Ray Dalio

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Ray Dalio
Web Summit 2018 - Forum - Day 2, November 7 HM1 7481 (44858045925).jpg Web Summit 2018 - Forum - Day 2, November 7 HM1 7481 (44858045925).jpg
Born	Raymond Thomas Dalio (1949-08-08) August 8, 1949. New York City, New York, U.S.
🏳️ Nationality	American
🏫 Education	Long Island University Harvard Business School
💼 Occupation	Hedge fund manager
Known for	Founder of Bridgewater Associates
💰 Net worth	US$17.0 billion (March 2021)
👩 Spouse(s)	Barbara Dalio
👶 Children	4 sons, including Paul Dalio
🥚 Twitter	Twitter=

label65 = 👍 Facebook

Raymond Thomas Dalio (born August 8, 1949) is an American billionaire businessman, hedge fund manager, philanthropist, and author who has served as co-chief investment officer of the world's largest hedge fund, Bridgewater Associates, since 1985. He founded Bridgewater in 1971 in New York. Within ten years, it was infused with a $5 million investment from the World Bank's retirement fund. Dalio is regarded as one of the greatest innovators in the finance world, having popularized many commonly used practices, such as risk parity, currency overlay, portable alpha and global inflation-indexed bond management. Dalio was called "a financier-statesman, of sorts, consulting with political leaders in China, the Middle East and elsewhere" by the New York Times.

Dalio was born in New York City, and attended C.W. Post College of Long Island University before receiving an M.B.A. from Harvard Business School in 1973. Two years later, in his apartment, Dalio launched Bridgewater. In 2013, it was listed as the largest hedge fund in the world. In 2020 Bloomberg ranked him the world's 79th-wealthiest person. Dalio is the author of the 2017 book Principles: Life & Work, about corporate management and investment philosophy. It was featured on The New York Times best seller list, where it was called a "gospel of radical transparency."

Early life

Dalio was born in the Jackson Heights neighborhood of New York City's Queens borough. When he was 8, the family moved from Jackson Heights to Manhasset in Nassau County, New York. He is the son of a jazz musician, Marino Dalio (1911–2002), who "played the clarinet and saxophone at Manhattan jazz clubs such as the Copacabana," and Ann, a homemaker. As a child, Dalio had various odd jobs, including mowing lawns, shoveling snow, and a paper route. He is of Italian descent. At age 12, he started caddying at The Links Golf Club, which was walking distance from his childhood home. He caddied for many Wall Street professionals during his time at the gold club. One was George Leib. The Wall Street veteran and his wife Isabelle invited Dalio to their Park Avenue apartment for family dinners and holiday gatherings.The couple's son, a Wall Street trader, later gave Dalio a summer job at his trading firm. He began investing at age 12, when he bought shares of Northeast Airlines for $300 and tripled his investment after the airline merged with another company. By the time he reached high school, he had built up an investment portfolio of several thousand dollars. He received a bachelor's degree in finance from Long Island University (C.W. Post College) and an M.B.A. from Harvard Business School in 1973.

Investment career

College

In his high school years, Dalio was a mediocre student. He found school repetitive and monotonous, and saw no practical applications for the skills he was learning. Because of this, he had trouble finding a college to enroll at. He finally applied and got into C.W Post College, a campus of Long Island University. He continued to buy and sell stocks in college, but became attracted to something new: commodity futures. Commodity futures had low borrowing requirements at the time, and Dalio knew he could profit more handsomely than with simple stocks. At the same time, he was beginning to enjoy school. With more freedom given to him, he took up transcendental meditation, which he still practices to this day. With this newfound strategy to manage stress and focus, along with his blossoming appetite for learning, Dalio excelled academically. At the end of his time at C.W Post College, he was admitted to Harvard Business School

Graduate school

After graduating from C.W Post College, Dalio had a free summer. He took a job as a clerk on the New York Stock Exchange. While there, he witnessed Nixon's decision to take the United States off of the gold standard. Due to the inflation this caused, stock prices on the exchange rose, on average, 33% the following day. These events set in motion the Great Inflation of the 1970's. The combination of easy money policy and abandonment of fiscal discipline set prices soaring. The next summer, after his first year at Harvard, Dalio and his friends created the company that later became Bridgewater Associates. It started off as a small entity, and its goal was to trade commodities. But they lacked experience and the venture yielded little fruit. Although the original Bridgewater failed, Dalio retained the name and used it to create the largest hedge fund ever. This experience trading commodities later became much more valuable, as the high interest rates used to break the back of inflation caused the stock market to fall. This caused investors on Wall Street to turn to commodities, which are typically more resilient and thrive during times of inflation.

