a guarantor of the risks in the euro system and in its views about how to manage the imbalances. Given these shifts in the alliances between contributor and recipient countries we think that the popular assumption that the Germans and the ECB (which requires agreement of the key factions within it) will come through with money to make all of these debts good should not be taken for granted. Said differently, we think that there are good reasons to doubt that European bank and sovereign deleveragings will be prevented from progressing to the next stage in a disorderly way, without a viable Plan B in place. This fat tail event must be considered a significant possibility.

Given the lack of global private sector credit creation, the world's economies remain highly reliant on government support through monetary and fiscal stimulation. Now that the most recent round of global monetary stimulation has ended, world economic growth has slowed and central bankers are in the process of stimulating again. We estimate that in the past few months, global growth has slowed from about 3.3% to 1.9% and that 80% of the world's economies have slowed, including all of the largest. The breadth of this slowdown creates a dangerous dynamic because, given the inter-connectedness of economies and capital flows, one country's decline tends to reinforce another's, making a self-reinforcing global decline more likely and a reversal more difficult to produce. And at this point, while actions have been taken, none of the world's largest economies are stimulating aggressively via either monetary or fiscal policy, further reducing the odds of a reversal.

About half of the global slowdown has been due to slower growth in China. In recent years, China has been the locomotive of world growth and its recent sharp slowdown has had knock-on impacts on numerous countries and markets. China itself now makes up 12% of world GDP and its interactions with the rest of the world add to its impact. China is a large export destination for many countries and is the largest marginal consumer of raw materials in the world, so its slowdown has disproportionately hurt the economies which export to China, and its weaker commodity consumption has hurt the commodity producers. In response to this slowdown, China has begun to ease monetary policy and is contemplating more aggressive fiscal stimulation, but the actions have so far been gradual and have not yet been sufficient to produce a notable economic response.

US conditions have slipped with the rest of the world and the Fed has decided to extend its Twist operation; to end it would have been an inappropriate tightening. Last year's hump in growth has passed as numerous temporary forces have faded, and private sector credit growth remains weak, so growth is converging on the growth of income of around 1.5%. Besides the drag from Europe and the potential for a contagious debt blowup there, numerous US federal programs will expire in the fourth quarter, and given the likely political divisions after the election it will be a challenge for the new Congress to deal with these in a timely manner. Without action, the expiration of these programs represents a fiscal drag on growth of about 2.5%. Given the lack of new aggressive Fed stimulation, the threat from Europe, the simultaneous decline in major country growth rates and the fiscal cliff, the risks to US growth are skewed to the downside.

Over the past 18 months what markets are discounting has changed radically, with a clear bias toward discounting much weaker growth for a longer period of time. This shift is reflected in the rise in credit spreads, fall in bond yields, much lower discounted future earnings growth, flattening of the yield curve, currency moves and shifts in commodity prices. But such price changes simply reflect a transition from the discounting of one set of future economic conditions to the discounting of another set of future economic conditions. After discounting a relatively imminent return to normalcy in early 2011, markets are now pricing in a meaningful deleveraging for an extended period of time, including negative real earnings growth, negative real yields, high defaults and sustained lower levels of commodity prices. This pricing is the midpoint of discounted expectations and each market has an equal probability of outperforming or underperforming. By balancing the portfolio's exposure to discounted growth and inflation, a disappointment in one asset class will be offset by gains in another, without the necessity of predicting which it will be.

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

September 22, 2012

Ray Dalio on QE3, Gold, China, Europe, Economy & More



Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

September 21, 2012

Ray Dalio: Southern Europe is facing 10-15 years controlled depression


Countries in southern Europe face "10 to 15 years controlled depression" which can cause social unrest similar to those that led to the rise of the Nazis in Germany in the 30s of the 20th century, says Ray Dalio, manager largest hedge fund in the world, said on CNBC.

