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by Derek Loosvelt | March 03, 2011


Sixty-one-year-old Ray Dalio, the controversial founder and chief investment officer of Bridgewater Associates, one of the world's largest hedge funds, is known as much for his incredible investing track record (he now manages $89 billion and last year his investments returned 48 percent) as he is for his company’s incredibly unique culture (which has been accused of being everything from cultish and crazy to bizarre and bonkers).

Until today, Dalio has also been known for his low profile.

But this morning, due to a few widely-circulated articles focusing on Bridgewater’s (perhaps misunderstood) company culture, Dalio was forced out of his office and onto CNBC's "Squawk Box."

In his appearance on the show, Dalio didn't say much about the allegations that he operates a cult and not a company (other than stating his No. 1 business principle: that emotions and egos get in the way of healthy and sound business decisions), but he did lay out, rather eloquently and commandingly, his vision of the world's economic near future (note: start diversifying your currency holdings into the planet's emerging markets).

As for that B.A. culture that's come under the microscope as of late, Dalio does not try to hide (nor has he ever) that his ship is a tight one and not for everyone. His company's principles (all scribed by his pen) are laid out on the Bridgewater website for any and all to see.

Of course, it's one thing to profess philosophical and business principles and quite another to live by them. And there have been several reports by former Bridgewater insiders stating that what may look good in writing does not look as good in practice. In response to such criticisms, Dalio has been known to say something to the effect of: “If you ask a divorced man to describe his ex-wife, he's not going to paint such a rosy picture.”

At any rate, I can't say that I've read Dalio's entire 108 pages of principles, but I will admit that, among much muck (odd ramblings as well as several spelling and grammatical errors), there are some diamonds (or, at least, principles that I can very much get behind). Here are three (straight from the B.A. website):

1. People who worry about looking good typically hide what they don’t know and hide their weaknesses, so they never learn how to properly deal with them, so these weaknesses remain impediments in the future. I have never met a great person who did not earn and learn their greatness. These people typically try to prove that they have the answers, even when they really don’t. Why do they behave in this unproductive way? They typically believe the senseless but common view that great people are those who have the answers in their heads and don’t have weaknesses. Not only does this view not square with reality, but also it stands in the way of progress.

2. Not all opinions are equally valuable so don’t treat them as such. Almost everyone has an opinion, but they’re not all equally valuable. Many are worthless or even harmful. So it is not logical to treat them as equally valuable. For example, the views of people without any track records or experience are not equal to the views of people with great track records and experience. Treating them equally is more likely to undermine getting at the truth than facilitate it. People who haven’t successfully done things but are nonetheless confident about how they should be done are often either naïve or arrogant. In either case, they're potentially dangerous to themselves and others. Still, all views should be considered in an open-minded way, but put in the proper context of experience and track record.

3. Don’t mistake small things for unimportant things because some small things can be very important (e.g., hugging a loved one).

(Dealbook: Ray Dalio Under the Microscope)

(Bridgewater Associates)


Filed Under: Finance