Ray Dalio

President & Chief Investment Officer

September 13, 2010

One Glendinning Place

Westport, CT 06880
(203) 226-3030
www.bwater.com

If youre talented, dont go into a business in which the

macro environment will determine your success.

-1-

What each decade is like is determined by the excesses

of the prior decade.

-2-

If you can understand the linkages and not get carried

away by the excitements of the times, you can
maneuver strategically.

-3-

Whenever there's a boom and debts are rising faster than

incomes, a bust will follow.

-4-

Governments will always choose to print money rather

than tighten their belts, if the pain of debt gets bad
enough.

-5-

Whatever career has the highest percentage increase in

HBS grads going to it is probably headed for trouble.

-6-

You cant chase the good things you have to be ahead

of them or early on their waves.

-7-

-8-

-9-

Whenever economic conditions are extremely one way

and most people are sure that they will continue, they
will probably reverse.

- 10 -

The most common mistake of investing is to assume that

investments that had the highest returns over the past
few years are the best investments rather than they
have become expensive.

- 11 -

INVESTMENT PRINCIPLES

A portfolio is nothing more than the

weighted average of its return streams.

There are only 2 types of return streams:

Alphas and Betas.

You need to have a well thought out game

plan that is based on knowing what your
return streams are like and knowing how
to combine them.

- 12 -

15 UNCORRELATED RETURN STREAMS THE HOLY GRAIL

OF INVESTING
Probability of
Losing
Return-to- Money in a

60% correlation

Risk Ratio

Given Year

40% correlation
10%

1.00
0.25

40%

0.90
0.28

39%

8%

0.80
0.31

38%

7%

0.70
0.36

36%

6%

0.42
0.60

34%

5%

0.50
0.50

31%

4%

0.63
0.40

26%

3%

0.83
0.30

20%

2%

1.25
0.20

11%

1%

2.50
0.10

1%

20% correlation
10% correlation

Annual Portfolio Standard Deviation

9%

0% correlation

10

11

12

13

Number of Assets/Alphas in Portfolio

- 13 -

14

15

16

17

18

19

20

Our Alpha

- 14 -

DECISION RULES ARE CONVERTED INTO RETURN STREAMS

18%

1.60

Inflation/ Unemployment
1.40

16%

T-Bill Rate
14%

1.20

12%

1.00

10%
0.80
8%
0.60

6%

0.40

4%

0.20

2%

0.00

0%
60

62

64

66

68

70

72

74

Inflation/ Unemployment Pressure

76

78

80

82

84

86

88

90

92

94

96

98

100%

18%

80%

16%

06

08

10

Avg Annual Ret: 3.7%

Std Dev: 5.3%
Ratio: 0.70

14%
150%

12%

20%

04

250%
200%

40%

02

Cumulative Profit

T-Bill Rate

60%

00

10%
100%

0%
8%

-20%

50%

6%

-40%
-60%

4%

-80%

2%

-100%

0%

0%
-50%
60

60 63 66 69 72 75 78 81 84 87 90 93 96 99 02 05 08 11

63 66

69

72 75

78 81

84 87

90 93

96 99

02

05 08

11

Please refer to Note 1 for relevant disclosures. HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL
PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING OR THE COSTS OF MANAGING THE PORTFOLIO. ALSO, SINCE THE TRADES HAVE
NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER OR OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF
LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO
REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
- 15 -