"I think we will see a combination of monetary measures and printing money, which will aim to alleviate depression," said Dalio, founder of Bridgewater Associates, which manages assets of 130 billion dollars.
"At the same time we will see as lower debt levels and debt restructuring ... There will be both, as necessary to relieve the debt burden in order to achieve higher growth than bond yields, "he said.
This process, however, worry whether.

"I fear that another recession could lead to social unrest. Reducing debt levels can be very painful - it all depends on how this process is managed, "he said.
"When people's throats - rich vs. poor, left against right, the situation is very worrying. Hitler came to power in 1933 when the Great Depression reached its bottom. What was it raised tensions between ideological factions and social groups in society, "said Dalio.

The main fund Bridgewater - Pure Alpha - amounted to $ 75 billion in 2011 and reached 25% return after winning 45 percent in 2010 Since its founding in 1975, the fund has brought investors $ 50 billion.
Since the beginning of the year Pure Alpha grew by only 3.1 percent, while EUR 55 billion All Weather Fund, also managed by Dalio, a return of 12.2%. From 1 January 2012 the return on Dow Jones Industrial Average is 11%.

Whether fears that U.S. politicians will agree on the right mix of fiscal and monetary policies will lead to a new recession. "I'm worried about it because the danger is real," he said. He appreciates the U.S. "A" in the Global Competitiveness Index, compiled by Bridgewater Associates.
"We're very competitive, both Europe and Japan. Outperforms most of the emerging markets, "says Dalio. "On the other hand, China, India, Korea and Singapore are more competitive than us," he said.

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

September 17, 2012

Bridgewater: Europe Faces Greater Challenge Than the US in 2008

Prior to the G20 Summit that took place in Mexico in June this year, analysts at Ray Dalio’s Bridgewater Associates, made some key observations on how he expects the meeting to play out. The analysis was critical of the role that policy decisions made at these summits play in restoring investor confidence. Policy makers face challenges at these times when deleveraging processes are leading to risk of further slow or negative growth. The analysts of the world’s largest hedge fund, they also note that the fate of Spain was decided a few years ago, but policy makers failed to realize the signs. They still give out empty assurances and seem incapable of planning any significant changes to alleviate the dire consequences.

The European leaders still don’t have a definite Plan B when their present actions, that mostly rely on the fate of the Spainish bailout, and the ECB’s support, will fail to deliver the desired results. The current crisis in Europe differs from the 2007-08 meltdown of the US economy. The major difference is that the US had a focused and united economic interest, while opinions and interests are largely polarized in the Eurozone. Countries like France, Spain, and Italy are not ready to give up fiscal sovereignty, while Germany wants to take part in debt sharing, only when a fiscal union has been achieved. There is a lot of work to be done in Europe, if an actual fiscal and banking union is implemented. Angela Merkel did emphasize on the need for unified policies in the EU Summit that took place in late June 2012. The Brussels summit also agreed on an elaborate bailout plan for Spain.

Bridgewater also comments that the European economy is capable of stonewalling the growth in emerging markets and other developed economies. The observations are true, as China and Japan slowed in the face of the choppy European markets. The most concerned of the group are the US and China, but their ability to provide stimulus is severely strained, as they await impending elections. Dalio comments that if EM countries take part in increasing IMF funds to Europe, it should not be taken as an action purely reflective of their concern for the Euro economy. These economies are looking for a larger voting share in the global lender, and for this reason, the German Chancellor is not excited about these rescue measures. Dalio further adds,
  • “Policy makers in Europe have a particularly tough road ahead, and “the challenges of the European policy makers much greater than those of American policy makers in 2008.”
Europe does now have more of a plan to deal with the situation, but Dalio notes the hardships ahead. In an interview earlier this week, he specifically mentions the tough conditions in Southern Europe which will not end any-time soon.

Source: ValueWalk

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

September 16, 2012

Ray Dalio recent thoughts

Ray Dalio of Bridgewater hedge fund response to the question 'What keeps you up at night?' is most likely the reason why the ECB and FED went 'unlimited' with QE policy this month.

