The New York Times published Nov. 6, 2023:
Ever Had a Horrible Boss? ‘The Fund’ Is the Perfect Rage-Read.
In Rob Copeland’s “The Fund,” we learn about the notorious hedge-fund giant Ray Dalio — and the manipulative professional hellscape over which he has presided.
Ray Dalio is the titan behind the world’s biggest hedge fund — a deep thinker and confidant of some of Earth’s most powerful people. Now 74, he has worked diligently over the past few years to publicize his “Principles,” perhaps in the hope that his name will live on.
In “The Fund,” Rob Copeland has done him the favor of assuring that it will — attached to one of the pettiest bullies you’ll ever meet on the page. This is a terrific dagger of a book packed with cringey detail, just long enough to efficiently disembowel its subject.
Most of “The Fund” doesn’t feel like a book about finance. Instead, it is about how a man of surpassing mediocrity used money to control and humiliate, and how much people abased themselves for it. Which, come to think of it, makes it one of the better books ever written about Wall Street.
Rob Copeland writes in this great 2023 book:
* Amid Pure Alpha’s extraordinary growth, the Bridgewater founder continued to give frequent media interviews in which he identified imminent market crashes that rarely happened. Dalio predicted a bear market coming in 1994; a “blow – off phase of the U.S. stock market” in 1995; “bombs away” for the Dow Jones Industrial Average in 1997; and a “deflationary implosion” for 1998. Each time, he explained away the misfires as a learning opportunity…
* Paul McDowell was one of the carriers. Roughly once a month, he would stand in front of a group of new hires and deliver the same speech: “Newton had his Principia . Ray has his Principles. The only difference is that Newton’s were limited to physics.”
The rules were presented to the newbies as a secret menu filled with acquired tastes that would not only seem more palatable over time, but also improve their lives inside and outside work. This was a winning pitch — being let in on a secret was alluring.
The doors blew open in May 2010, when the finance blog Dealbreaker got its hands on The Principles. The blog introduced the document, which it called “The Tao of Dalio,” with a healthy hit of snark (“WTF is this shit?” read the introduction). The blog quoted an anonymous employee who said, “The Principles are pretty cultish, as is the culture of the whole company. At one of our town halls [Dalio] handed out personally signed copies of them to everyone.”* The Bridgewater founder’s persistent pessimism became a source of ribbing among the Bridgewater ranks. Parag Shah, the firm’s head of marketing, opened one meeting with a too – close – for – comfort joke. “He’s called fifteen of the last zero recessions,” Shah said of his boss.
* The headline for the profile on the cover asked, “Is Ray Dalio the Steve Jobs of Investing?,” a question that McDaniel intentionally left unanswered in the piece.
Over time, the question mark faded. The next publication to compare the two men was Wired, which in an article about Apple acolytes included Dalio as an example and said he “has been called ‘the Steve Jobs of investing,’” a reference to McDaniel’s piece. That was enough to get Dalio’s official biography on Bridgewater’s website changed to read, “Ray has been called the ‘Steve Jobs of Investing’ by aiCIO Magazine and Wired Magazine.”* Dalio began to talk about Jobs ad nauseum, and some at Bridgewater concluded that he was less interested in Jobs’s accomplishments at Apple than in his outsize public persona. In Jobs, Dalio could see a model for his own hero’s journey. Both men were, charitably, viewed as jerks. Both had multiple legs to their careers. The difference was that while Jobs in his second stint had built Apple into a universally envied model for the technology world, Bridgewater was mostly known just in finance.
Dalio concluded that the difference wasn’t in their work, but in their messaging. The solution was to have Walter Isaacson write Dalio’s biography. Those around him didn’t pursue it the first few times it came up, but Dalio persisted in asking if it was possible, so Bridgewater staffers put out the request. Word came back from Isaacson’s camp: it was a pass.* [Dalio] gestured to Isaacson and asked, Wouldn’t you agree that both Steve Jobs and I are shapers?
Isaacson’s eyes darted side to side and he let out a nervous cough. He might have been a corporate guest, but he was a journalist, too, and he had demanded — and received — complete independence from Jobs in writing the book. Isaacson certainly wasn’t about to aggrandize Dalio just for picking up his guest’s travel costs. Isaacson dodged the question a few times, then launched into his pat talk.
Once it became clear that Isaacson wasn’t interested in shapers, Dalio slumped in his chair and was more subdued for the remainder of the talk.* Dalio soaked up the spotlight, on all platforms. Some weeks it seemed as if anyone who asked for an interview got one.
* Ferrucci, one of the world’s foremost experts in artificial intelligence, told colleagues he couldn’t figure out where to even begin to apply hard science to Dalio and McDowell’s creation, the Book of the Future. It was a mess of pseudoscience, wrapped in a patina of philosophy. Before Ferrucci’s arrival, it seemed there had been no double – blind tests, no anonymous surveys, and, no, not even a simple regression to show that the adoption of The Principles’ methods led to better results. (“I don’t believe in regressions,” Dalio told one employee who suggested it.) Even a cursory look at the data showed the opposite. The more time that folks at Bridgewater spent on The Principles — and its associated arguments, dottings, trials, and public hangings — the worse the company’s investments seemed to perform.