Professional start

After completing his education, Dalio worked on the floor of the New York Stock Exchange and traded commodity futures. He later worked as the Director of Commodities at Dominick & Dominick LLC. In 1974 he became a futures trader and broker at Shearson Hayden Stone, a securities firm run by Sandy Weil, who later became famous for building up Citigroup. At the firm, Dalio's job was to advise cattle ranchers, grain producers, and other farmers on how to hedge risks, primarily with futures. But he was largely dissatisfied with Shearson Hayden Stone's hierarchical structure, which reminded him of primary education. He longed for the more freedom-based lifestyle of college. At one point, he paid a stripper to drop her clothes in front of a crowd at the annual convention of the California Food and Grain Growers' Association. His creative ways of blowing off steam continued, and exploded on New Year's Eve in 1971 after he went out drinking with some colleagues, including his boss. After a disagreement with his superior, a drunk Dalio punched him in the face. Soon afterward, he was let go from his job at Shearson Hayden Stone.

Founding of Bridgewater Associates

Despite his aggressive behavior, numerous clients at Shearson Hayden Stone retained their trust in Dalio, and continued to allow him to manage their money. With this capital, he was able to scrape together the beginnings of his asset management fund. In 1975, he founded Bridgewater Associates out of his two-bedroom New York City apartment. Bridgewater started out as a wealth advisory firm, and did so for numerous corporate clients, mostly from Dalio's job at Shearson Hayden Stone. The main areas in which Dalio advised were currencies and interest rates. The company began publishing a paid subscription research report, Daily Observations, in which it analyzed global market trends. The fund began to gather a following because of this note, which was described as "deeply researched". Dalio's big break came when McDonald's signed on as a client of his firm. Bridgewater then began to grow rapidly. The firm began to sign on larger clients, including pension funds for the World Bank and Eastman Kodak. In 1981 the firm opened an office in Westport, Connecticut, which was where Ray and his wife Barbara wanted to start a family. Dalio started to become well-known outside of Wall Street after turning a profit from the 1987 stock market crash. The following year, he appeared on “The Oprah Winfrey Show” in an episode titled “Do Foreigners Own America?” In 1991, Dalio launched Bridgewater's flagship strategy, "Pure Alpha,'' a reference to the Greek letter that, in Wall Street terminology, represents the surcharge a money manager can earn above a particular market benchmark, such as the NASDAQ. In 1996, Dalio launched a fund called All Weather, which pioneered a steady, low-risk strategy that would later become well known as risk parity.

Rise to prominence

Bridgewater Assoc. Pure Alpha I stock market strategy returns vs the S&P 500.

Bridgewater Associates became the world's largest hedge fund in 2005. From 1991 to 2005 it lost money in only three calendar years, and never more than 4%. During the same period, the S&P 500 also had three down years, including a negative return of 22.1% in 2002.The fund grew in size by using the standard hedge fund model, which takes a 2% management fee of assets and 20% of yearly profits accrued from using an investment system. By 2005, Dalio was managing money for extremely large entities, including the $196 billion California Public Employees' Retirement System (CalPERS), the $27 billion Pennsylvania State Employees' Retirement System, Melbourne-based National Australia Bank Ltd. and the pension fund of Hartford, Connecticut-based United Technologies Corp. In 2007, Bridgewater suggested there might be a global financial crisis, and in 2008 Dalio published "How the Economic Machine Works: A Template for Understanding What is Happening Now", an essay assessing the potential of various economies by various criteria. The firm's total assets under management increased to $50 billion in 2007 (up from $33 billion seven years earlier).