Points to note:
- Europe crisis has much more trouble to come and will result in a lost decade
- $2 trillion euros of losses to be soaked up by European banks by either write offs or monetary policy
- Age of great returns is over, as there will be no benefit from interest rates falling (as they are already zero)
- De leveraging safely requires the correct balance between austerity, monetary and fiscal policy
- Depressions happen when there is no monetary or fiscal policy

At 9.50, the question is: What keeps you up at night?

Response: We are in a one world economy and the world is slowing. In the past when the world economy sank the response was to lower interest rates. This can't be done now as rates are already at zero, thus there is an air pocket of what policy can be used. IF the world falls into recession, the response will need to be global with the correct mix of prudent monetary and fiscal policy. Ray fear that the response will be be prudent, due to the fact the policy makers will not know how to respond.



Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

September 15, 2012

Bridgewater Associates makes the world's largest hedge fund

The largest investment company in the world, Bridgewater Associates intends to launch a new hedge fund with unprecedented capital of $ 10 billion, says Wall Street Journal.
The amount is a record for similar projects, and starting with such large capital is evidence of recovery of business investment since the crisis in 2008, the newspaper said.
The new fund will be called Pure Alpha Major Markets.
It is assumed that it will be focused on working with the stock exchanges of the most developed economies, such as Germany and the UK. For now, it can belong to only existing investors from Bridgewater.
The company itself was founded in 1975 by entrepreneur Ray Dalio, who graduated from Harvard and deals mainly with macroeconomic investments - such as gold and bonds.
Bridgewater manages assets are currently over $ 100 billion.
The large amount of Bridgewater - the company has 1,200 employees, is very attractive for investors because the fund can provide resources for services that others can not.
Bridgewater analysts regularly produce valuable reports that can not be found elsewhere, points out financial issue.

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

July 30, 2012

Ray Dalio, the man behind Bridgewater Associates comments on Spain

An ELA for Spanish banks would likely be several times the size of those in place for Greece and Ireland, further fracturing the uniformity of central bank standards across the eurozone, and the magnitude of funding coming through the national central banks could accelerate rapidly.

Spanish Banks' Collateral Is Running Out in a Way That Could Force Them Into an ELA

We estimate that the Spanish banking system only has a few hundred billion euros left in eligible collateral. That means that some of the weaker banks are likely already getting close to a point where their collateral is exhausted. (We think this reality is the reason why we are seeing a number of legal changes in Spain that look like an attempt to scrounge up a bit more capital). if Spanish banks run out of ECB collateral, then the Spanish central bank would likely need to turn on its own ELA.The potential magnitude of such an operation would dwarf the nationalized money printing to date.

Spanish balance sheets can probably support about €800 billion of borrowing from the ECB. Between the ECB and privately secured funding, mostly foreign interbank, Spanish banks are already borrowing about €500 billion, and if private secured funding was pulled, this borrowing and related collateral could be shifted to the ECB. So we think about the remaining capacity to borrow as the total collateral borrowing capacity (€800 billion) less what is pledged to both the ECB and private lenders (€500 billion), or about €300 billion. However, this almost certainly overstates Spanish banks' collateral cushion because there are strong banks such as BBVA and Santander that probably have ample capacity and weaker banks that are likely much closer to being tapped out.

The attempt to manage the imbalances among the Euroland economies is an extremely dangerous highwire act, and to the extent that monetary policies diverge to serve individual countries' needs, the further capital flows will likely go in the opposite direction.

The Balkanization of European Central Banking Continues

We think that one of the bigger risks facing the Eurosystem is the continuing division in its central banking system. Wien the euro came into existence, the individual national central banks within Europe became mostly implementers of a common ECB monetary policy. But as the European debt crisis has dragged on, the national central banks have gradually begun to conduct policies that are creating a differentiated monetary policy between core and peripheral countries (as we'll describe below). The more the national central banks create easier policy within weaker parts of the eurozone, the more they stimulate money creation in the weaker parts of Europe that will logically flow to the stronger parts -- which will only put more pressure on the currency union.