* The inventor of IBM Watson, who had trained a computer to answer trivia on any topic of the world, couldn’t make heads or tails of Dalio’s thought process. Ferrucci’s team could produce no obvious, predictive pattern to when the Bridgewater founder would bring up one Principle or another. The employee ratings, or dots, had equally little evidence of logic. Ferrucci, the AI expert, shared with colleagues a gradual awakening: Dalio’s system contained more artifice than intelligence.
* He invited the British historian Niall Ferguson to a sit – down in Westport. Ferguson was a safe bet to understand the importance of Dalio’s discovery. He was a Harvard professor (many of his former students worked for Bridgewater), prolific author, and like the Bridgewater founder a bit of an iconoclast. One of Ferguson’s animating philosophies was that Western civilization was more fragile than it appeared. Ferguson was also on retainer as a paid consultant for a number of financial firms, and when he got the invitation from Bridgewater, his first thought was that, if he played his cards right, he might have a chance to make some spare change.
Ferguson’s hope burst when he read the more than one – hundred – page document sent over from Bridgewater laying out the economic machine. He noticed almost immediately what he considered to be fundamental flaws. The paper ignored that one nation’s culture might lead to better or worse economic outcomes. It also discounted what Ferguson called “the caprices of decision makers,” including the role of human agency and ingenuity that could, for instance, lead one country to declare war on another, or to choose peace.
If this work had been done by one of his graduate students, Ferguson would have flunked the person. He couldn’t believe that he was reading, as he put it, the “holy texts” of Bridgewater.
Never one to shy from a good argument, Ferguson traveled down to Bridgewater… “There isn’t a way of modeling the historical process, and there’s definitely not a way of modeling the choices that highly indebted countries make.”
Ferguson stole a glance over at his host. Dalio was still sitting, but Ferguson and others present could tell he was on his way to steaming, shaking his head slowly, legs beginning to tap with antsiness. The professor pressed on. While it was possible to cherry – pick historical examples of nations that had collapsed under their debts, plenty of countries had grown fast enough to render the debts moot. Also: wars, coups, cultural changes, competing legal systems, effective and ineffective political leaders, and all sorts of other factors, including human consciousness, couldn’t ever be quantitatively measured, let alone cleanly placed into a formula.
“There is no cycle of history. It’s a fantasy,” Ferguson said.
Dalio jumped to his feet, shaking. The professor was claiming the secret of Dalio’s success couldn’t possibly be so.
“Where’s your fucking model, Niall?” he bellowed at his guest.
The room stood still. There was no model — that was the whole point. The world, and its people, were endlessly complicated. There was no cracking that nut. Before Ferguson could get that full thought out, Dalio repeated himself.
“Where’s your fucking model?”
It was about this time that Ferguson realized he wasn’t going to be hired at Bridgewater anytime soon. Employing a stiff British clapback, Ferguson turned to Dalio with a sniff and chose his words carefully. “I always feel that when someone uses the f – word, they’re losing the argument.”
The professor wrapped up his talk and headed for the door. Not long after he got home, he heard from one of his former students who had been among the rows of Bridgewater employees in the room. After Ferguson departed — and with everyone still present — Dalio had called for an instant poll. Who won the debate: the Bridgewater founder or the guest?
Dalio won, of course.* Dalio got what he wanted. He was not only the face of the firm, but as had been amply demonstrated over the preceding years — no matter how it was spun publicly — he had veto – proof control over management decisions.
Nowhere was that more obvious than in Bridgewater and Dalio’s budding fascination with international strongmen. Since the late 1980s, Dalio had been convinced that the United States was in an inextricable fall, not merely economically, but culturally. He saw U.S. politics as on a slow descent into unproductive unproductive squabbling, a journey that could end in nothing less than another civil war. At times, he called himself “an economic doctor,” with the prescription to fix all that.
In place of U.S. hegemony, Dalio looked for a better blueprint abroad. He seemed particularly smitten with societies ruled by powerful autocrats. Thanks to Bridgewater’s long history of managing money for Singapore’s government – run funds, Dalio became friends with Lee Kuan Yew. The elder man, who served as Singapore’s prime minister for a staggering thirty – one years, was a controversial figure whose long tenure achieved stability for his nation at the cost of freedom. Lee governed through what was essentially one – party rule, restricting freedom of speech and dismissing the value of democracy…
Over dinner at Dalio’s New York apartment shortly before the Singaporean leader’s death, the men discussed the best models among world leaders. Lee gave an unlikely answer in a posh Manhattan setting: Vladimir Putin. The Russian leader, Lee said, had stabilized Russia after the chaotic collapse of the Soviet Union. To Dalio, the analogy would have been seamless. He, too, had stabilized Bridgewater after a tumultuous stretch.
Dalio turned his attention, bordering on obsessive, to meeting Putin.* DALIO HAD been fascinated with China for decades, long before the growing nation became a mainstream destination for Western businesspeople. In China, he found the perfect confluence of his interests. The culture of the collectivist society demanded its citizens defer their short – term interests and gratifications for those of the state and its rules, for the promise of a long – term reward.
* My publication, when I joined, was in a tussle with Dalio over an investigative cover story that quoted a Bridgewater former executive saying, “My fundamental belief is that Bridgewater is a cult. It’s isolated, it has a charismatic leader, and it has its own dogma.”