{"id":157360,"date":"2024-09-07T23:07:16","date_gmt":"2024-09-08T07:07:16","guid":{"rendered":"https:\/\/lukeford.net\/blog\/?p=157360"},"modified":"2024-09-08T04:17:45","modified_gmt":"2024-09-08T12:17:45","slug":"the-fund-ray-dalio-bridgewater-associates-and-the-unraveling-of-a-wall-street-legend","status":"publish","type":"post","link":"https:\/\/lukeford.net\/blog\/?p=157360","title":{"rendered":"The Fund: Ray Dalio, Bridgewater Associates, and the Unraveling of a Wall Street Legend"},"content":{"rendered":"

The New York Times published Nov. 6, 2023<\/a>: <\/p>\n

Ever Had a Horrible Boss? \u2018The Fund\u2019 Is the Perfect Rage-Read.<\/p>\n

In Rob Copeland\u2019s \u201cThe Fund,\u201d we learn about the notorious hedge-fund giant Ray Dalio \u2014 and the manipulative professional hellscape over which he has presided.<\/p>\n

Ray Dalio is the titan behind the world\u2019s biggest hedge fund \u2014 a deep thinker and confidant of some of Earth\u2019s most powerful people. Now 74, he has worked diligently over the past few years to publicize his \u201cPrinciples,\u201d perhaps in the hope that his name will live on.<\/p>\n

In \u201cThe Fund,\u201d Rob Copeland has done him the favor of assuring that it will \u2014 attached to one of the pettiest bullies you\u2019ll 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.<\/p>\n

Most of \u201cThe Fund\u201d doesn\u2019t 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.<\/p><\/blockquote>\n<\/blockquote>\n

Rob Copeland writes in this great 2023 book<\/a>: <\/p>\n

\n

* Amid Pure Alpha\u2019s 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 \u201cblow – off phase of the U.S. stock market\u201d in 1995; \u201cbombs away\u201d for the Dow Jones Industrial Average in 1997; and a \u201cdeflationary implosion\u201d for 1998. Each time, he explained away the misfires as a learning opportunity…<\/p>\n

* 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: \u201cNewton had his Principia . Ray has his Principles. The only difference is that Newton\u2019s were limited to physics.\u201d
\n 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 \u2014 being let in on a secret was alluring.
\n 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 \u201cThe Tao of Dalio,\u201d with a healthy hit of snark (\u201cWTF is this shit?\u201d read the introduction). The blog quoted an anonymous employee who said, \u201cThe 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.\u201d<\/p>\n

* The Bridgewater founder\u2019s persistent pessimism became a source of ribbing among the Bridgewater ranks. Parag Shah, the firm\u2019s head of marketing, opened one meeting with a too – close – for – comfort joke. \u201cHe\u2019s called fifteen of the last zero recessions,\u201d Shah said of his boss.<\/p>\n

* The headline for the profile on the cover asked, \u201cIs Ray Dalio the Steve Jobs of Investing?,\u201d a question that McDaniel intentionally left unanswered in the piece.
\n 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 \u201chas been called \u2018the Steve Jobs of investing,\u2019\u201d a reference to McDaniel\u2019s piece. That was enough to get Dalio\u2019s official biography on Bridgewater\u2019s website changed to read, \u201cRay has been called the \u2018Steve Jobs of Investing\u2019 by aiCIO Magazine and Wired Magazine.\u201d<\/p>\n

* Dalio began to talk about Jobs ad nauseum, and some at Bridgewater concluded that he was less interested in Jobs\u2019s accomplishments at Apple than in his outsize public persona. In Jobs, Dalio could see a model for his own hero\u2019s 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.
\n Dalio concluded that the difference wasn\u2019t in their work, but in their messaging. The solution was to have Walter Isaacson write Dalio\u2019s biography. Those around him didn\u2019t 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\u2019s camp: it was a pass.<\/p>\n

* [Dalio] gestured to Isaacson and asked, Wouldn\u2019t you agree that both Steve Jobs and I are shapers?
\n Isaacson\u2019s 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 \u2014 and received \u2014 complete independence from Jobs in writing the book. Isaacson certainly wasn\u2019t about to aggrandize Dalio just for picking up his guest\u2019s travel costs. Isaacson dodged the question a few times, then launched into his pat talk.
\n Once it became clear that Isaacson wasn\u2019t interested in shapers, Dalio slumped in his chair and was more subdued for the remainder of the talk.<\/p>\n