According to a 2007 article in Barron's magazine, "nobody was better prepared for the global market crash" than Bridgewater's clients and subscribers to its Daily Observations. The company "began sounding alarms...in the spring of 2007 about the dangers of excessive financial leverage." Researchers at the firm examined the public records of most of the world's largest financial entities and discovered that estimated future liabilities related to bad debts totaled $839 billion. When Dalio met with U.S. Treasury Department staff and other White House economic advisors in December, these findings were disclosed. Due to this research, Bridgewater's Pure Alpha fund avoided much of the 2008 stock market implosion for its investors. During his 2008 presidential campaign, John McCain paid a visit to the firm and spoke to staff. Despite the initial success of avoiding the turmoil in 2008, the next year was not as bright. In 2009, when economic growth was higher than expected and the Dow Jones Industrial Average increased by 19%, the company's Pure Alpha fund reportedly earned just 2% to 4%. In 2011, Dalio self-published a 123-page volume, Principles, that outlines his philosophy of investment and corporate management. In 2012, he appeared on the annual Time 100 list of the 100 most influential people in the world. In 2011 and 2012 Bloomberg Markets listed him as one of the 50 Most Influential people. With just three losing years in its history, Bridgewater's Pure Alpha II has a recorded an average return of 10.4%. A stake in Bridgewater Associates Intermediate Holdings, LP was purchased by the Teacher Retirement System of Texas (TRS) for $250 million in February 2012. This stake was non-voting, and thus provided the pension fund with very little control of corporate governance. Institutional Investor's Alpha ranked Dalio No. 2 on its 2012 Rich List. He has controlled Bridgewater Associates alongside co-chief investment officers Bob Prince and Greg Jensen since its inception. The hedge fund recently announced plans to reorganize as a partnership. Dalio said the reason for this was the continued sustainability and profit-sharing of the company. He was co-CEO of Bridgewater for 10 months before announcing in March 2017 that he would step down as part of a company-wide shakeup by April 15. The company had been in a seven-year management and equity transition to find a replacement. Jon Rubinstein, co-CEO of the fund, was announced to step down with Dalio, but would retain an advisory role. The reason for the removal of Rubinstein was because he was not a "culture fit", according to Dalio. In September 2017, the New York Times reported that Bridgewater Associates was larger then the next two hedge funds combined.As of October 2017 Bridgewater Associates had $160 billion in assets under management. In reference to the personality that led him to investment success, Dalio has said that he considers himself a "hyperrealist", and that he is motivated to understand the mechanisms that dictate how the world actually functions, without adding in abstract value judgments. A senior employee, who was at the firm as an internal adviser to the Bridgewater management committee, called Mr. Dalio “ a purist; you had to go all in.”

Investment Philosophy

Within Bridgewater Associates, Dalio deploys multiple strategies and allocates a certain amount of capital per strategy. Each subset of the company's capital that uses a particular investment strategy is referred to as a fund. According to Ray Dalio, Bridgewater Associates is a "global macro firm".John Longo, a finance professor at Rutgers University School of Business said that Dalio's investment culture was "not for everyone but not one that would dissuade me from investing”. The corporation divides its holdings into two different areas: beta investments, which produce returns through passive management and normal market risk, and alpha investments, which are actively managed and aim to generate better returns than beta investments, and that are uncorrelated to the general market.It uses "quantitative" investment methods to identify new investments while avoiding unrealistic historical models. Its goal is to structure portfolios with uncorrelated investment returns based on risk allocations rather than asset allocations. Additionally, the company is reported to accept funds from only institutional clients such as pension funds, foundations, endowments, and central banks rather than private investors. Dalio translates his insights into algorithms, much like fellow quantitative hedge fund managers such as David Elliot Shaw and Jim Simons. His strategy mainly focuses on currency and fixed income markets, and focuses less on stocks, like investors such as Warren Buffett and Peter Lynch. Dalio also popularized the risk parity approach, which is used to for risk management and diversification within the fund. Bridgewater employs an investment strategy that blends conventional diversification with "wagers on or against markets around the world" according to Bloomberg. Risk parity strategies allow for both leverage and external diversification in portfolios and funds, as well as short selling. Portfolio managers can use whatever asset combination they want if they take this route. The strategy uses an optimal risk target level as its basis for investing, rather than creating allocations to various asset classes to arrive at an optimal risk target. This is often implemented by using leverage to evenly distribute exposure across various asset classes while maintaining the best risk target level. Dalio began using the term "d-process" in February 2009 to describe the deleveraging and deflationary process of the subprime mortgage industry as distinct from a recession. Dalio's exact investment portfolio and strategies are largely kept a secret from the outside world. This includes most employees as well as external investors, and only a dozen people within the firm understand how it trades at a given time. He reportedly hires those from top academic instructions that have little or no experience in finance.

