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Wednesday, May 29, 2024

New book suggests that Ray Dalio is a monster – is it fair?

Bridgewater: Book reveals the cult of Ray Dalio

Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, has been in the news for all the wrong reasons. A new book, “The Fund” by Rob Copeland, sheds light on Mr. Dalio’s management style and investment process. It’s not a pretty picture. The book paints a not-so-flattering portrait of Mr. Dalio, challenging his management principles and investment strategy.

The book narrates the disturbing story of Mr. Dalio publicly berating a pregnant employee, calling her an “idiot” repeatedly until she left the room in tears. This is allegedly just one example of Mr. Dalio’s true commitment to “truth-seeking” and radical transparency. The book argues that Mr. Dalio’s so-called principles are nothing more than tools to intimidate his employees and manipulate the company culture.

The author suggests that, far from having a codified set of investment rules, Mr. Dalio relies on hunches and simple “if then” statements in his decision-making. These tactics might have worked in the past, but have lost their edge in the face of evolving market trends.

Another striking point is that Mr. Dalio’s investment decisions seem to be at odds with the reports provided by his research staff, leading to lackluster returns for Bridgewater’s flagship funds. The book concludes that there is “no secret” to Bridgewater’s success, and Mr. Dalio’s efforts to codify investment rules and principles were a waste of time.

Mr. Copeland’s deep reporting has uncovered damning tales that reveal Mr. Dalio’s management style in the worst possible light. However, some anecdotes hint at Mr. Dalio’s willingness to later seek advice and listen to feedback, leading to a gray area on whether he is simply misunderstood rather than unprincipled.

Moreover, the book questions the erosion of Mr. Dalio’s edge and suggests that his investment process might have been better off if some of the magic could have been codified or captured. Nonetheless, the book is worth a read, as it presents a counter-narrative to the hagiography of Mr. Dalio.

The narrative of “The Fund” offers a compelling exposé of Bridgewater and Mr. Dalio. Despite Mr. Dalio’s dismissal of the book as sensational and inaccurate, the book raises important questions about leadership, investment strategies, and company culture.

If you want to learn more about financial markets, check out the links below:

• Forget the S&P 500. Pay attention to the S&P 493 (Nov 8th)
• What a third world war would mean for investors (Oct 30th)
• Investors are returning to hedge funds. That may be unwise (Oct 26th)

Also, check out how the Buttonwood column got its name.

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