The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Funds by Maneet Ahuja

The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Funds by Maneet Ahuja

Chapter 1
The Global Macro Maven
Ray Dalio
Bridgewater Associates
Above all else, I want you to think for yourself—to decide 1) what you
want, 2) what is true and 3) what to do about it. I want you to do that
in a clear-headed thoughtful way, so that you get what you want.
—From the introduction to Ray Dalio’s Principles
In his famous Principles, Raymond, or “Ray,” Dalio tells his employees,
“You learn so much more from the bad experiences in your life than the
good ones. Make sure to take the time to reflect on them. If you don’t, a
precious opportunity will have gone to waste. Remember that pain plus
reflection equals progress.”
This is just one of the many aphorisms, precepts, nuggets of wisdom, and
practical management tips that the 62-year-old Dalio—the founder of
Bridgewater Associates, the global macro fund that is the world’s largest
hedge fund, with $120 billion under management—emphasizes time and
time again. Bridgewater advises and runs portfolios for the most powerful
pension funds, central banks, and countries around the world. In fact, a
recent study by London-based research firm Preqin shows that Bridgewater
is the most popular hedge fund among public pensions.
If you did a quick search on Dalio, you’d be flooded with stories of his
firm’s success in the markets (including generating its best returns in the
most difficult markets of the last decade) and get a fair dose of his
philosophy on life and management. For example, Dalio has been
practicing transcendental meditation for more than 40 years and calls it “the
single biggest influence” on his life.
You’d also find that his most important maxims involve his relentless
“pursuit of truth” and hunger for “personal evolution.” His unwavering
focus on these goals has no doubt affected his performance figures and
client satisfaction for the better, but has earned him mixed reviews from
employees, some of whom judge his approach as unnecessarily harsh. Dalio
is unapologetic. In his Principles, Dalio proudly says, “I have become a
‘hyperrealist.’ ”
Dalio is also well known for how his big-picture, innovative thinking has
changed investing in important ways. In fact, industry magazine aiCIO
devoted its December 2011 cover story—“Is Ray Dalio the Steve Jobs of
Investing?”—to him, highlighting the similarities between the two leaders’
motivations and approaches and how each has impacted his industry. Dalio,
like Jobs, feels his life is a journey during which he must turn his bold
visions into reality. Dalio’s industry-changing innovations have earned him
two lifetime achievement awards and won Bridgewater dozens of “Best of”
awards.
Dalio says the form of meditation he practices “is a combination of
relaxation and a very blissful experience. That sounds more like an orgasm
than it really is; by blissful I just mean that I just feel really good and
relaxed and in good shape. You go into a different mental state—neither
conscious nor unconscious. But unlike when you’re sleeping, if a pin drops
all of a sudden, it can reverberate through you; it’s shocking.”
It took some time for Dalio to discover a meditation technique he could
master, but eventually he began to notice that even 20 minutes of meditation
could make up for hours of lost sleep. It also began to change the way he
was thinking about things: he became more centered and more creative.
Meditation put Dalio in a clear-headed state so that when challenges came
at him, he could handle them “like a Ninja—in a calm, thoughtful way.” He
says, “When you’re centered, your emotions are not hijacking you. You
have the ability to think clearly, put things in their right place, and have
good perspective.”
The Makings of a Maven
Sitting in his modern Westport, Connecticut, office in a blue Bridgewater
polo shirt and khakis, Dalio seemed comfortable and at peace. But

The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Funds by Maneet Ahuja