"Review: Dalio writes ultimate Baby Boomer’s guide"

From Breakingviews:

“Before I begin telling you what I think,” Ray Dalio writes in the opening sentence of his new book, “I want to establish that I’m a ‘dumb shit’ who doesn’t know much relative to what I need to know.” It’s an odd way to start a biography-meets-self-help guide by a pioneering billionaire investor whose first maxim is “Trust in radical truth and radical transparency.”

The 68-year-old Bridgewater Associates founder has been called many things – brilliant, inspirational, weird, maybe even the second half of his self-chosen epithet – but never dumb. It takes smarts and determination to start an advisory and investment business two years out of business school and build it over four decades into the world’s largest hedge fund adviser, managing some $160 billion.

But the modesty serves Dalio’s purpose. If an ordinary kid from Long Island can succeed beyond his wildest dreams, then the methods he used might help others do the same. That’s the pitch for “Principles,” the 567-page tome that describes how Dalio navigates life and runs his firm. It’s a kind of Baby Boomer manifesto: Ray’s rules (oh boy, are there rules) for getting what you want by getting the best out of yourself and your colleagues.

The method has worked astonishingly well for Dalio. The son of a jazz musician and a homemaker, he got the investing bug as a teenager by buying stocks with money he made caddying at the local golf course. He began Bridgewater in his Manhattan apartment in 1975 by advising and trading for corporate clients on livestock and grain markets. He survived a near-death experience in 1982 when he bet that the Latin American debt crisis would trigger a depression, and loaded up on gold and T-bills just as the Reagan stock market rally started.

Humbled, but more determined than ever, Dalio developed his systematic approach: seek out the smartest people with contrary opinions, rigorously examine data and trading strategies to uncover the “timeless and universal principles” behind the economy and markets, and make sure to balance risk. Shorting stocks before the 1987 crash put the firm on the map, a performance it repeated in 2008. And Dalio and his colleagues invented the risk-parity strategy with their All Weather Fund, which combines bets on typically uncorrelated assets like stocks, bonds and commodities and has become wildly popular with pension funds.

Today Forbes estimates his wealth at $16.8 billion. Dalio regularly gets to test his opinions with the likes of Microsoft founder Bill Gates, Tesla’s Elon Musk, ECB President Mario Draghi, China’s anti-corruption czar Wang Qishan and the Dalai Lama. That fulfills his second principle for success, “Cultivate meaningful work and meaningful relationships.”

Dalio writes about the importance of living as well as working, including the joys of good food, good sex and partying. Yet he’s not an open book. Although he idolized Steve Jobs, he doesn’t say if he shared the Apple founder’s fondness for hallucinogens like LSD.

He doesn’t much lift the veil into Bridgewater’s investing process, or even how much humans intervene in its computerized trading strategies. The firm recently sought to squelch an effort by the New York Times to get investment details from the Teacher Retirement System of Texas via a public records request. Radical transparency has its limits for Dalio. As principle 1.1 (f) states, “Don’t share sensitive information with the organization’s enemies.”....MORE