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Chapter 1
The Global Macro Maven
Ray Dalio
Bridgewater Associates
Above all else, I want you to think or yoursel—to decide1) what you want, 2) what is true and 3) what to do about it.I want you to do that in a clear-headed thoughtul way, so that you get what you want.
—From the introduction toRay Dalio’s
Principles
2
THE
ALPHA
MASTERS
I
n his amous
Principles
, Raymond, or “Ray,” Dalio tells his employees,“You learn so much more rom the bad experiences in your lie thanthe good ones. Make sure to take the time to refect on them. I youdon’t, a precious opportunity will have gone to waste. Remember thatpain plus refection equals progress.”This is just one o the many aphorisms, precepts, nuggets o wisdom, and practical management tips that the 62-year-old Dalio— the ounder o Bridgewater Associates, the global macro und that isthe world’s largest hedge und, with $120 billion under management— emphasizes time and time again. Bridgewater advises and runs porto-lios or the most powerul pension unds, central banks, and countriesaround the world. In act, a recent study by London-based researchrm Preqin shows that Bridgewater is the most popular hedge undamong public pensions.I you did a quick search on Dalio, you’d be fooded with stories o his rm’s success in the markets (including generating its best returnsin the most di cult markets o the last decade) and get a air dose o his philosophy on lie and management. For example, Dalio has beenpracticing transcendental meditation or more than 40 years and calls it“the single biggest infuence” on his lie. You’d also nd that his most important maxims involve his relent-less “pursuit o truth” and hunger or “personal evolution.” His unwav-ering ocus on these goals has no doubt aected his perormancegures and client satisaction or the better, but has earned him mixedreviews rom employees, some o whom judge his approach as unnec-essarily harsh. Dalio is unapologetic. In his
Principles
, Dalio proudly says,“I have become a ‘hyperrealist.’ ”Dalio is also well known or how his big-picture, innovative think-ing has changed investing in important ways. In act, industry magazine
aiCIO
devoted its December 2011 cover story—“Is Ray Dalio the Steve Jobs o Investing?”—to him, highlighting the similarities between thetwo leaders’ motivations and approaches and how each has impacted hisindustry. Dalio, like Jobs, eels his lie is a journey during which he mustturn his bold visions into reality. Dalio’s industry-changing innovationshave earned him two lietime achievement awards and won Bridgewater dozens o “Best o” awards.Dalio says the orm o meditation he practices “is a combinationo relaxation and a very blissul experience. That sounds more like an
The Global Macro Maven
3
orgasm than it really is; by blissul I just mean that I just eel reallygood and relaxed and in good shape. You go into a dierent mentalstate—neither conscious nor unconscious. But unlike when you’resleeping, i a pin drops all o a sudden, it can reverberate through you;it’s shocking.”It took some time or Dalio to discover a meditation technique hecould master, but eventually he began to notice that even 20 minuteso meditation could make up or hours o lost sleep. It also began tochange the way he was thinking about things: he became more cen-tered and more creative. Meditation put Dalio in a clear-headed stateso that when challenges came at him, he could handle them “like aNinja—in a calm, thoughtul way.” He says, “When you’re centered, your emotions are not hijacking you. You have the ability to thinkclearly, put things in their right place, and have good perspective.”
The Makings of a Maven
Sitting in his modern Westport, Connecticut, o ce in a blue Bridge-water polo shirt and khakis, Dalio seemed comortable and at peace.But cultivating a calm mind and demeanor hasn’t dampened his lie-long desire or independent thinking. Growing up the son o a jazzmusician and a homemaker, Dalio didn’t like ollowing instructionsor remembering what he was taught. Instead, he loved chasing ater what he wanted and guring out or himsel how to get it. Becausehis parents aorded him the reedom to do this, he eels, he receiveda better-than-normal education, learning more rom negative experi-ences than the positive ones and developing the skills that serve him sowell to this day. One o the problems with traditional education, Daliobelieves, is that it punishes people or making mistakes rather thanteaching them how to use those mistakes to learn and grow.The idea o someday starting his own rm was the last thing onhis mind when a 12-year-old Dalio began caddying to make extramoney at the Links Gol Club in Manhasset, New York, near his home.He earned $6 a bag and had some regulars, many o whom were WallStreet investors. It was 1961, and he elt like he heard about stockseverywhere he went. “I I got a haircut, the barber would be talkingabout stocks,” he remembers. “I I got my shoes shined, the shoeshine
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