Principles

Overview

Dalio has said that he has been guided by his principles, which he views as "fundamental truths that serve as the foundations for behavior that gets you what you want out of life". He has developed these principles over time and they have become an integral part of his life. He had just a few dozen Principles in the mid-2000s, but the number rapidly increased in tandem with Bridgewater's head count. Dalio eventually collected his standards into a small white book. Until his 2017 hardback Principles was available on the firm's iPads, all staff brought hard copies to work. In March 2019, Dalio published an essay on his LinkedIn page in which he described the origin of his principles. He wrote that he began writing down what objectives he wanted to achieve and how he wanted to achieve them about 30 years before the article was published, circa 1989. He said that his most important principle was to have a principled mindset and think in a principled way, where "principled" meant "embracing reality, seeing how reality works and having effective ways for dealing with reality". Dalio claimed that reality works like a machine that has cause/effect relationships, and that by understanding these relationships and knowing how to interact with reality well, people can make better decisions, resulting in superior outcomes and better lives. He asserted that when one views things through principled lens, one sees that most things repeatedly occur for the same reasons, and that by going from regular thinking to principled thinking one goes from being in a blizzard of unrelated things to encountering a far fewer number of types of things that are familiar and develops tried and true principles for dealing with one’s realities well. By thinking in this principled way, one has an easier life by being more adaptable to unfamiliar situations and more effective in familiar ones. He gave an analogy of a baseball player. He asked the reader to visualize how batting against different types of pitches being thrown at you works. Dalio said that as a hitter practices batting against curveballs, fast balls, and sliders, they naturally learn to distinguish between them and to instinctively use principles for dealing with each scenario well so that they become an better hitter.

Examples

The following are a few example that Dalio has claimed serve as principles that he applies in everyday life:

"If there are questions about who has what power, there will be a conflict to resolve that. Ideally that happens without a hot war, but when it is not clear and it is important it generally isn’t resolved peacefully. Over time evolution will make it clear who has what power, so if those with less power know that they have less power, they should slip into the subordinate position so the power and position change takes place without fighting. If they refuse to slip into the subordinate position, there will be fighting and the painful defeat of the weaker power. That is what makes transitions of power so painful."

"Human productivity is the most important force in causing the world's total wealth, power, and living standard to rise over time. Productivity—i.e., the output per person, driven by learning, building, and inventiveness—has steadily improved over time because learning is gained more than lost. However, it has risen at different rates for different people, though always for the same reasons—because of the quality of people’s education, inventiveness, work ethic, and economic systems to turn ideas into output. These reasons are important for policy makers to understand in order to achieve the best possible outcomes for their countries, and for investors and companies to understand in order to determine where the best long-term investments are located"

"Don't worry about whether or not people like you and don't look to them to tell you what you should do. Just worry about making the best decisions possible, recognizing that no matter what you do, most everyone will think you're doing something--or many things-- wrong. It is human nature for people to want you to believe their own opinions and to get angry at you if you don't, even when they have no reason to believe that their opinions are good. So, if you're leading well, you shouldn't be surprised if people disagree with you. The important thing is for you to be logical and objective in assessing your probabilities of being right."

"How people are with each other is of paramount important in determining how they will handle the circumstances that they jointly face, and the cultures that they have will be the biggest determinants of how they are with each other. Our greatest war is with ourselves because we have the most control over how strong or weak we are. Because it is pretty clear what makes countries strong and weak, and because these strengths and weaknesses are measurable, it is easy to see how each country is doing."

"In order to sustain any system (i.e. any order) conditions must be good for the vast majority of the people under its rule. Conversely, those that prevented those from having what the people held most dear and would fight to the death for, were the quickest to fall. This is an important principle for those who lead to remember. For example, in the United States it would not be wise for the president who was elected by one large segment of the population to use that victory to try to take away from the losers those things that they hold most dear."

Arab Spring Protests

During the Arab Spring Protests, Dalio reportedly sailed up the Nile River in Egypt with some friends. In response to worries about the trip, Dalio said that he was following one of his principles, "If you make a plan, follow through". Dalio's security team eventually had to set up GPS trackers for the cohort after the hedge fund billionaire refused to abort the trip.

Workplace Culture

Dalio is said to have organized an extremely unique workplace culture based upon his principles. Employees reportedly hold each other to account by following certain "workplace principles that he has set out. Examples of these principles include “look for people who sparkle” and “be willing to ‘shoot the people you love". In interviews with 50 employees at the firm, the New York Times reported that Dalio also carries out "public hangings" at the firm, which consists of a punishment(not the literal action) that is meant to deter bad behavior. According to Dalio, these rules celebrate radical transparency and help build a more effective and efficient workplace. However, many employees have found these rules to be unnecessarily stringent, and reports of employees being driven to tears are not uncommon. Dalio dismissed the company's criticisms as exaggerations by disgruntled employees and "distorted news." Employee turnover is high — 30% are said to quit within the first two years, a number that the company does not deny. Some of those who have left have expressed their dissatisfaction with the persistent harsh feedback, questioning of their conduct, lack of privacy, and requirement to follow Mr. Dalio's policies.