COMBINE UNCORRELATED RETURN STREAMS

Aus Equity Indicator Cum Return

Aus - UK Equity Diff Cum Return

US Bond Indicator Cum Return

200%
150%
100%
50%
0%

160%

130%

60%

140%

110%

50%

120%

40%

100%

30%

80%

20%

60%

10%

40%

0%

20%

-10%

-50%
70

74

78

82

86

90

94

98

Copper Indicator Cum Return

500%

7%

60%
50%

400%

6%

4%

20%

3%

10%

2%

0%

1%

100%
0%
91 92 93 94 95 96 97 98 99 00 01 02

US Yield Curve Cum Return

-100%
70

3.0%

3.0%

1.75%

2.5%

2.5%

1.50%

0.5%

1.00%

1.5%

0.75%

1.0%

0.50%

0.0%

0.00%

0.0%

-0.25%

-0.5%

88

92

96

00

82

86

90

94

98

86

90

94

98

91

02

93

95

97

99

01

CHF vs EUR Cum Return

Swiss Franc vs Euro

2.0%
1.5%
1.0%
0.5%

Average Alpha = 0.09%

0.0%

-0.5%
84

82

0.5%

0.25%

80

78

2.0%

1.25%

Average Alpha = 0.14%

78

Nominal vs IL Cum Return

2.00%

1.0%

74

US Bond Diff Cum Return

3.5%

74

80

84

88

92

96

00

-0.5%

80

Please refer to Note 2 for relevant disclosures

- 16 -

02

IL Indicator Cum Return

200%

0%

70

90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
-10%

300%

5%

1.5%

10%

Opportunistic EMD Indicator Cum Return

8%

2.0%

30%

-10%

70%

81 83 85 87 89 91 93 95 97 99 01

50%

80 82 84 86 88 90 92 94 96 98 00 02

Aus Bond Diff Indicator Cum Return

-10%

70%

80 82 84 86 88 90 92 94 96 98 00 02

80%

30%

90%

0%

02

40%

JPY/USD Indicator Cum Return

70%

84

88

92

96

00

80

84

88

92

96

00

03

Our Beta

- 17 -

CONVENTIONAL ASSET RETURN/RISK PERSPECTIVE

Expected Rates of Return For Various Asset Classes

18%

16%

Private
Equity

14%

Expected Total Return

Emerging
Equities

12%

10%
U.S.
Equities

8%

Real
Estate

6%

Non-U.S.
Equities

Non-US
Fixed Income
(Hedged)

Emerging Market
Debt

4%
High Yield
Debt

2%
Cash

0%
0%

Inflation Linked
Core US
Bonds
Fixed Income

5%

10%

15%

20%
Expected Risk

Please refer to Note 3 for relevant disclosures.

- 18 -

25%

30%

35%

40%

0%

Asset Class

Please refer to Note 3 for relevant disclosures.

- 19 -

Real Estate

Private Equity

Emerging Equities

Non-U.S. Equities

U.S. Equities

Emerging Market Debt

25%

Non-US Fixed Income

(Hedged)

High Yield Debt

Inflation Linked Bonds

Core US Fixed Income

Expected Excess Return

RISK-ADJUSTED RETURNS
Leverage-Adjusted Expected Excess Returns
(Standardized to the Risk Level of the S&P 500)

20%

15%

10%

5%

BALANCE RISK (NOT CAPITAL) EQUALLY ACROSS ECONOMIC

ENVIRONMENTS

GROWTH

INFLATION

RISING

FALLING

Please refer to Note 4 for relevant disclosures.

- 20 -

The Economy:
How it Works & What it Looks Like Now

- 21 -

My Template
Long-term Productivity Growth
Long-term Debt Cycle
Business Cycles

- 22 -

LONG RUN GROWTH DRIVEN BY INCREASES IN PRODUCTIVITY

Real GDP per Capita (2008 dollars, ln)
4.5

4.0

0.7%
2.1%
2.1%

3.5

2.2%
3.0%
3.0

2.4%
4.1%

2.5

0.2%
1.9%
0.8%

2.0

2.7%

1.5

1.0
00

10

20

30

40

50

60

Source: Global Financial Data Inc. and Bridgewater Analysis.

- 23 -

70

80

90

00

10

WE HAVE REACHED OUR DEBT LIMITS

USA Total Debt %GDP

400%

350%
60 Year Credit
Expansion
300%

250%

200%

150%

100%
1920

1930

1940

1950

1960

1970

Source: Global Financial Data Inc. and Bridgewater Analysis.

- 24 -

1980

1990

2000

2010

THE SECULAR FALL IN INTEREST RATES

KEPT DEBT SERVICE STABLE
USA 3m Interest Rate
18%

16%
1982

14%

12%

10%

8%

Hard
landing

Hard
landing

6%

4%

2%

0%
1920

1930

1940

1950

1960

1970

Source: Global Financial Data Inc. and Bridgewater Analysis.

- 25 -

1980

1990

2000

2010

DEBT LEVELS ROSE RAPIDLY WHILE DEBT SERVICE DID NOT

USA Household Debt % Disposable Income

USA Household Interest Payments % Disposable Income

20%

140%

18%
120%
16%
14%
100%
12%

1982
80%

10%
8%

60%
6%
4%
40%
2%
20%

0%
20

30

40

50

60

70

Source: Global Financial Data Inc. and Bridgewater Analysis.

- 26 -

80

90

00

10

MASSIVE PRINTING OF MONEY

US M0 as % of NGDP

20%

18%

16%

14%

12%

10%

PRINTING

8%

6%

4%

2%
1920

1940

1960

1980

Source: Global Financial Data Inc. and Bridgewater Analysis.

- 27 -

2000

BIG BUDGET DEFICITS

US Federal Budget Surplus as a % of NGDP

6%

4%

2%

0%

-2%

-4%

-6%
even bigger deficit
-8%
wartime deficit goes to -30%

-10%

-12%
1920

1930

1940

1950

1960

1970

Source: Global Financial Data Inc. and Bridgewater Analysis.

