Book review: “The Fund: Ray Dalio, Bridgewater Associates and The Unraveling of a Wall Street Legend “
“The Fund” is in short an absolute tear-down of both, the legendary Macro Hedge Fund Bridgewater and its equally famous founder Ray Dalio. There is an old saying that you don’ want to know how the sausage is made and in this case this is more than fitting to what happened behind the scenes at Bridgewater.
I have to admit that I never cared that much about Bridgewater (*) and that I found Dalio always very strange when he was speaking, but that he was such a Psychopath as it is described in the book is quite a surprise.
Interestingly, Dalio in the beginning of his carreer needed a long time before he got anything off the ground. His initial fame came that he was one of the usal Perma Bears, predicting permanent doom in his newsletters until he finally could say in a bad year that he predicted it. He also seemed to have married very rich and somehow then got his fund going.
Inititally, he also seemed to have some really good years which earned him the reputation and brought in assets, but over time je became a horrible psychopath who terrorized everyone with his “principles”. His fixation on these “principles” that he (unsuccessfully) tried to codify into some kind of AI/Expert system also led to a pretty bad investment performance. Their flagship fund underperformed a simple 60/40 Stock/bond portfolio over the past 10-12 years. Interestingly as a perma bear, Dalio also failed to see and react on the Covid crash.
Although not many deatails were given, Bridgewater seemed to have used a realtively simple Quant model based on Momentum early on, which in the beginning gave them some edge, but they never seemed to have developed that further.
My personal opinion is that Dalio and Bridgewater is not the only case of a famous Hedge Fund Manager who actually is not such a good investor but mainly a good salesman. As we have recently seen with Bill Hwang (Archegos) Gabe Plotkin (Melvin) and Tiger Global, a lot of these Hedge Fund Billionaires are not geniuses at all but more like “One trick ponys” that often manage to enrich themselves at the cost of their clients.
As in other cases, people were drawn to Bridewater because of the high salaries, but every employee was at risk to get publicly “questioned” by the boss if he or she said soemthing wrong. Employees were carrying around Ipads with real time rating systems to rate each other which in many cases led to doom loops as everyone tried not to be the next victim and instead tried to push someone else over the cliff. Sometimes he hired very senior people into senior roles (liek Larry Culp, fromer CEO of Danaher, now GE), but these people ususally left after a few months once they understood what they got into.
As most employees also had nothing to do with investing, it was also hard to leave because they would not been able to make the same amount of money elsewhere. Towards the end of his time at Bridgewater, Dalio became more and more fixated on teaching his “principles” to each and anyone who would listen.
The book is a fasciniating read on how out of control things can get in a company, where the founder has all the power and is not held accountable by an independent board or similar bodies.
The only negative point about the book is that there is relatively little to read about the actual investing, but this is maybe due to the fact that Bridgewater as such was not really about investing.
In any case I can recommend the book as a pretty unique “behind the curtain” story on one of the most famous Macro Hedge funds of all times.
*) for some reason, I must have subscribed to Ray Dalio at some point in time because I still find some Emails from Dalio in my Spam folder from time to time
value and opportunity 
The good news is that company run this way only damage the people willing to enslave themselves as employees for money and those who were gullible enough to trust them with their money (both clients and shareholders). The bad news is that what’s true of companies is also true of countries, with much more severe consequences.
Read Principles and very much resonated with me. Doesn’t mean Ray is perfect and possible he was a bit obsessive and strange. You might want to proof read and spell check your post though. The number of errors really make the post seem professional and detracts from the content.
What can be said however is that Dalio / Bridgewater have long time stats on markets and economies that are interesting to digest if one is interested in macro economics 😉
so he married into money ? I met countless fund managers with their own underwhelming shop that way.
the guy is a bit strange, and apparently got “Stranger” in the last 10 years, but you do not build a $150 Billion Hedge Fund Business without good returns and good Salesmanship , so give the guy some credit. They all get caught by “The Law of Large Numers” eventually
I generally like you insightful blog but this piece is biased and even wrong. The risk parity strategy pioneered by Dalio made Pure Aloha one of the most successful HF strategies ever (both performance and assets). I personally like to read and listen to Ray Dalio. Best,
Bart
No worries, we can easily agree to disagree. It’s just if you read the book and see what he did to his people, that this changed my perception a lot. Did you read the book ?
Yes I did read the book. Management style is too rude. I agree. But Dalio’s track record is impeccable
LOL “Pure Aloha”. I guess this would be a long/short strategy?
From Reuters on 16/08/2023 :
Since it was launched in 1991, Pure Alpha 12% has generated 7.7% net total returns annually, according to the same source. The All Weather strategy, a multi-asset investment approach structured to be indifferent to shifts in economic conditions, was up 3.8% in the same period, the person added.
It has no correlation to stocks so it is a worthy performance but not out of this world.