“The Fund” is in brief an absolute tear-down of each, the legendary Macro Hedge Fund Bridgewater and its equally well-known founder Ray Dalio. There’s an outdated saying that you just don’ wish to understand how the sausage is made and on this case that is greater than becoming to what occurred behind the scenes at Bridgewater.
I’ve to confess that I by no means cared that a lot about Bridgewater (*) and that I discovered Dalio all the time very unusual when he was talking, however that he was such a Psychopath as it’s described within the guide is kind of a shock.
Curiously, Dalio to start with of his carreer wanted a very long time earlier than he obtained something off the bottom. His preliminary fame got here that he was one of many usal Perma Bears, predicting everlasting doom in his newsletters till he lastly might say in a nasty 12 months that he predicted it. He additionally appeared to have married very wealthy and in some way then obtained his fund going.
Inititally, he additionally appeared to have some actually good years which earned him the fame and introduced in property, however over time je turned a horrible psychopath who terrorized everybody together with his “rules”. His fixation on these “rules” that he (unsuccessfully) tried to codify into some type of AI/Professional system additionally led to a reasonably unhealthy funding efficiency. Their flagship fund underperformed a easy 60/40 Inventory/bond portfolio over the previous 10-12 years. Curiously as a perma bear, Dalio additionally did not see and react on the Covid crash.
Though not many deatails got, Bridgewater appeared to have used a realtively easy Quant mannequin primarily based on Momentum early on, which to start with gave them some edge, however they by no means appeared to have developed that additional.
My private opinion is that Dalio and Bridgewater isn’t the one case of a well-known Hedge Fund Supervisor who truly isn’t such an excellent investor however primarily an excellent salesman. As we’ve not too long ago seen with Invoice Hwang (Archegos) Gabe Plotkin (Melvin) and Tiger World, quite a lot of these Hedge Fund Billionaires usually are not geniuses in any respect however extra like “One trick ponys” that usually handle to counterpoint themselves at the price of their purchasers.
As in different circumstances, folks have been drawn to Bridewater due to the excessive salaries, however each worker was in danger to get publicly “questioned” by the boss if she or he mentioned soemthing unsuitable. Staff have been carrying round Ipads with actual time score programs to charge one another which in lots of circumstances led to doom loops as everybody tried to not be the following sufferer and as an alternative tried to push another person over the cliff. Generally he employed very senior folks into senior roles (liek Larry Culp, fromer CEO of Danaher, now GE), however these folks ususally left after just a few months as soon as they understood what they obtained into.
As most staff additionally had nothing to do with investing, it was additionally exhausting to go away as a result of they’d not been in a position to make the identical sum of money elsewhere. In direction of the tip of his time at Bridgewater, Dalio turned increasingly more fixated on educating his “rules” to every and anybody who would hear.
The guide is a fasciniating learn on how uncontrolled issues can get in an organization, the place the founder has all the facility and isn’t held accountable by an unbiased board or comparable our bodies.
The one unfavorable level concerning the guide is that there’s comparatively little to learn concerning the precise investing, however that is possibly on account of the truth that Bridgewater as such was not likely about investing.
In any case I can suggest the guide as a reasonably distinctive “behind the scenes” story on probably the most well-known Macro Hedge funds of all occasions.
*) for some purpose, I will need to have subscribed to Ray Dalio sooner or later in time as a result of I nonetheless discover some Emails from Dalio in my Spam folder every so often