This morning, I got to listen to a (too short) discussion with hedge fund manager Ray Dalio of Bridgewater Associates at the Bloomberg Market 50 Summit (video here).

Ray Dalio is a fascinating guy . . . he has what some people describe as a very idiosyncratic approach, but I find it logical and intelligent. His numbers speak for themselves — $125B, 15+%/year, running the shop for 35 years. Those people who criticize his “Truth-driven, self-reflective process” tend to only trash his beliefs as, the numbers above reveal, they cannot trash his performance.

Following his presentation, I wanted to meet him and just say thank you. The guy was barely off the stage when he was mobbed by people pushing business cards and presentations into his hand. I utterly forgot what a pack of unruly jackals the Sell Side can be. I am mortified by the behavior, and go outside to grab an iced tea (Bloomberg events always have great food and drink).

As I head back inside, Dalio and the sea of hangers on are heading out. The salivating salesmen hoping for fat commissions seem to not understand his methodology, which does not have him waiting on a trading desk’s recommendation. He has a huge pile of business cards, and an assistant or Bloomberg aide has a stack of envelopes/presentations.

I hang back from the hyenas, annoyed by the thought I won’t get to meet him. But then there is the tiniest of pauses, and without thinking, I blurt out “Ray, I don’t have a business card for you, I just wanted to thank you for your emphasis on process.”

Dalio turns, extends his hand. I introduce myself, shake his hand, and add “I find your focus on self-reflection and error correction, on enlightenment refreshing compared to the rest of Wall Street.” or words to that effect.

He swivels around to face me full on, and says “Isn’t that what it is all about? If you don’t understand yourself, how can you ever meet your goals, in life or in investing?

Exactly. I tell him the emphasis on what matters is inspirational –the rest of the Street is missing the big picture. We start to chat — I tell him a brief story from my sell side days about cognitive foibles and selective retention — he nods and laughs. Meanwhile, we’re talking a few minutes and I can feel lots of eyeballs staring hatefully at the one jackass not interested in commission dollars (the damned fool!).