Views

Bitcoin

In September 2017, Dalio called bitcoin a speculative bubble. He denied being a believer in cryptocurrencies and said "bitcoin today, you can’t make much transactions in it. You can’t spend it very easily...Bitcoin is a bubble". He named the two most important functions of a currency: ease of transaction and use as a medium of exchange. He said bitcoin could work as a currency, but that the amount of speculation was hurting its reputation. A few months later, he said that it was not an effective medium of exchange due to its limited applications. He claimed that there were limited ways to transact with bitcoin and that even those were threatened by third parties who could unveil bitcoin's secrecy, thereby damaging one of its key features. In November 2020, Dalio shifted his stance, admitting that he might have been wrong and was open to correction, but still expressed concern about bitcoin's ability to store wealth. He also emphasized the possibility of a ban on bitcoin, saying, "if it becomes successful enough to compete and be threatening enough to currencies that governments control, the governments will outlaw it and make it too dangerous to use". Dalio also cast a doubtful eye on bitcoin's ability to be acquired as a Federal Reserve asset, saying, "I can’t imagine central banks, big institutional investors, businesses or multinational companies using it." In March 2021, Dalio reemphasized his concerns, saying there was a "good probability" that bitcoin would be outlawed, like gold. He pointed to the Gold Reserve Act of 1934, which made it illegal for people to own gold due to "government leaders not wanting gold to compete with money and credit as a store hold of wealth.” He claimed that something similar could happen with bitcoin, which recently surged against a backdrop of high levels of debt, low interest rates, a lot of liquidity and stimulus, and investors seeking alternatives to bonds and currencies.In April 2021, Dalio participated in a discussion during the Texas A&M Bitcoin Conference, where he highlighted points both for and against the dominant digital currency. Dalio pointed out that 2% of bitcoin holders own 90% of all bitcoin. He also said that there are 21 million coins that can be mined. He stated that the market was currently at 18 million and a total of 4 million are presumed to have been lost.At the conference, Dalio finally revealed that he had come to admire bitcoin as an asset, and was investing in it like a commodity. He said that bitcoin allocation should be 20% of ones portfolio. However, he stressed that over-exposure to bitcoin could also lead to problems. As for the best way to protect oneself, Dalio said that if there were to be a de-dollarization event, then investors would need to pick a few assets that would thrive in that scenario. He stressed that diversification was key, and that there was no one magical thing that would lead to investment success in the anti-fiat cycle which he believed the world was in.

Bonds

Graph posted on Ray Dalio's twitter, showing decreasing American, European, and Japanese bond yields over time

In March 2021, Dalio argued that investing in bonds had "become stupid". On Twitter, he displayed a number of charts showing the decreasing bond yields over time and showing that real yields of reserve currency sovereign bonds were negative and at their lowest levels ever. On LinkedIn, he argued that these assets' extremely low yields did not meet the requirements of the usual purchasers of said assets such as sovereign wealth funds, pensions, and insurance companies. He said that it was ridiculous to invest in bonds to achieve a positive return on an initial investment. At 2021 rates, Dalio said that it would take 500 years to return the principal invested in bonds in U.S. markets. Furthermore, the yields in Europe and Japan were negative, meaning a positive return was impossible. He asserted that global markets were oversaturated with bonds, and that it was particularly true for the U.S., saying, "US bond holdings are over a third of global bond holdings held by central banks, sovereign wealth funds, and international investors with the next largest country/currency bond being euro bonds at only roughly 60% of US bond holdings." Dalio also said that there was a shift away from American bonds to Chinese bonds, arguing that although they were only 6% of allocations in global portfolios, they were "rising fast". The reason for this, he said, was a combination of high growth, increased openness to foreign investment, and the increased internationalization of the Chinese currency. Dalio also said the bond market was in a bubble, saying that the 40-year bull market that had rewarded long investors and punished shorts was a telltale sign of a bubble. With over $75 trillion of U.S debt assets such as treasury bills and bonds, Dalio maintained that investors' trust in converting their debt into cash was one of the only reasons investors were still holding onto these assets. But he then said it was physically impossible for these investors to convert their debt into cash, and that when they realized this, it would trigger a "run-on-the bank" dynamic. Dalio said that the governments of the world would respond to this scenario via money printing and devaluing the U.S dollar. At the 2021 Texas A&M Bitcoin Conference, Dalio again stressed the risks associated with a currency crisis due to the devaluing of the U.S dollar. He likened the dollar move to the historical end of the Dutch & British empires. The fact that a massive amount of printing seemed uncomfortable for Dalio and he referred back to the gold standard on a few occasions. Dalio claimed the threat started when the U.S. moved off the gold standard in the 1970s. One anecdote Dalio mentioned was when he was a clerk on the floor of the stock exchange when Nixon removed the gold standard. He said that he expected stocks to tank. However, he noted that equities did the opposite. He added that he later realized that this was because the Federal Reserve could now expand the amount of dollars in circulation as it was not governed by a hard asset(gold). In the aforementioned British and Dutch empires, Dalio observe that there was always a propensity to print money as a countermeasure in times of strife. However, as in historical times, the overprinting of money could mark the beginning of the end of the particular civilization.