The ECB's rejection of Greek government bonds as Eurosystem-eligible collateral is the most recent example of the growing balkanization, as it will require Greek banks to again turn to their national central bank's ELA for funding, an avenue that basically allows them not to adhere to the ECB's borrowing standards. The real looming risk, however, is in Spain. Spanish bank funding needs continue to grow, system-wide ECB-eligible collateral is running low (and anecdotal signs of banks seeking to create new collateral suggest to us that some banks are probably already almost out), and there is a real chance that the Spanish banks could soon need to turn to an ELA of their own.

An ELA for Spanish banks would likely be several times the size of those in place for Greece and Ireland, further fracturing the uniformity of central bank standards across the eurozone, and the magnitude of funding coming through the national central banks could accelerate rapidly.
Recall that, like the Fed, the ECB has a hub and spoke structure, with policy directed by Frankfurt and implemented by the national central banks (NCB's). But unlike the Fed, which has been around for a very long time and is the national central bank of a single, indivisible sovereign, the ECB is still in its infancy and represents a collective of 17 countries with very different risk tolerances, incentives, and historical perspectives. And importantly, these countries are not bound very tightly in a fiscal union. The ECB charter reflects this, providing a reasonable amount of autonomy and authority to individual NCB's, which was not utilized until the debt crisis. This autonomy has recently translated into the increasing use of emergency liquidity facilities (ELAs) and lending against non-standard collateral by the NCB's. And unlike standard ECB repo lending operations, these loans are solely backstopped by the applicable NCB and, if necessary, the domestic government in that country.

This creates a two-tier monetary policy - exactly what Draghi just tried to tell us he is avoiding.

The ECB has taken some steps:

Emergency Liquidity Assistance (ELA's)
NCB's received, under the original construct of the European Central Bank, certain autonomous rights, including the ability to determine their own policies with regard to the provision of domestic liquidity. However, few central banks ever actually operated outside the Eurosystem for more than very limited purposes. This changed with the onset of the sovereign debt crisis. Several NCB's have opened ELA's, which theoretically give them the ability to unilaterally set collateral standards, terms, and haircuts for lending to the domestic banking system. The risks arising from these ELA loans are borne by the NCB's (since these transactions are "outside" the Eurosystem) and backstopped by the domestic government. The ECB has the ability to shut down these facilities with a two-thirds vote of the governing council (and we believe that the ECB is involved in the set-up and maintenance of ELA's), but technically the NCB's do not require the ECB's approval to open an ELA. Our current estimate of ELA's is €180 billion.

Non-standard collateral
In concert with the recent LTRO's, the ECB announced an expansion in eligible collateral for repo operations. The NCB's had to submit for ECB approval the non-standard collateral they would accept. However, even with the ECB's approval, the risk of loans backed by non-standard collateral is borne by the individual NCB's, not the ECB. After the second LTRO, ECB President Draghi said that €53 billion of non-standard collateral had been accepted by the ECB. We don't know if this number has changed since that time. There is potential for this number to go much higher. It should also be noted that once again we saw differentiation across the NCB's. Only seven NCB's submitted plans to allow their banks an expanded pool of eligible collateral. Most core NCB's rejected the opportunity to ease collateral standards (the exceptions being France and Austria).

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

June 05, 2012

Bridgewater reminds us about Italy

It seems that the markets were focused on Spain debt/bank and other issues as of late but forgot about Italy. The media was also focused with tons of articles about Spain while Italy was ignored. According to Bridgewater, Italy will again gain in the competition for the media attention.

It seems that that the main rationale behind the lacking punishment of the Italian debt situation was the LTRO and the thought on mind that the free cash free credits will buy enough Italian bonds to safe the country from a spiraling debt crisis. Bridgewater shows us with one chart that this is wrong and the banks have no free money left to buy bonds neither to buy in the primary nor in the secondary Italian bond market.