* Dalio soaked up the spotlight, on all platforms. Some weeks it seemed as if anyone who asked for an interview got one.<\/p>\n

* Ferrucci, one of the world\u2019s foremost experts in artificial intelligence, told colleagues he couldn\u2019t figure out where to even begin to apply hard science to Dalio and McDowell\u2019s creation, the Book of the Future. It was a mess of pseudoscience, wrapped in a patina of philosophy. Before Ferrucci\u2019s 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\u2019 methods led to better results. (\u201cI don\u2019t believe in regressions,\u201d 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 \u2014 and its associated arguments, dottings, trials, and public hangings \u2014 the worse the company\u2019s investments seemed to perform.<\/p>\n

* The inventor of IBM Watson, who had trained a computer to answer trivia on any topic of the world, couldn\u2019t make heads or tails of Dalio\u2019s thought process. Ferrucci\u2019s 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\u2019s system contained more artifice than intelligence.<\/p>\n

* He invited the British historian Niall Ferguson to a sit – down in Westport. Ferguson was a safe bet to understand the importance of Dalio\u2019s 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\u2019s 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.
\n Ferguson\u2019s 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\u2019s culture might lead to better or worse economic outcomes. It also discounted what Ferguson called \u201cthe caprices of decision makers,\u201d including the role of human agency and ingenuity that could, for instance, lead one country to declare war on another, or to choose peace.
\n If this work had been done by one of his graduate students, Ferguson would have flunked the person. He couldn\u2019t believe that he was reading, as he put it, the \u201choly texts\u201d of Bridgewater.
\n Never one to shy from a good argument, Ferguson traveled down to Bridgewater… “There isn\u2019t a way of modeling the historical process, and there\u2019s definitely not a way of modeling the choices that highly indebted countries make.\u201d
\n 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\u2019t ever be quantitatively measured, let alone cleanly placed into a formula.
\n \u201cThere is no cycle of history. It\u2019s a fantasy,\u201d Ferguson said.
\n Dalio jumped to his feet, shaking. The professor was claiming the secret of Dalio\u2019s success couldn\u2019t possibly be so.
\n \u201cWhere\u2019s your fucking model, Niall?\u201d he bellowed at his guest.
\n The room stood still. There was no model \u2014 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.
\n \u201cWhere\u2019s your fucking model?\u201d
\n It was about this time that Ferguson realized he wasn\u2019t 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. \u201cI always feel that when someone uses the f – word, they\u2019re losing the argument.\u201d
\n 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 \u2014 and with everyone still present \u2014 Dalio had called for an instant poll. Who won the debate: the Bridgewater founder or the guest?
\n Dalio won, of course.<\/p>\n

* Dalio got what he wanted. He was not only the face of the firm, but as had been amply demonstrated over the preceding years \u2014 no matter how it was spun publicly \u2014 he had veto – proof control over management decisions.
\n Nowhere was that more obvious than in Bridgewater and Dalio\u2019s 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 \u201can economic doctor,\u201d with the prescription to fix all that.
\n 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\u2019s long history of managing money for Singapore\u2019s government – run funds, Dalio became friends with Lee Kuan Yew. The elder man, who served as Singapore\u2019s 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…
\n Over dinner at Dalio\u2019s New York apartment shortly before the Singaporean leader\u2019s 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.
\n Dalio turned his attention, bordering on obsessive, to meeting Putin.<\/p>\n

* 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.<\/p>\n

* My publication, when I joined, was in a tussle with Dalio over an investigative cover story that quoted a Bridgewater former executive saying, \u201cMy fundamental belief is that Bridgewater is a cult. It\u2019s isolated, it has a charismatic leader, and it has its own dogma.\u201d<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

The New York Times published Nov. 6, 2023: Ever Had a Horrible Boss? \u2018The Fund\u2019 Is the Perfect Rage-Read. In Rob Copeland\u2019s \u201cThe Fund,\u201d we learn about the notorious hedge-fund giant Ray Dalio \u2014 and the manipulative professional hellscape over … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[42922,42730],"tags":[],"class_list":["post-157360","post","type-post","status-publish","format-standard","hentry","category-guru","category-wall-street"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t