Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the Odd Lots podcast.
Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 2: So Tracy, since we've been doing the podcast for ten years,
Speaker 2: you know, trying to talk to some of the big thinkers, right,
Speaker 2: some of the people who have a little bit of
Speaker 2: a perspective on how the world's changed. We say, how
Speaker 2: the world's changed in ten years, but it's a little
Speaker 2: bit arbitrary how the world's changed and what the next
Speaker 2: ten years or fifty years are going to be.
Speaker 3: Like big thinkers, thinking big thoughts.
Speaker 2: Zooming out a little bit. And I think everyone sort
Speaker 2: of is these days. I mean, it happens to be
Speaker 2: that we're sort of celebrating our anniversary or birthday or
Speaker 2: whatever it is. But I think it's just in the air,
Speaker 2: you know, like everyone. I guess people are always trying
Speaker 2: to think big. But there's something in the air right
Speaker 2: now where everyone is trying to grapple with pretty evident
Speaker 2: change that is afoot.
Speaker 3: Well, here's the thing. The big story in markets is AI, sure, right,
Speaker 3: and whether or not it's in a bubble, and AI
Speaker 3: is a story that is not just about finance and markets.
Speaker 3: Is a story that touches multiple things. So you have
Speaker 3: it's a cultural, social, and political story. So you have
Speaker 3: people talking literally about how AI is going to change
Speaker 3: the world. It's going to change art, it's going to
Speaker 3: change music, movies, people as well. Right, so some people
Speaker 3: are going to lose their jobs, some people are going
Speaker 3: to get rich. People talk about it in this existential way,
Speaker 3: both for countries and companies. To your point, and if
Speaker 3: you don't win in the AI race, then you are
Speaker 3: literally dead right.
Speaker 2: Part of the permanent underclass or whatever people say. And
Speaker 2: then I think beyond AI, even if we didn't have
Speaker 2: this boom that really started in late twenty twenty two,
Speaker 2: even if that weren't going on, there'd be all these
Speaker 2: other big questions related to technological competition, because we already
Speaker 2: talked about that particularly.
Speaker 4: Yeah we were Shauna.
Speaker 2: There would be all the concerns about the size of
Speaker 2: the debt. There'd be all the concerns about demographics and
Speaker 2: so forth, and the perhaps strain that changes in demographics
Speaker 2: are going to put on the existing labor force. So yes,
Speaker 2: you have all of these things going on, big picture
Speaker 2: questions then layer into the AI question. And I just
Speaker 2: feel like people right now is we all feel it.
Speaker 2: We're consumed by these like sort of forward uncertainty questions
Speaker 2: about the integrity of elections and democracy and all of
Speaker 2: these things. Is sort of we're at this clearing of
Speaker 2: the woods where we don't know which.
Speaker 5: Direction we're going to go.
Speaker 3: You know who's very good at synthesizing major forces going
Speaker 3: on in the world.
Speaker 2: Well, we do, indeed have the perfect guest, someone who
Speaker 2: many people turn to and who obviously is an incredible
Speaker 2: track record of talking about things both in the big
Speaker 2: picture and shorter cycles. We are going to be speaking
Speaker 2: with Ray Dalio, the founder of Bridgewater. He ran it
Speaker 2: for fifty years. That's kind of unbelievable.
Speaker 3: You know, we've seen many market cycles.
Speaker 2: Proud of ten years of doing a podcast, fifty years
Speaker 2: of running what became the world's biggest hedge fund is
Speaker 2: an orders of magnitude more impressive accomplishment. So Ray, thrilled
Speaker 2: that you're in here in studio with us, Thrilled that
Speaker 2: you're taking the time to chat with us once again,
Speaker 2: appreciate you coming back on odd lots.
Speaker 5: Thank you, Yeah, congratulations on ten years ago starting this thing.
Speaker 5: I think of how the world has changed in those
Speaker 5: ten years. And you want to talk macro. Listen, I
Speaker 5: think you're.
Speaker 2: You've heard, you've heard a thing or two about it.
Speaker 5: Yeah, I am Global mac grobal mac and AI is
Speaker 5: just a part of that. It's a small thing in
Speaker 5: relationship to the whole global Macro.
Speaker 2: I know we'll get into all this thing, but again,
Speaker 2: like it feels like something we're patting ourselves on the
Speaker 2: back of ten years podcast, fifty years of running a
Speaker 2: hedge fund. Like I say, it doesn't even seem real
Speaker 2: that that could even be possible. I mean, I know
Speaker 2: it sounds crazy, but yeah, what a joy.
Speaker 5: Oh it's fantastic. Yeah, you know I do.
Speaker 2: You have any tips on longevity because we're like, well,
Speaker 2: we want to be doing this again in ten years
Speaker 2: and maybe again.
Speaker 3: No one's asking us about in forty years.
Speaker 4: Yeahh So.
Speaker 5: Meaningful work and meaningful relationships, in other words, do you
Speaker 5: have is it your passion to make it as great
Speaker 5: as it can be and a shared passion? And are
Speaker 5: you doing it with people that you care about? And
Speaker 5: you have meaningful relationships? And if you've got that, you
Speaker 5: know you've got the energy to keep evolving and you
Speaker 5: know that's what it's about. I think that's for me
Speaker 5: what it's about.