Bubbles

Dalio's bubble gauge index, showing results circa 1910 within the U.S economy

Dalio has said that he uses six criteria to evaluate whether an economy is in or trending toward a stock market bubble.

1. How high are prices relative to traditional measures?
2. Are prices discounting unsustainable conditions?
3. How many new buyers (i.e., those who weren't previously in the market) have entered the market?
4. How broadly bullish is sentiment?
5. Are purchases being financed by high leverage?
6. Have buyers made exceptionally extended forward purchases (e.g., built inventory, contracted forward purchases, etc.) to speculate or protect themselves against future price gains?

Using data to evaluate them, Dalio said that the criteria are combined to form gauges, and that he has used the gauges to form indices that analyze the security market as a whole, along with individual stocks. In February 2021, Dalio said that his aggregate bubble gauge was in the 77th percentile, meaning that the stock market was closer to bubble territory than 77% of the data since historical records began. Providing some context, Dalio showed that the 1929 stock market bubble and the 2000's tech bubble both had readings that were the highest ever, at the 100th percentile. He said that some stocks were in bigger bubbles than others, particularly in emerging technologies such as quantum computing and artificial intelligence. Dalio displayed a list of "bubble stocks" that had been selected compared to the largest 500 companies in the U.S by market capitalization. The chart showed that the bubble stocks had, on average, returned 350% since the start of 2020, roughly 14 months earlier. The S&P 500 returned around 25% during the same period. This, according to Dalio, was a key indicator that the market was in a bubble-like state.

Capitalism

While Dalio has agreed that capitalism is generally the best economic system, he has argued that it needs to be reformed due to it "not working well for most Americans". In an article written on Harvard Law School's website, he pointed out that there has been little income growth for average citizens over the past two decades, with the bottom 60% of workers having no inflation-adjusted income growth since the 1980s. He mentioned that income inequality was at its highest level since the 1930s, when the top 1% of earners had more wealth than the bottom 99% combined. Dalio also presented a chart demonstrating that the odds of a low-wage earner moving up a quintile to a higher level of wealth were decreasing over time, from over 23% in 1985 to under 15% in 2010. The graph demonstrated the lower economic and social mobility of Americans over time, leading to a society in which inequality was more entrenched. On April 7, 2019, Dalio said on 60 Minutes that income inequality in the United States was a national emergency requiring reform. In July 2019, he again called for refinement of capitalism and called wealth inequality a national emergency. In November 2019, he posted a blog entry stating that excess capital, unfunded social liabilities, and government deficits had created a recipe for disaster, in what he called a "paradigm shift". In May 2020, he stressed the importance of reforming capitalism, not abandoning it, saying, "As the current crisis unfolds, we should remember that throughout history, capitalism has proven to be the best system, though it can sometimes be highly flawed." He said that the hypothetical improved version of capitalism would have to be good at creating a bigger pie and redistributing it as well.

China

In October 2020, Dalio published another article on LinkedIn in which he cautioned people to not be blind to China's rise, arguing that it has continued to emerge as a global superpower. He claimed that China had succeeded in "exceptional ways", including high economic performance in spite of the COVID-19 pandemic, some of the lowest COVID-19 case rates, and being the center of half of all listed initial public offerings globally. Dalio asserted that when he visited China in 1984, high-ranking officials would marvel at basic technology such as calculators, calling them "miracle devices". He argued that China was now on a par with the U.S. in advanced technologies and would probably take the lead in the next five years. In addition, Dalio said that there were many indicators that favored China. He discussed the growing population of well-educated citizens, as well as China's continued growth in the absorption and processing of data, which many headlines have called "the new oil". He also called China favorable from an investor's perspective, saying that the Chinese economy's fundamentals were strong and its assets relatively attractively priced. Dalio also maintained that China's stocks and bonds were currently underweighted in terms of the global portfolio, and that the U.S. was bloated. A natural shift in pricing would give China another comparative advantage. While stressing that things could always go wrong, Dalio stated that he believed China's path of economic reform would continue, bringing it unabated prosperity. In April 2021, Dalio said that China's holdings in U.S dollar debt could be a "major catalyst for change" if the U.S continued to print money and devalue the dollar. In February 2021, Dalio said that China would vie to become a global financial center.