- 28 -

1980

1990

2000

2010

FISCAL AND MONETARY STIMULATIONS ARE OVER

Developed World Purchases of Financial Assets (annualized) %PGDP

9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Jan-10

Oct-09

Jul-09

Apr-09

Jan-09

Oct-08

Jul-08

United States Trailing 3 Month Growth Impact from Stimulus (%PGDP)

4%
3%
2%
1%
0%
-1%
-2%
-3%
Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Jan-10

Oct-09

Jul-09

Apr-09

Jan-09

Oct-08

Jul-08

- 29 -

THERE ARE TWO WORLDS

Developed World Industrial Production (GDP-w eighted)
105
100
95
90
85
80
75
00

01

02

03

04

05

06

07

08

09

10

08

09

10

Emerging Market Industrial Production (GDP-w eighted)

120
110
100
90
80
70
60
50
40
30
00

01

02

03

04

05

06

- 30 -

07

SECULAR IMBALANCES HAVE NOT CHANGED

Creditor Countries (const. basket) Curr Acct % NGDP

Debtor Countries (const. basket) Curr Acct % NGDP

8%

6%

4%

2%

0%

-2%

-4%

-6%
00

01

02

03

04

05

06

- 31 -

07

08

09

10

Appendix

- 32 -

Our Principles
People and culture
Truth and excellence at all costs

- 33 -

BAD

GOOD

Allowpaintostandintheway
oftheirprogress.

Understandhowtomanagepain
toproduceprogress.

- 34 -

BAD

Avoidfacingharshrealities.

Faceharshrealities.

GOOD

- 35 -

BAD

Worryaboutappearinggood.

Worryaboutachievingthegoal.

GOOD

- 36 -

BAD

GOOD

Maketheirdecisionsonthebasis
offirstorderconsequences.

Maketheirdecisionsonthebasis
offirst,second andthirdorder
consequences.

- 37 -

BAD

Dontholdthemselvesaccountable.

Holdthemselvesaccountable.

GOOD

- 38 -

Disclosures

Please read the following notes and disclosures as they provide important information and context for the research and
performance presented herein. Additional information is available upon request except where the proprietary nature of the
information precludes its dissemination.

- 39 -

NOTES
Note 1 : This slide is meant to show an example of how Bridgewaters active market views are formulated and is purely for illustrative purposes. The charts are not intended to reflect what
actual Bridgewater valuation, signals, and performance were during the periods outlined. Charts are created using backtesting of a portion of Bridgewaters systems.
Note 2 : For illustrative purposes only. The example does not necessarily indicate the actual historical or current implementation of Bridgewaters strategies. Markets listed may or may
not be currently traded and are subject to change without notice.
Note 3 : Based on return and risk expectations from an independent study by Rocaton, a third party consultant.
Note 4 : For illustrative purposes only. The example does not necessarily indicate the actual historical or current implementation of Bridgewaters strategies.

- 40 -

Research/Outlook Disclosure:
This research is based on Bridgewater Associates, LP proprietary research and analysis of global markets and investing. Bridgewater research utilizes (in whole and in part) data and
information from public, private, and internal sources. Some internally generated information may be considered theoretical in nature and is subject to inherent limitations associated
therein. External sources include the International Energy Agency, International Monetary Fund, National Bureau of Economic Research, Organisation for Economic Co-operation and
Development, U.S. Department of Commerce, as well as information companies such as Bloomberg Finance L.P., CEIC Data Company Ltd., Emerging Portfolio Fund Research, Inc.,
Global Financial Data, Inc., Global Trade Information Services, Inc., Markit Economics Limited, Mergent, Inc., MSCI, Standard and Poors, Thomson Reuters, TrimTabs Investment
Research, Inc. and Wood Mackenzie Limited. While we consider information from external sources to be reliable, we do not assume responsibility for its accuracy.
The views expressed are solely those of Bridgewater Associates, LP and are subject to change without notice. Reasonable people may disagree. You should assume that Bridgewater
Associates, LP has a significant financial interest in one or more of the positions and/or securities or derivatives discussed. Bridgewater Associates, LP employees may have long or short
positions in and buy or sell securities or derivatives referred to in this research. Those responsible for preparing this research receive compensation based upon various factors, including,
among other things, the quality of their work and firm revenues.
The research in this presentation is for informational and educational purposes only and is not an offer to sell or the solicitation of an offer to buy the securities or other instruments
mentioned. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors. Investors
should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, where appropriate, seek professional advice, including tax
advice. Investment decisions should not be based solely on simulated, hypothetical or illustrative information. The price and value of the investments referred to in this research and the
income therefrom may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Certain transactions,
including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors. Fluctuations in exchange rates could have adverse effects
on the value or price of, or income derived from, certain investments.
Bridgewater Associates has no obligation to provide recipients hereof with updates or changes to such data. No part of this material may be (i) copied, photocopied or duplicated in any
form by any means or (ii) redistributed without the prior written consent of Bridgewater Associates, LP.

- 41 -