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Ray Dalio & the Machinery of Finance

Posted By Barry Ritholtz On September 15, 2011 @ 8:30 pm In Hedge Funds,Investing,Philosophy | Comments Disabled

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 [1]).

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 [2]. Its his Magnum opus, and explains his fundamental Life Principles as well as his Management Principles.

>

See also
Bridgewater Discussions on Culture [3] (Videos)

Observing a Bipolar World [4]
Barron’s March 12, 2011

Mastering the Machine: How Ray Dalio built the  world’s richest and strangest hedge fund. [5]
John Cassidy
New Yorker, July 25, 2011


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2011/09/ray-dalio-the-machinery-of-finance/

URLs in this post:

[1] video here: http://www.ritholtz.com/blog/2011/09/bridgewaters-dalio-on-europe-economy-strategy/

[2] Dalio’s dissertation on Principles: http://www.bwater.com/home/culture--principles.aspx

[3] Bridgewater Discussions on Culture: http://www.bwater.com/home/culture--principles/culture-videos.aspx

[4] Observing a Bipolar World: http://online.barrons.com/article/SB50001424052970203423404576186671576180048.html#articleTabs_panel_article%3D1

[5] Mastering the Machine: How Ray Dalio built the  world’s richest and strangest hedge fund.: http://www.newyorker.com/reporting/2011/07/25/110725fa_fact_cassidy?printable=true&currentPage=all#ixzz1ShhRHYRm

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