This is a Guest Post by: Colibri Trader @priceinaction
Ray Dalio is an American billionaire who is a legend in the investing and hedge fund communities. He is the founder, CIO, and co-chairman of Bridgewater Associates, one of the major players in the investment world. As of June 2019, he was ranked as the 58th wealthiest person in the world by Bloomberg.
Who is Ray Dalio?
Ray Dalio was born in Jackson Heights, Queens, New York City. His father was a jazz musician, quite accomplished and well-known in Manhattan. His mother was a homemaker. Ray Dalio was certainly not one who would be expected to become one of the world’s great investors, but clearly, he has defied all odds. He has mentioned before that his first investment was at 12 years old, as he was working as a caddie for wealthy traders at a local golf club. It was through listening to them that he caught the “trading bug.”
He bought Northeast Airlines for $300 for his first investment and tripled that within a year as the company merged with another. After that, he was hooked. He received a bachelor’s degree in finance from Long Island University, followed by his MBA from Harvard business school in 1973.
Ray worked on the floor of the New York Stock Exchange after completing school, in traded commodity futures to begin with. In 1974 he started trading futures as both a futures trader and broker at Shearson Hayden Stone. In 1975 he founded his own investment management firm, Bridgewater Associates out of his home. A few years later Ray ended up moving to Westport, Connecticut where the firm resides to this day. From his move in 1981 he grew the company to become the world’s largest hedge funds in 2005.
Most of his gains in the beginning were based upon futures, such as gold and crude oil, but most notably he made quite a bit of money in the cattle markets. Part of this was probably due to the fact that he had become a professional trader early in the 1970s when trading commodities became very fashionable. This was in his own words a matter of “Being in the right place at the right time.” Ultimately though, Bridgewater has had its fingers in everything from gold to real estate and of course other more common investments such as stocks and bonds. Currencies are also traded, and something that Bridgewater got much more active in during the late part of the 1980s.
With over $160 billion in assets under management, Bridgewater continues to be a Titan in the industry. Dalio stated in 2007 that he thought that we may be ready to see some type of global financial crisis, and shortly before the actual crisis kicked off in the markets, Dalio published an essay entitled “How the Economic Machine Works: A Template for Understanding What is Happening Now”, warning of the various issues around the world and in various economies.
In 2011 he published a book called “Principles” that outlines his philosophy on investing and management based upon his own lifetime. He uses observation, analysis of markets, and time-tested principles that he has used at Bridgewater. “Principles” was widely received with positive reviews.
Later, in 2017 he released “Principles: Life & Work”, which became a New York Times #1 Bestseller. The book has become so successful that he will be writing a second volume called “Principles: Economics & Investing.” At this point, it appears that Ray Dalio is stepping away from the actual investing world from a hands-on approach and looking to educate others as he is gaining in age. These days, he tends to be much more interested in philanthropy and education than the grind of trading the markets on a daily basis.
Ray Dalio has made a lot of headlines recently and can be seen interviewing with just about anybody who will talk to him. It seems as if recently his desire has been to spread his message more than worry about running Bridgewater. In fact, he stepped away from running the day-to-day business of Bridgewater in 2017. He still of course has his interests there, but more of an advisory role than anything else.
In an interesting twist compared to other fund managers, Dalio has done extensive work with Tony Robbins, the self-help Guru. Much of the work even gives you a rough idea of how to do what he does, in a very general sense. The “All Weather Portfolio” is a simplified way for retail traders to use the same type of risk parameters that he has throughout his life.
He has recently been seen addressing what he considers to be a “national emergency” in the United States: wealth inequality. He has recently called for a reform of capitalism, suggesting that excess capital, unfunded social liabilities and of course public deficits have set the world up for a major disaster. He is often quoted as saying that we are very similar to the 1930s, which of course was the pre-World War II era. In fact, one of the things that he suggests is that it is only a matter of time before a larger global conflict does in fact occur due to a various grouping of headlines and of course should be economic pressures that so many people feel.
In fact, his most recent release has been “Why and How Capitalism Needs to be Reformed”, which is a bit interesting considering that the very system that allowed him to have a net worth of $18.6 billion as of early 2019 is now the one that he wishes to correct. That being said, he does work a lot in philanthropy, joining Bill Gates and Warren Buffett in the “Giving Pledge”, vowing to donate more than half of his fortune to charitable causes before he dies. Through the Dalio Foundation, he has provided millions of dollars in donations to the David Lynch Foundation, which promotes Transcendental Meditation. He also has donated to New York Presbyterian Hospital, Fund for Teachers, and various polio eradication projects. He also has created OceanX, which is run by his own family and Bloomberg Philanthropies. This project has committed $185 million over the next four years to protect oceans around the world.
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