Ray Dalio is arguably the most successful hedge funder in the world right now, and that means everyone wants to know more.
This week’s issue of The Economist has a wide ranging issue with Dalio, who calls America’s recovery “the most beautiful deleveraging yet seen” (Europe’s is “ugly”).
And he’s seen a lot of deleveraging, if only because part of the way Dalio constructs his investment ideas is by reading old newspapers from past periods of economic distress, like the Great Depression. Unlike Soros, Dalio isn’t big on reading academics, his strategy comes from his experience after years of trading.
There are a lot of ideas in there, so he wrote them all down (The Economist):
What Mr Dalio calls the “timeless and universal” core of his economic ideas is set out in a 20-page “Template for Understanding” that he wrote shortly after the collapse of Lehman Brothers in 2008 and recently updated. The document begins: “The economy is like a machine.” This machine may look complex but is, he insists, relatively simple even if it is “not well understood”. Mr Dalio models the macroeconomy from the bottom up, by focusing on the individual transactions that are the machine’s moving parts. Conventional economics does not pay enough attention to the individual components of supply and, above all, demand, he says. To understand demand properly, you must know whether it is funded by the buyers’ own money or by credit from others.
Using these principles, Dalio was able to predict the Euro crisis. Bridgewater figured out how much debt would need to be refinanced and when, who would want it and who could buy it. Paul Volker has called Dalio’s methods and calculations “mind blowing,” and said “he has a bigger staff, and produces more relevant statistics and analyses, than the Federal Reserve.”
That’s saying something.
And that’s why he’s on this list — The Richest Hedge Fund Billionaires In The World>>>