Ray Dalio Macro and Stock Views
- Bullish USD, bearish EUR and JPY
- Bullish on USA and bearish on the rest of the world
as of January 2015 / These Views Are Taken From Public Sources and Are Edited by Financial Mercury Staf
The founder of Bridgewater Associates – Ray Dalio – was born on 1949 to a jazz musician. Ray began his first trade at age 12 when he bought Northeastern Airlines stocks that yielded him a 300% return. By the time he was in college; he had a not so small stock portfolio. Dalio went on completing his BA from Long Island University and an MBA from Harvard Business School.
Dalio worked on the floor of New York Stock Exchange (NYSE) for Merrill Lynch and also traded commodities. Later, he was allotted as the director of commodities at Dominick & Dominick LLC. In 1974 he began trading futures for Shearson Haydon Stone. By 1975, he formed an investment management firm by the name of Bridgewater Associates.
Today, Ray Dalio’s net worth is $10 billion and his company is one of the leading hedge funds with around $120 billion assets under management. Dalio mostly bets on economic trends like changes in currency exchange rates, inflation, and G.D.P. growth through currency bets, commodities and credit bets. The firm’s flagship fund by the name of Pure Alpha has more than $40 billion AUM. Dalio netted big bets on US and German government bonds with 20% return rate in 2011. Ray Dalio theories and methods have somewhat been controversial due to videotaped meeting and honesty encouragements among staff. Forbes testified that Dalio’s annual earning sums somewhere around $500-$600 million and is worth $10 billion; making him the 34th richest man in America. He forecasted year 2007 to be the end of mortgage boom, and also warned about the insolvency of big banks to Bush Administration.
During the financial crisis era of 2008, when most of the Bridgewater competitors made huge losses, the Pure Alpha funds rose to a net of nine and a half percent. He blames China’s growth as the culprit for the increase in commodity prices. In 2011, he made a total of $3.9 billion by securing government bonds and gold. His predictions about the rise in both the commodities turned true which led him to additional $2 to $3 billion dollars. According to Mr. Dalio, an ordinary type of recession can be broken if the central bank lowers the interest rate. He has written a template by the name of A Template for Understanding, which encloses the core of his economic understandings. Dalio has made numerous media appearances in financial publications, including CNBC, Bloomberg, WSJ, etc.
Ray Dalio Personal Info
Ray Dalio’s Age – 65 Years
Career Duration and Experience – More than 40 Years
Source of Het Wealth: Hedge Fund Activities – Self-made.
Residence: Greenwich, CT
Occupation: Founder of Bridgewater Associates.
Net worth (March 2012): $15.2 billion
Other Achievements: #88 Forbes Billionaires, #30 Forbes 400, ranks #30 on the wealthiest person in United States and 88th richest person in the world.
Titled as the Steve Jobs of Investing, Dalio owns a three-story Greenwich mansion prized at $3.64 million where he lives with his wife with four children. Conferring to 2011 reports by the Wall Street; Ray Dalio made a total of $3.9 billion, which is greater or equal to the GDP of 37 countries, including Suriname ($3.9 billion), Swaziland ($3.9 billion), Togo ($3.6 billion), Fiji ($3.4 billion), etc.
He has designed a charity institution by the name of The Raymond Dalio Foundation and claim to have donated 10% of his earnings to several charity institutions including the Robin Hood Foundation, NYU and the Raymond Dalio Foundation. He practices Transcendental Meditation technique on daily basis and is an ardent practitioner.
The company is based in Westport, Connecticut by the name of Bridgewater Associates with approximately 1200 employees. It serves foreign governments, central banks, corporate and public pension funds, university endowments and charitable foundations while managing almost $125 billion in global investments. The establishment has been known as a top-performing organization and industry innovator, securing 22 industry awards in the past five years. The management carries out an enhanced decision-making and team work which helps the employees cultivate at a faster rate. According to an annual survey, its employees and clients always give Bridgewater a top satisfaction rating; due to which it is ranked as the largest and best performing hedge firm in the world.
The company follows ‘radical transparency’ and runs on a personal advice and guidance from the owner itself. Apart from being a fixed income and currency advisor, Bridgewater has expanded its expertise on advising hedging interest rates and price risk of commodities. It’s top-notch clients includes central banks across the globe, Nabisco, McDonalds, CalPERS, Georgetown University and quite a few more to list it here. In the past ten years Bridgewater has reached an average return of more than 18%.
The firm has 3 hedge funds under it, namely – the Pure Alpha fund which is the main fund, the All Weather, and the newest fund Pure Alpha Major Markets. The white paper by the name of Daily Observations is published at a subscription and is read and perused by investors all over the world.