I appreciated the moment, and say something to the effect of “I know you want to get to you car, I just wanted to say thank you again.” He shakes my hand again, and heads to the car (Some other crazy stuff happened that I will save for another day).

~~~

If you want to learn more about his approach, I suggest you read Dalio’s dissertation on Principles. Its his Magnum opus, and explains his fundamental Life Principles as well as his Management Principles.

>

See also
Bridgewater Discussions on Culture (Videos)

Observing a Bipolar World
Barron’s March 12, 2011

Mastering the Machine: How Ray Dalio built the  world’s richest and strangest hedge fund.
John Cassidy
New Yorker, July 25, 2011

Category: Hedge Funds, Investing, Philosophy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

24 Responses to “Ray Dalio & the Machinery of Finance”

  1. As usual Mister Ritholtz, I like your style (you know, the oblate spheroid variety; yes, spherical is closer to round than flat :) ). I listened to the 20-something odd minute Dalio presentation – twice – and got 2 takeaways that I’m incorporating into my process – daily and beyond. I’m hoping to build this into habit, until it becomes second-nature, to the point where it’s nearly a part of my character. Long journey ahead.

  2. Also, on a random note, Dalio sounds all efficient-markets, CAPM, academic-finance-esque, until you listen to him more carefully. As he made clear, when he says ‘correlation’ it isn’t strictly the statistical measure we tend to think of; rather, I sense something closer to ‘causation’ , especially given that he goes at lengths to talk about the ‘machine’ and understanding how said ‘machine’ works, whether it be the ‘market machine’ or the ‘political machine’

  3. Rouleur says:

    …kiss ass BR…j/k…Dalio is one sharp cookie with a good philosophy…

  4. faulkner says:

    Introductions to Big Thinkers (I didn’t know about). This is one, among the many reasons I read The Big Picture. Looking forward to the Conference, and perhaps a brief, non-sell side moment. Thanks.

  5. theexpertisin says:

    Just completed a read of Dalio’s Principles. Thank you so much, BR, for bringing this to the fore. Indeed, the truth shall set you free.

  6. 873450 says:

    They are groupies, whores and prostitutes not hyenas, jackals and jackasses .

    ~~~

    BR: You are right — I should not really denigrate wild dogs and lesser predators by comparing them to the sell side. But along the similar lines of thought, you should not denigrate whores and prostitutes the same way!

  7. David in D says:

    Barry, the interviewer mentioned that Dalio “Principles of the Economy” was available on the Bloomberg website. I found his general “principles” not the one about the economy. Could you post if for us?

    Thanks for alerting us to this great interview. I loved it!

  8. G Street says:

    BR, thanks for the post. This was an informative interview and enjoyable story on your part!

  9. [...] – In praise of Ray Dalio. [...]

  10. Julia Chestnut says:

    BR, thank you for the link to something great – and someone I didn’t know about. He has carefully articulated things that are difficult to parse and put into words, and that always puts a light into the dark spots for me.

    Lots to chew on — ah. Thanks!

  11. tebee says:

    You know Barry, there are some of us who would fel the same way about meeting you……

    Bur it’s good to know out heroes have their own heroes too, makes us realize they are just people as well and realize they can be fallible too

  12. InterestedObserver says:

    @David in D… I believe the “Principles of the Economy” is basically contained in Dalio’s “A Template For Understanding What’s Going On”. Google the title and you’re there.

  13. ilsm says:

    Sun Tzu said: “If you know your enemy and know yourself, you will prevail in a thousand battles”.

  14. machinehead says:

    ‘Meanwhile, we’re talking a few minutes and I can feel lots of eyeballs staring hatefully at the one jackass not interested in commission dollars (the damned fool!).’

    Well done, BR! I had a similar experience at a conference, waiting to meet Marc Faber after his talk. Some broker dude latched onto him and I couldn’t get a word in edgewise.

    I don’t want to sell anything to Ray Dalio, but I’d sure like to get a subscription to his daily research reports! But it ain’t for sale, apparently. So it’s self-reflection for now …

  15. scecman says:

    Humblebrag….just kidding BR, good work as always!
    I marvel at how you post so many long articles and still get any work done!

  16. Very cool.
    I must admit that I watched the interview on Bloomberg Live and had that feeling of “I’d like to learn from this guy”.

    Perhaps not directly, but I’ve started with The Principles. It was an excellent read.

    Congrats. It must have made your day, simple as that.

  17. [...] Barry (Ritholtz) meets Ray (Dalio).  (Big Picture) [...]

  18. Dow says:

    Dalio’s Principals – I was with Dalio until his politics slipped in – “….For example, communism was a system created by people with good intentions who failed to recognize that their idealistic system was inconsistent with human nature. As a result, they caused more harm than good.”

    The same can be said for capitalism. Or any other ism. Purity of all stripes just doesn’t work. That Dalio doesn’t recognize his own bias is a shame.

  19. DeDude says:

    @Dow;

    But the minute you say hedge fund manager you kind of expect a rather narrow world view where the purpose of society and human activity is the production of “wealth”.

  20. David in D says:

    Thanks to Interestedinvestor for the google tip.

  21. max100 says:

    Barry, I was also at that conference. One of the pictures I took is the exact moment you described.
    What’s your email? I’ll send it to you.

    ~~~

    BR: Thebigpicture-at-optonline.net

  22. Tahoe says:

    Congrats. It is simply awesome when things just work out well. As for Mr. Dalio, and your perspective, I agree. It is inspirational and a breath of fresh air that success in this business, and in these markets can come from common sense and logical (and sometimes simplified) thought – key word being thought i.e., someone actually spends time just thinking – something that is becoming increasingly scarce in today’s world of doing and doing more – with much less thinking. Thank you for sharing this with us. As always, love your work.

  23. [...] Barry (Ritholtz) meets Ray (Dalio).  (Big Picture) [...]