The Original Finance Influencer: Ray Dalio & Bridgewater Associates

Bridgewater is a $200 billion investment fund, like one of the largest of all times. All right. What's up, guys? Today we're going to be talking about one of the greats, one of the GOATs of all time, Ray Dalio with Bridgewater Associates, kind of giving you guys a highlight on his firm, how he started, some cool lessons that he learned along the way and that I think are relevant to you guys. Let's jump into it. So Ray Dalio, interesting story. He didn't actually start off by wanting to be a fund manager. He was a researcher. So he went to, you know, business school and he joined a commodities group where he was a research analyst. Honestly, didn't last very long. He was there like 2 years and then he parted ways and he just started essentially a consulting company. And what I like about it is he essentially became a content creator even back in his day. I mean, this is like the 1970s, right? And '80s where he started publishing his insights. So he really loved research and he started essentially a blog called Bridgewater Daily Observations, where he essentially just wrote about his take on the markets. He started getting a lot of big clients that wanted his advice. You know, one of his first big firms was actually McDonald's. They were having problems with how to price their chicken. They were, you know, there was a lot of volatility in chicken prices. They asked him to help McDonald's build a hedging strategy so that the price of chicken was more stable and predictable. For him. And he did. You know, eventually all these big firms, you know, just started asking him to take their money and to manage it for him. So in case you guys didn't know, Bridgewater is a $200 billion investment fund, like one of the largest of all times. And, you know, he took a really interesting path to get there. He was essentially a content creator. He was an influencer, right? And he started building this brand and he understood the benefits of marketing early on and getting his voice out there where he started getting invited onto shows and to share his opinion. If you follow Ray today, he's actually still very quite public. He's on TikTok, he's on Instagram, he's on YouTube. He does a number of events and conferences. And, you know, he's a pretty active, vocal member of the investments world, which I admire greatly. I know some of you who are starting funds, like, are a little more sensitive around timeframes and schedules. I mean, look, this guy consulted and basically managed funds through SMAs, separately managed accounts, for 15 years, right? He didn't really start like the core of Bridgewater as we know it today really didn't start until his Pure Alpha Fund in 1991. So he really just consulted, managed separately managed accounts for more than a decade, just building up essentially his track record. And I think it's important to understand Ray's personality. Ray is a very principle-driven person, right? He's very methodical. He's extremely calculated. He doesn't like to lose money. You know, as he scaled Bridgewater, he actually essentially opened up— he started getting all these employees and he opened up a code of conduct, what he called like daily principles. And for those of you that have read some of Ray's books and writings, he has a book on principles, which is basically principles on life. And he took to his fund a very similar approach. And I just want to share with you, like, just to give you an example, a taste of some of these principles. So on his website, a couple of his favorite principles are as follows. Reality works like a machine. With everything we encounter being the result of cause-effect relationships. Because most everything happens repeatedly in slightly varied versions, by studying many cases of something, you can understand the cause-effect relationships behind how it works and come up with principles for dealing with it well. Being explicit about your principles and stress testing them improves your decision-making and likelihood of success. Right? So those are some of his principles. About making principles, he says there as he starts to stutter patterns. Your ability to increase the probability of predicting the future and understand the probabilities, then you're more likely to be successful. And he's taken his approach to investing in a very similar fashion. So how did this guy who started a consulting firm out of his two-bedroom apartment in New York become one of the largest hedge fund managers of all time? So he started the Pure Alpha Fund in 1991, which is one that he's probably second. Second most well known for aside from his all weather fund, which he started in 1996. But that's really you know the majority of his career just revolved around giving investment advice and you know helping people with their hedging strategies and trading strategies. I mean A he had this awesome network of LPs and then B he's just he'd been following the markets for decades right and he can he can see these trends. So he started the Pure Alpha Fund in 1991 that's you know performed really well revolves around you know more higher concentration in positions. And then really tactical asset allocation. And then again, like I said, he started the All Weather Fund in 1996, and his All Weather product is really a diversifying element, right? That he basically says, as long as you, you know, are exposed to this asset, then you can weather any sort of, you know, market downturn. And that was a really popular product, right? It's not going to be crazy. It's focused on diversification. Risk parity, risk management, an inflation hedge, a really long-term focus. Right. And I think this is an important concept for people to understand that, you know, so you had these 2 very different products. And I think this is largely one of the things that attributed to his success. It's ultimately led him to managing hundreds of billions of dollars. So he's launched like subset of those 2 products and combinations of those products. But those are really the driving 2 that have Built— he's built his entire empire on. And I think an important note for especially emerging managers out there, he did not do it simultaneously. Right. I think that's a big mistake. A lot of people have all these investment strategies and they try and do them all at the same time. And that typically results in neither of them getting off the ground. So he started with one, he refined one, he leaned on his prior experience and track record of consulting and separately managed accounts. He landed his first separately managed account in 1985. So he did SMAs for about 6 years. Before he even started his first fund. You know, I guess what I would say to you guys that are just starting is play this long-term, right? This isn't a short-term get-rich-quick business, but this is like a get-rich-over-time sort of play. It's a, you know, really fascinating industry. And I think Ray was really good about just taking his time and being very methodical, principally driven in his approach to starting funds. You know, to kind of recap a little bit, what made this deca-billionaire that we know today that is probably one of the most influential people in finance. He did things step by step, right? He started his own business and he started consulting for year after year. He was essentially a content creator. He got his ideas out there that ultimately led him to landing some big accounts and ultimately launching his fund in 1991, which is now just a superpower today. Just remember, as you guys are starting your funds, he didn't become Ray Dalio overnight. It was a long-term process. I'd encourage you, like I've done myself, to follow Ray's counsel and live a Principally driven life. So try and add principles into your life and the way you make decisions. Write them down. I think it'll help you guys a lot. It's helped me substantially. Thanks for listening.