The birth of Pure Alpha Strategy in 1991 turned out to be so successful that the firm had to send the money back to investor’s home in order to keep the strategy practical. In 2011, the Pure Alpha funds increased by forty-five percent. A sister fund by the name of All Weatherwas launched after the success of Pure Alpha Strategy.
Pure Alpha Major Markets was designed in 2011 at $2.5 billion from prevailing clients. It is quite similar to Pure Alpha, but an advanced liquidity is maintained by focusing on the European bonds. The flagship was also open to new investors who willingly invested $7+ billion, making it the largest hedge fund set up. This flagship contributed to another $100 billion in total assets. The Daily Observations research published by the company is read and followed by leaders and politicians such as these of CBs, global pension funds, U.S. Treasury Secretary Timothy Geithner and even the U.S. President Barack Obama. It is a flagship product of Bridgewater associates and is known as “one of the most widely forwarded pieces of market analysis.”
Ray Dalio’s recommended Reading
Bridgewater, the largest and most successful US based hedge fund currently have over $75 billion under management. In a recent interview with their iconic CEO, Ray Dalio one of the questions that arose was what figured high in Dalio’s list of favorite literature. While that question might have appeared pretty inane, the interviewer knew exactly what they were doing when they tossed it in the rig. Because the answers provided some unique insights in Dalio’s tastes and interests that may have been invaluable in the development of his renowned astute decision making processes.
The first book on Dalio’s list was “The Lessons of History” which was written by Will Durant. Durant was quick to point out that “the lessons” comprised just 104 pages. On the other end of the scale was another of Will Durant’s works “The Story of Civilization” which is no less that fifteen volumes long. It was obvious that Dalio was a big fan of Will Durant, who he described as “the greatest historian of all time”.
The connection between history and investment in which Dalio places great stress was very predominant in the interview. One of the most pertinent quotes on the subject, mentioned by Dalio in the interview, was made by Robert Rodriguez, CEO, of First Pacific Advisors (FPA)
“In the fall of 1974 I was in graduate school at USC taking a portfolio-management investment course. The financial markets were in difficulty, and I didn’t understand how securities were being sold at such depressed levels. I had only recently discovered Security Analysis by Graham and Dodd when we had a guest lecturer come in named Charlie Munger, who went on about this idea of value investing. After the class was over, I walked up to Charlie and asked him if there was one thing that I could do that would make me a better investment professional. His answer was, ‘Read history, read history, read history.”
Another piece of literature worth reading on Ray Dalio was the transcription of an interview and personal profile given to Maneet Ahuja under the title of “The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Funds” ,
Ray Dalio Principles
Ray Dalio, legendary hedge fund manager, brain and driving force behind Bridgewater Associates is not slow in sharing his life and management principles with the people that he employs at Bridgewater. While his internal newsletter “Ray Dalio Principles” is, in true terms, required reading by all of the all more than 1000 employees at Bridgewater, there would have been very few that required too much convincing. Those outside the organisation, including our team at value slots, who were privileged to receive a copy of Ray Dalio Principals, could not have failed to be impressed about Dalio’s forthrightness and honest self appraisals. After reading the first few pages it becomes increasingly obvious that Dalio’s as well as Bridgewater’s corporate culture is based upon relentlessly focusing on openly discussing mistakes and weaknesses., both in the market as well as within Bridgewater,
Those wishing to read a copy of ‘Ray Dalio Principles’ should click on the link below. In the meantime here are a few brief insights into Dalio’s philosophies:
“ I remained wary about being overconfident, and I figured out how to effectively deal ith my not knowing. I dealt with my not knowing by either continuing to gather information until I reached the point that I could be confident or by eliminating my exposure to the risks of not knowing.”
“While most others seem to believe that learning what we are taught is the path to success, I believe that figuring out for yourself what you want and how to get it is a better path.”
“ How much do you let what you wish to be true stand in the way of seeing what is really true? “
“ How much do you worry about looking good relative to actually being good?”
“ The most important qualities for successfully diagnosing problems are logic, the ability to see multiple possibilities, and the willingness to touch people’s nerves to overcome the ego barriers that stand in the way of truth.”
“ Know what you want and stick to it if you believe it’s right, even if others want to take you in another direction.”
“ In a nutshell, this is the whole approach that I believe will work best for you—the best summary of what I want the people who are working with me to do in order to accomplish great things. I want you to work for yourself, to come up with independent opinions, to stress-test them, to be wary about being overconfident, and to reflect on the consequences of your decisions and constantly improve.
While most others seem to believe that mistakes are bad things, I believe mistakes are good things because I believe that most learning comes via making mistakes and reflecting on them. ”