Economics

In 2012, Dalio said that a weak global economy could lead to a second coming of Hitler. He said “Hitler came to power in 1933, which was the depth of the Great Depression because of the social tension between the factions". He added “I don’t know whether we are beyond the point of being successively able to manage this, and I worry then about social disruption.” Furthermore, he expressed concern at growing inequality and said that it it was worrisome that different political and economic factions were at each others throats in increasing numbers. Dalio has also explained his economic views through educational content which he produces. One such video, How The Economic Machine Works, has over 22 million views as of April 2021.

Personal life

Ray Dalio at the International Achievement Summit’s 2012 Banquet of the Golden Plate reception in Washington, D.C., with his wife, Barbara, and two Academy of Achievement student delegates, Philip Thigo of Kenya and Julia Fan Li of Canada.

Family

Dalio resides with his wife Barbara, a descendant of sculptor Gertrude Vanderbilt Whitney (married in 1976/77) in Greenwich, Connecticut, and is known to practice Transcendental Meditation. The couple have four sons, Devon, Paul, Matthew, and Mark. Devon, the eldest, was born on March 26, 1978. He was named after North Devon cattle because Ray was deeply involved in cattle futures at the time of his birth. Devon was killed in a car accident at age 42. Their second son, Paul Dalio, is a film director. Matthew Ace "Matt" Dalio, their third son, is founder and chairman of the China Care Foundation, a nonprofit that seeks to help Chinese orphans, and co-founder and CEO of Endless Mobile, Inc., a computer operating system company. Matt claims his dad always told him, "you can have anything you want in life but you can’t have everything you want". Their youngest son, Mark Dalio, is a wildlife filmmaker. Ray has suffered from Barrett's esophagus, a form of gastroesophageal reflux disease (GERD), a pre-malignant condition that if not treated properly can lead to cancer.

Wealth

In 2011, Dalio was the subject of John Cassidy's New Yorker article "Mastering the Machine". Business Insider reported that in 2012, Dalio's fortune was enough to buy 778 Gulfstream G4 private jets, 4,930,966 2013 Super Bowl tickets, or six Yankee Stadiums. In 2015, Forbes estimated his net worth at $15.4 billion, making him the second-wealthiest hedge fund manager after George Soros. In 2014 he reportedly earned $1.1 billion, including a share of his firm's management and performance fees, cash compensation and stock and option awards. In 2016, Dalio was reportedly worth 15.9 billion dollars, according to the Forbes 400. In 2018, Dalio was estimated to have personally received $2 billion in compensation for the year, after his fund posted a 14.6% return. According to Forbes, Dalio has an estimated net worth of $18.6 billion as of July 26, 2020, making him the world's 69^th richest person and 26^th on the Forbes 400 list. In March 2021, Bloomberg News reported that Dalio's net worth had fallen slightly to $17.0 billion, making him the world's 110th-richest person.

Philanthropy

In April 2011, Dalio and his wife joined Bill Gates and Warren Buffett's Giving Pledge, vowing to donate more than half his fortune to charitable causes within his lifetime. Because of his work with the National Fish and Wildlife Foundation, Mr. Dalio had a coral species named after him, Eknomisis dalioi, in 2011.He created the Dalio Foundation, which serves as his personal philanthropic vehicle. By the end of 2012, the Dalio foundation had built up assets of $590 million. In 2013, Dalio contributed another $400 million to the foundation, which increased its assets to about $842 million. Through the Dalio Foundation, he has directed millions in donations to the David Lynch Foundation, which promotes and sponsors research on Transcendental Meditation. The Dalio Foundation has also contributed to the National Philanthropic Trust, to polio eradication projects, and to NewYork–Presbyterian Hospital. One such donation occurred in October 2020, when the Dalio Foundation gave $50 million to the hospital to fight health inequity. The money was used to establish a new center called the Dalio Center for Health Justice. In a statement, Dalio said, "Our goal is to contribute to equal healthcare and equal education because we believe that these are the most fundamental building blocks of equal opportunity and a just society." The foundation has also supported the Fund for Teachers, an initiative that supports professional learning fellowships for teachers. The foundation was part of a group of foundations supporting the 2018 launch of TED's Audacious Project, an initiative to fund social entrepreneurs working to solve global issues. In March 2019, Forbes named Dalio one of the highest-earning hedge fund managers and traders. A special focus of his philanthropy is the world's oceans, and the negative impacts that damaging them can cause. Dalio's research yacht and submarine have appeared on the Discovery Channel during Shark Week and have been used to hunt for a giant squid. In 2018, OceanX, an initiative of the Dalio family, and Bloomberg Philanthropies committed $185 million over four years to protect the oceans. In 2019, Dalio pledged $100 million to Connecticut public schools. He has sat on NewYork–Presbyterian Hospital's board of trustees since 2020. In February 2020, the Dalio Foundation donated $10 million to support China's coronavirus recovery efforts in response to the COVID-19 pandemic. In March 2020, the foundation gave $4 million to the state of Connecticut to fund healthcare and nutrition. On October 13, 2020, NYP launched the Dalio Center for Health Justice, a research and advocacy organization, which will focus on reducing differences in access to quality health care that overwhelmingly affect communities of color. Dalio has also backed the Volcker Alliance, the public policy group headed by former Federal Reserve Chairman Paul Volcker. Overall, the Dalio family has donated more than $5 billion to his foundation, and the foundation has given out more than $1 billion in charitable grants.

