“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 may be an previous saying that you just don’ need 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 e book is sort of a shock.
Apparently, Dalio at first of his carreer wanted a very long time earlier than he received 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 may say in a nasty 12 months that he predicted it. He additionally appeared to have married very wealthy and in some way then received his fund going.
Inititally, he additionally appeared to have some actually good years which earned him the repute and introduced in property, however over time je turned a horrible psychopath who terrorized everybody together with his “ideas”. His fixation on these “ideas” that he (unsuccessfully) tried to codify into some type of AI/Professional system additionally led to a fairly unhealthy funding efficiency. Their flagship fund underperformed a easy 60/40 Inventory/bond portfolio over the previous 10-12 years. Apparently as a perma bear, Dalio additionally didn’t 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 at first gave them some edge, however they by no means appeared to have developed that additional.
My private opinion is that Dalio and Bridgewater just isn’t the one case of a well-known Hedge Fund Supervisor who really just isn’t such a great investor however primarily a great salesman. As now we have just lately seen with Invoice Hwang (Archegos) Gabe Plotkin (Melvin) and Tiger International, lots of these Hedge Fund Billionaires are usually 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 instances, folks had 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 mistaken. Workers had been carrying round Ipads with actual time ranking methods to fee one another which in lots of instances led to doom loops as everybody tried to not be the subsequent sufferer and as an alternative tried to push another person over the cliff. Typically he employed very senior folks into senior roles (liek Larry Culp, fromer CEO of Danaher, now GE), however these folks ususally left after a couple of months as soon as they understood what they received into.
As most workers additionally had nothing to do with investing, it was additionally laborious to depart as a result of they’d not been in a position to make the identical amount of cash elsewhere. In direction of the tip of his time at Bridgewater, Dalio turned increasingly more fixated on educating his “ideas” to every and anybody who would pay attention.
The e book 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 related our bodies.
The one adverse level concerning the e book is that there’s comparatively little to learn concerning the precise investing, however that is perhaps on account of the truth that Bridgewater as such was probably not about investing.
In any case I can suggest the e book as a fairly distinctive “behind the scenes” story on some of the well-known Macro Hedge funds of all occasions.
*) for some purpose, I will need to have subscribed to Ray Dalio in some unspecified time in the future in time as a result of I nonetheless discover some Emails from Dalio in my Spam folder every now and then