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Ray Dalio - Bridgewater Associates Founder

Who is Ray Dalio

Ray Dalio is the founder, co-Chief Investment Officer and co-Chairman of Bridgewater Associates. Bridgewater associates being one of the best global macro hedge funds in the world, making an estimated $49.7 billion for investors.

Dalio applies and innovates various investment strategies and approaches to the market, ranging from: risk parity, currency overlay, portable alpha and global inflation indexed bond management.

If managing one of the largest hedge funds in the world wasn't enough in his spare time he's also a best selling author. One of his best pieces of work being The New York Times best seller Principles.

What is Bridgewater Associates

Bridgewater Associates is an asset management fund founded by Ray Dalio in 1975, focusing on delivering unique insights for institutional investors. Bridgewater's investment strategy focuses on a global macro approach which manages upwards of $150 billion.

Bridgewater's customers include: pension funds, endowments, foundations, foreign governments, and central banks.

Bridgewater Associates Hedge Funds

Bridgewater Associates has 3 products which are hedge funds:

  1. Pure Alpha

  2. All Weather

  3. Pure Alpha Major Markets

Pure Alpha Strategy

The Pure Alpha strategy typically involves placing thirty to forty different trades, which consistently returned either singe or double figures. In 2010, the Pure Alpha strategy invested in the likes of:

  • U.S. Treasury Bonds

  • Japanese Yen

  • Gold

  • Euro

  • European sovereign debt

Pure Alpha seeks to be a purely diversified strategy. Bridgewater would place multiple spread bets which means it would buy one security it deems undervalued and sell short another that it considers overvalued. For example, buying Goldman Sachs (GS) and selling JP Morgan.

All Weather Strategy

All-Weather was a strategy made famous by Ray Dalio. The All-Weather Portfolio is a diversified portfolio in terms of assets designed for better returns over time and protect investors against market fluctuations. The strategy involves great diversification but increasing the returns using leverage instead of allocating more of it's portfolio into the equity market.

Pure Alpha Major Markets Strategy

Similar to Pure Alpha strategy above, the Pure Alpha Major Markets focuses on the bigger markets. For example, European Bonds instead of exotic bonds. Greg Jensen Co-CEO and CO-CIO was the one to oversee the rollout of Pure Alpha Major Markets.

Ray Dalio Books

Ray Dalio is a New York Times best selling author having wrote several books, which include:

  1. Changing World Order: Why Nations Succeed or Fail

  2. Principles for Navigating Big Debt Crises

  3. Principles for Success

  4. Principles: life and work

Changing World Order: Why Nations Succeed Or Fail

The Changing World Order investigates history's most impactful economic and political times, revealing why the future will be radically different to what we've experienced in the past.

Ray Dalio started to notice a confluence of specific political and economic conditions he hadn't encountered before. This included:

  • Large debts

  • Zero or near-zero interest rates in the world's three major reserve currencies;

  • Significant wealth, political, and values divisions within countries

  • Emerging conflict between a rising world power (China) and the existing one (US).

Studying history and combining the current conditions with the past the book discovers how wealth and power shift in ways that reshape world order.

The book goes back in time five hundred years of history and nine major empires whic ruled the world at some point including the:

  1. Dutch

  2. British

  3. American

The Changing World Order puts into perspective the cycles and forces that have driven the successes and failures of all the world's major countries throughout history.

This is a valuable book for those with an inherent interest in economics and investing.

Principles for Navigating Big Debt Crises

Principles for Navigating Big Debt Crises reveals Ray Dalios unique template on how debt crises work and how to manage them well. This allowed Bridgewater Associates to not only anticipate upcoming events but also product significant positive returns whilst others lost.

Principles for Success

Principles for Success is what made Ray Dalio a best selling author. It contains key principles that enabled Dalio to become one of the worlds most elite. The lessons have been shared by people world wide and includes:

  • How to set goals

  • Learn from mistakes

  • Collaborate with others to produce exceptional results

The guide is now in an illustrated or video format for all kinds of audiences to learn from.

Principles: Life and Work

Principles: Life and Work, Dalio shares further career building advice and principles which apply to various other paths in life such as management, economics and investing. The lessons include most effective ways for organisation and people to make:

  • Decisions

  • Approach challenges

  • Build strong teams

This book will offer the reader a clear straight forward approach to decision-making.

Many of these principles of Ray Dalio and the macro investing approach to the markets we've also incorporated into our beginners forex course.

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