We bold their "assumption" because as Bridgewater calculates, the 'dry powder' number is far, far less than conventional wisdom had been expecting. In fact, currently for Italy it is at negative €48 billion in residual LTRO capital. If that is right, and we believe so, Italy will have no way to plug its debt funding needs anymore which means that rates will start rising once again and more turmoil is expected. Now the question left is only whether the ECB will initiate a new LTRO operation or not. It seems quite unlikely to do as now is obvious the previous was failure and was a way to fund deficits through money printing. Also the ECB balance sheet is huge now and the leverage is super-high. We should not forget that the ECB’s Greek bonds values are also under risk which means that very soon not the Italian banks will need emergency cash but the ECB to be recapitalized.


Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

May 03, 2012

Ray Dalio on money printing

“There hasn’t been a case in history where they haven’t eventually printed money and devalued their currency”

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

March 18, 2012

Ray Dalio and his fund’s Weimar Hyperinflationary Case Study

World's biggest hedge fund, Bridgewater, published wonderful analysis on deleveraging case studies through the history of the world. As Ray Dalio's analysts note: "the differences between deleveragings depend on the amounts and paces of 1) debt reduction, 2) austerity, 3) transferring wealth from the haves to the have-nots, and 4) debt monetization. Each one of these four paths reduces debt/income ratios, but they have different effects on inflation and growth. Debt reduction (i.e., defaults and restructurings) and austerity are both deflationary and depressing while debt monetization is inflationary and stimulative. Ugly deleveragings get these out of balance while beautiful ones properly balance them. In other words, the key is in getting the mix right." Of these the most interesting one always has been that of the Weimar republic, as it certainly got the mix wrong. Ray Dalio and his colleagues are worried that USA might also get the mix wrong. According to BCG in order to reduce global debt to GDP to a sustainable 180%, which some even find still too high …, the world economies should reduce its debt with $21 trillion! Of this amount, USA must reduce $8.2 trillion and the EZ $6.1 and $6.7 for the rest of the world. And if you wonder how banks will withstand such huge deleveraging, makes no wonder, they will not and that is why CB will continue printing until we get the other outcome: deleverage through inflation (hyperinflation).


According to the case study on Germany hyperinflation, the Reich government was forced to choose between
cash shortage and contraction or money printing. The government chosen the latter and you know the rest. Cash lost 100% of it’s value compared to gold, and all debt disappeared.
 
Starting debt of 913% fell to basically zero. Non-reparations government debt of 133% GDP in 1919 was wiped out by inflation. Gold-based reparation of 780% GDP effectively went into default in the summer of 1922 when reparation payments were halted. We summarize this in the table below and then go through the pieces.


Then there is the question of what happens to gold. In Weimar's case, gold-denominated reparations were simply forgiven. Ray Dalio is worried that no this time gold will first be confiscated. All of it. Only then will the debt be forgiven. In the form of a hyperinflating of trillions in claims, in a coordinated way across all currencies, and relative to a basket of hard assets.

As a conclusion it seems that Ray Dalio and his colleagues in Bridgewater are worried that 1. Well, as the According to the Greek case study shown, this time around not only gold will firstly be confiscated but the savers will be totally destroyed.

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

March 13, 2012

BridgeWater Associates Secrets’ Revealed by Former Employee on Blog

Bridgewater Associates is one of the largest hedge funds in terms of assets under management in the investment world. Despite its size the founder and manager Ray Dalio, keeps a tight lid on his colleagues. It seems that he do it with success because his fund is one of the most secret hedge funds.

However, Kathleen Ogrady who worked in Bridewater for several months posted a blog with some information about the fund and revealed some previous undisclosed information.

Kathleen learned more about self-leadership in several months than most people learn in a lifetime. After seeing a recent article on Ray Dalio in The New Yorker, titled Mastering the Machine, she felt compelled to write about her experience on her blog.