Speaker 3: How would you characterize this moment, not just in markets,
Speaker 3: but in global macro as you point out, in terms
Speaker 3: of your experience, your career, how does it stack up
Speaker 3: to previous decades.
Speaker 5: It's part of a long term evolution that I'd like
Speaker 5: to take you through. I love a brief macro perspective
Speaker 5: of that evolution, and I'd like to start, if I could,
Speaker 5: with a little story of what change me. Okay, when
Speaker 5: I was twelve, I caddied and I earned a little
Speaker 5: bit of money, and I put my money in the
Speaker 5: stock market because everybody was in the stock market at
Speaker 5: the time, and the people I caddied for would tell
Speaker 5: me about the stock market, and I bought a company.
Speaker 5: It's the only company I ever heard of that was
Speaker 5: selling for less than five dollars a share.
Speaker 3: Did you just choose it randomly?
Speaker 5: It was the only company that was less than five
Speaker 5: dollars a share that I heard of, and I figured
Speaker 5: if I could buy more share, so if it went up,
Speaker 5: I'd make more money. That was my logic. Okay, you
Speaker 5: know there.
Speaker 4: Are many people today in the market anyway, keep going.
Speaker 4: But the silliest lot. The number of people.
Speaker 2: Out there who I believe like have come to think
Speaker 2: similar logic, particularly in other areas like crypto.
Speaker 5: Anyway, I didn't know anything about what I was doing
Speaker 5: on It was obviously stupid. But what happened was it
Speaker 5: was company that was about to go bro another company
Speaker 5: acquired it, and when tripled in value, I thought I
Speaker 5: was smart and it is an easy game, and I
Speaker 5: got hooked on the game. Okay, fast forward. Graduated college
Speaker 5: in nineteen seventy one, clerking on the floor of the
Speaker 5: New York Stock Exchange before I went to graduate school.
Speaker 5: In the summer August fifteenth, nineteen seventy one, President Nixon
Speaker 5: gets on the television and says, you're not going to
Speaker 5: get the gold. Gold was money then, and you had
Speaker 5: paper money and it depreciated in value, so you're not
Speaker 5: going to get the gold. And I walked on the
Speaker 5: floor of the stock Exchange the next morning, and I thought,
Speaker 5: this is a big crisis. Money as we know it is ending.
Speaker 5: We're going to have a problem. And it went up
Speaker 5: more than it had gone up in decades. And I
Speaker 5: didn't that's because I didn't know what a devaluation was.
Speaker 5: So I studied history, and I found the exact same
Speaker 5: thing happened in March of nineteen thirty three with Roosevelt
Speaker 5: getting on the radio and making the exact same move.
Speaker 5: Because they didn't have enough real money back then it
Speaker 5: was gold was real money. They didn't have it. And
Speaker 5: that led me to realize for the first time that
Speaker 5: I needed to understand things that happened before my lifetime,
Speaker 5: not just my experiences. So I studied the thirties, and
Speaker 5: because I studied the thirties, I was able to anticipate
Speaker 5: the two thousand and eight financial crisis because it was
Speaker 5: the thing that was playing over and over again. And
Speaker 5: there are those things that are going on now. Okay,
Speaker 5: we'll get into those. But it led me study history.
Speaker 5: So about six or seven years ago, I studied last
Speaker 5: five hundred years of history to think what causes the
Speaker 5: rise and decline of reserve currencies in the empires? And
Speaker 5: I said, the last five hundred years, and that brings
Speaker 5: me to the five big forces. Okay, the five big
Speaker 5: forces are and they each have a mechanic to them,
Speaker 5: a dynamic. The first is how money, debt, markets, and
Speaker 5: economics works. Okay, and we'll get into that the second.
Speaker 5: By the way, there's a big cycle there is, and
Speaker 5: we can call it a monetary order, and there's a
Speaker 5: monetary order that always happens and breaks down, and it's
Speaker 5: part of an arc that has to do with limitations
Speaker 5: on debt and money. And we'll get into that.
Speaker 3: Like a leverage cycle.
Speaker 5: Right, how much debt can you take on? And what
Speaker 5: is the value of money? Money's supposed to have a
Speaker 5: storehold of wealth? Is debt a storehold of wealth? And
Speaker 5: what is our money? That's a question that we have
Speaker 5: to deal with today. Right, what is the money that
Speaker 5: you can be an effective storehold of wealth? Okay? And
Speaker 5: are we at the end of our debt cycle? Okay?
Speaker 5: That's number one. Number two related to this money and
Speaker 5: who has money and wealth differences and so on. A
Speaker 5: part of the cycle is that capitalism creates great opportunities
Speaker 5: for inventiveness, to be productive and so on, and it
Speaker 5: raises living standards and it raises wealth, but it raises
Speaker 5: wealth in an unequal way, and there are big wealth
Speaker 5: differences that naturally come as a part of the cycle,
Speaker 5: and those wealth and then values differences get to a
Speaker 5: point where there are irreconcilable differences So throughout history there's
Speaker 5: the left and there's the right. There's the rich and
Speaker 5: there's the poor, and there are those who are liberals
Speaker 5: and those who are conservatives, and throughout history they have
Speaker 5: a conflict, particularly if you have an economic problem. So
Speaker 5: that's the second force, right. The third force is the
Speaker 5: changing world order, the international geopolitical order, and that has
Speaker 5: a cycle to it too. You started last time, you
Speaker 5: start in nineteen forty five, the end of the war.