Hobbies

Dalio is an avid outdoorsman, and enjoys both hunting and fishing. He has hunted cape buffalo, grouse, elk and warthog. He is especially fond of bow-hunting, which is his weapon of choice when stalking animals.

Published works

How the Economic Machine Works; A Template for Understanding What is Happening Now is Dalio's first book, published in 2007. In it, he describes the economy as a machine. His stated aim for the book was to explain how the economic machine works, as he saw many people did not understand. Dalio explains that contrary to popular belief, recession and depressions are created due to a shortfall of demand, rather than loss in productivity. He says that the Federal Reserve has chosen to define money as aggregates, rather than credit. In reality, all the money in circulation in the U.S economy is credit. By defining money properly as credit instead of aggregates (currency plus M1, M2 money supply etc.), the total amount of debt in the U.S. is $50 trillion, whereas the total amount of money is $3 trillion. Dalio explains the government "prints" money and uses it to combat some of the consequences of contracting credit. This is reflected in money growing at an extremely fast rate at the same time as credit and real economic activity contract. Dalio argues that if the money printing occurs on a large enough level, it devalues the currency, decreases interest rates and drives investors from financial assets to inflation hedge assets. This typically happens when investors want to move money outside the domestic currency and short-term government debt is no longer considered a safe investment.

Principles: Life & Work is Dalio's second book, published in 2017 by Simon and Schuster. It was a New York Times #1 bestseller and Amazon's #1 business book of 2017. Dalio discusses his background as a backdrop for his takeaways about life and work, and explains his principles, which he views as "fundamental truths that serve as the foundations for behavior that gets you what you want out of life." The catalyst for the book was a frank memo from his top lieutenants in 1993 about his interpersonal performance as a manager at Bridgewater Associates. Following the harsh but realistic critique, Dalio began to develop a unique company culture based on principles and unadorned feedback. He originally published a shorter version of Principles online in 2011, which received over three million downloads. He has announced that he will write a second volume, Principles: Economics & Investing. Dalio has said that he could continue improving his returns by solidifying recurring lessons into "principles".

Principles for Navigating Big Debt Crises is Dalio's third book, published in 2018. In it, he provides a substructure for interpreting the mechanics of large debt plights. Dalio sets out six stages, from the roots of the crisis to its rectification. He analyzes 48 historical examples of debt crises when real GDP growth fell by 3% or more, in various historical economies, including developed and prosperous countries as well as emerging economies. Dalio categorizes big debt crises into two types—deflationary and inflationary—and provides historical and economic contexts for both, as well as lessons that can be learned from them. The first type of debt crisis is deflationary. Dalio says that deflationary debt rotations generally happen when the majority of debt is denominated in a country’s own currency. An example of a country with this type of issue is Japan. Dalio believes it is possible for legislators to handle these scenarios relatively well, but even a good end result will be extremely costly to some people. The second type of scenario is inflationary. Inflationary debt cycles occur when most debt is denominated in foreign currencies. This situation makes it harder for a country’s policymakers to adjust risk and spread it out, a key step in resolving the crisis. Dalio says that the legislators must choose the beneficiaries and who suffers. This process often necessitates a need to recapitalize systemically important institutions, such as large banks.

The Changing World Order: Why Nations Succeed and Fail, is a novel by Dalio due to be published on August 17, 2021.

Awards and honors

In 2012, Dalio received the Golden Plate Award of the American Academy of Achievement presented by Carlyle Group co-founder David Rubenstein, during the International Achievement Summit in Washington, D.C. CNBC listed Principles among the 13 Best Business Books of 2017. Dalio was called the “Steve Jobs of Investing” by aiCIO Magazine and Wired Magazine.

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