Kathleen states that she learned the following five lessons at Bridgewater:

Lesson #1: Don’t waste time on formalities.
Lesson #2: Be confident, make friends, and ask questions. Gambling on assumptions leads to chaos.
Lesson #3: Play is inherently linked to productivity. Whenever possible inject humor and fun into your work.
Lesson #4: Anything is possible, as long as you believe it has to be.
Lesson #5: Know yourself, and don’t let anyone else determine your worth, but you.

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

March 11, 2012

Ray Dalio Principles

Ray Dalio writes about his most fundamental life and management principles in his text titled "Ray Dalio Principles" which is required reading for all employees at Bridgewater. A major part of Bridgewater’s corporate culture is a relentless focus on the open discussion of mistakes and weaknesses.

Several gems of Ray Dalio Principles. Below is a link to the ‘Principles’ of Ray Dalio founder of Bridgewater Associates:

Ray Dalio Principles

- I remained wary about being overconfident, and I figured out how to effectively deal with my not knowing. I dealt with my not knowing by either continuing to gather information until I reached the point that I could be confident or by eliminating my exposure to the risks of not knowing.

- While most others seem to believe that learning what we are taught is the path to success, I believe that figuring out for yourself what you want and how to get it is a better path.

- How much do you let what you wish to be true stand in the way of seeing what is really true?

- How much do you worry about looking good relative to actually being good?

- The most important qualities for successfully diagnosing problems are logic, the ability to see multiple possibilities, and the willingness to touch people’s nerves to overcome the ego barriers that stand in the way of truth.

- Know what you want and stick to it if you believe it’s right, even if others want to take you in another direction.

- In a nutshell, this is the whole approach that I believe will work best for you—the best summary of what I want the people who are working with me to do in order to accomplish great things. I want you to work for yourself, to come up with independent opinions, to stress-test them, to be wary about being overconfident, and to reflect on the consequences of your decisions and constantly improve.

While most others seem to believe that mistakes are bad things, I believe mistakes are good things because I believe that most learning comes via making mistakes and reflecting on them. – Ray Dalio


Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

Ray Dalio’s Recommended Books

In an interview on 3/6/2012, Ray Dalio was asked what his favorite books were. Below is the list:

The Lessons of History, by Will Durant. 104 pages.

Will Durant’s 15 volumes of history (The Story of Civilization) which coverover the last 5,000 years. Dalio described him as possibly the greatest historian of all time.

History is a vital part of investing. We bring you the following quote regarding history and investing:

“In the fall of 1974 I was in graduate school at USC taking a portfolio-management investment course. The financial markets were in difficulty, and I didn’t understand how securities were being sold at such depressed levels. I had only recently discovered Security Analysis by Graham and Dodd when we had a guest lecturer come in named Charlie Munger, who went on about this idea of value investing. After the class was over, I walked up to Charlie and asked him if there was one thing that I could do that would make me a better investment professional. His answer was, ‘Read history, read history, read history.’ Robert Rodriguez, CEO, of FPA

The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Funds

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

February 22, 2012

Ray Dalio is still negative about 2012. Bridgewater sells $250 million to Texas Fund.

Bridgewater Associates LP, the hedge fund run by Ray Dalio, agreed to sell $250 million share of the company to a Texas Teacher Retirement System. It seems that Ray Dalio wants to lower his exposure in the company and that many institutional investors are looking for ways to diversify by investing in hedge funds. The texas fund move is no wonder, as in 2010 and 2011, Ray Dalio achieved extraordinary returns of his fund by investing in several profitable positions like: Long gold, Long CHF. The stake that was sold was non-voting one.

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

February 12, 2012

Bridgewater's Ray Dalio Interview With Charlie Rose



Late last year Ray Dalio, the founder of hedge fund behemoth Bridgewater Associates, sat down for his first interview with Charlie Rose. He talked about Bridgewater's culture, investment process, and more.


Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.