Ray Dalio: Principles for Success

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Ray Dalio, founder of the world’s largest hedge fund, is known as much for his unique approach to corporate culture as he is his investment philosophies. After founding Bridgewater Associates in 1975 at the age of 26, Dalio began chronicling the reasons behind every business and leadership decision he made, a 40-year exercise that culminated in his recently released book Principles. In this discussion, Dalio describes the two predominant themes that have framed these principles and thus shaped the culture at Bridgewater over the years – idea meritocracy (the best ideas win out) and radical transparency.

On his early investment strategy: “I caddied, and I earned $6 a bag, so made $12 a round…So I took my caddying money and I put it in the stock market when I was 12. The first stock I bought was the only company I ever heard of that was selling for less than $5 a share. I figured I could buy more shares, and if it would go up, I’d make more money. That was my investment strategy…It tripled, and I was hooked on the market.”

On creating an idea meritocracy: “There are two things that you have to have. The first is that you have to be able to put your honest thoughts on the table… Most people normally don’t do that…Second, you have to be able to understand the art of thoughtful disagreement, have the curiosity, an understanding to listen so that there’s a back and forth so you collectively are able to get into a better place than you were individually. There’s an art. There’s a skill set to that… and you have to have protocols to get around your disagreements if disagreements remain.”

On A.I.’s relationship with people: “The intuitions, the instincts… our ability to make connections is very different from the computer and will be for a long time into the future. And at the same time, the computer, wow, it can process so much more than I could. If I think about making a decision, what stock to buy, and I think about that criteria…Now I can apply it to thousands or more… So there's a great partnership between those two things.”

 

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