Among the 100 wealthiest investors in the world, Ray Dalio cuts an iconic figure in the sometimes cookie-cutter arena of hedge funds and finance.
Not only does he manage the world’s biggest hedge fund, Bridgewater Associates, with approximately $140 billion under management, he is also a big-game bow hunter, meditation practitioner, and firm believer in radical honesty. Dalio didn’t earn his $12 billion net worth by following anyone but himself. All investors can learn valuable lessons from this one-of-a-kind billionaire.
Ray Dalio’s Biography
Dalio wasn’t born with a silver spoon and was far from a gifted student, but he learned from an early age to work for what he wanted. The son of a jazz musician and a stay-at-home mom, he knew he wanted spending money. His first jobs were the mundane employment of many suburban youths: He ran a paper route, shoveled snow, and washed dishes in a restaurant.
When he was 12 years old, his life took a turn that would place him on the road to vast wealth: He started working as a golf caddy. Carrying the clubs of businessmen from hole to hole, he overheard much talk about the stock market and investing. Acting on his curiosity, he purchased his first shares of stock. He chose Northeast Airlines because it was the only one he found selling for less than $5 a share. Fortunately for Dalio, the company received a buyout offer resulting in his shares tripling. He was quickly hooked on the market, and the rest is history.
His attraction to the market led to attending Harvard Business School. During his summers at Harvard, Dalio traded commodities while landing a job as an assistant to Merrill Lynch’s director of commodities. Next, he worked on Wall Street for two years and in 1975 launched Bridgewater from his New York City brownstone.
Ray Dalio’s Investment Strategy And Big Wins
Dalio is a macro investor who adheres to a strict sense of ethical ideas that create the bedrock for his investing and the way Bridgewater is operated. He lays out these principles in a treatise titled, appropriately, “Principles,” a 123-page manifesto that is required reading for all Bridgewater employees.
Boiled down to its essence, “Principles” teaches readers that they should always think for themselves and that “Truth, more precisely an accurate understanding of reality is the essential foundation for producing good results.” In other words, understanding reality for what it is, not what you think or wish it is, is the fundamental core for living a successful life.
Dalio shared specific investment strategy at the Bloomberg Markets 50 Summit in 2011. He emphasized that when building a portfolio, the ideal number of uncorrelated return streams is 15. Dalio believes that at exactly 15 uncorrelated investments, an investor’s risk factor is reduced by 80%.