Speaker 5: The war determines who has power. The powerful determine what
Speaker 5: the new world order is like. And then you have
Speaker 5: the rising power challenging the existing power, and then you
Speaker 5: change the dynamic of the world order. The world order
Speaker 5: always changes. The monetary order changes, the domestic political order changes,
Speaker 5: the world order changes, and there is that arc. Number
Speaker 5: fourth force is acts of nature. Throughout history, drought, floods,
Speaker 5: and pandemics have killed more people and toppled more orders
Speaker 5: than the first three that I mentioned. And number five
Speaker 5: throughout history is man's inventiveness, particularly of new technologies. Okay,
Speaker 5: and here we are with AI, and all of those
Speaker 5: are connected. There each relate. What happens with AI affects productivity,
Speaker 5: effects who gets the money oh, what happens in geopolitical
Speaker 5: You have to spend money to have a military and
Speaker 5: the conflicts and then there are trade wars, and it
Speaker 5: all transpires pretty much in the same way. Over those
Speaker 5: five hundred years. You can see these cycles in that pattern.
Speaker 2: It is pretty incredible listening to this and thinking, you
Speaker 2: know what, it's not just our imagination. We are in
Speaker 2: a time of extraordinary change. We had a global pandemic
Speaker 2: that disrupted life for everyone on Earth in varying ways,
Speaker 2: at least to some extent. We do have this unbelievable
Speaker 2: technology that everyone is trying to wrap their heads around
Speaker 2: with AI. We did have, even starting you know, arguably
Speaker 2: ten years ago, the emergence of serious trade tensions with China.
Speaker 2: We do see the emergence of their military clearly getting
Speaker 2: much more strong. Like, you know, you see all these
Speaker 2: things like, it's not we're I guess we're not hallucinating.
Speaker 4: Some big stuff is going on these days.
Speaker 5: Well, yes, And the thing that I would like to
Speaker 5: focus on is the mechanics of how that happens, the
Speaker 5: interdep relationships between where are we in the debt cycle,
Speaker 5: where are we in wealth. We'll talk about these things.
Speaker 5: I hope, what does that mean geopolitical and so on?
Speaker 5: And if for me it's like watching the movie over
Speaker 5: and over again. There is connections and there's a cyclicality
Speaker 5: to this, a big cycle dynamic, so that we can
Speaker 5: step back. I think there's too much intent. Everybody looks
Speaker 5: at the news item of the day and they don't
Speaker 5: step back and see the big arc and the cause
Speaker 5: effect relationships. So that's why I'm hoping we can get
Speaker 5: into that.
Speaker 3: Okay, well, let me try to thread the needle between
Speaker 3: the news item of the day and the big arc.
Speaker 3: But when you look at something like AI, how does
Speaker 3: that fit into your five forces framework? Draw the lines
Speaker 3: for us as we well.
Speaker 5: Next, I mean, first of all, it has tremendous effect
Speaker 5: on the economics of it. Right, it looks to me
Speaker 5: very very similar to all the times in history that
Speaker 5: there was great inventions and great changes, such as the
Speaker 5: twenties late twenties.
Speaker 3: So a real productive show.
Speaker 5: It's a change and maybe the greatest ever. But right
Speaker 5: up there, but imagine, let me take you into the twenties.
Speaker 3: Imagine we need to get like a time warp soundtrack
Speaker 3: on it, back in time.
Speaker 5: But first time electricity is going into houses and you
Speaker 5: can have washing machines and refrigerators. First time we have
Speaker 5: the car. Okay, first time that we have airplanes, First
Speaker 5: time we have movies that you can go at ten,
Speaker 5: First time you have radio. You used to have silence
Speaker 5: in your house, and so on. The first invention of
Speaker 5: television and so on. Can you imagine it would be
Speaker 5: much more immediate and exciting. You see the revolutions in
Speaker 5: those things. And so there's a mechanic to a mechanism
Speaker 5: of which how does wealth get created? And what's the
Speaker 5: difference of wealth, and how does a bu come and
Speaker 5: how does a bubble go? In other words, to distinguish it.
Speaker 5: And that's, by the way, many of those bubbles. So
Speaker 5: I can go back in history and give you many examples,
Speaker 5: but that would be a good example. So what makes
Speaker 5: it go up? And what is the difference between wealth
Speaker 5: and money? So you get into the mechanics. Wealth is
Speaker 5: not money, okay. So and this becomes very relevant to
Speaker 5: us now because what you do, what say, okay, but
Speaker 5: let me give you an example. Yeah, okay, you come
Speaker 5: up with a great idea, you want to create a unicorn.
Speaker 5: You sell fifty million dollars of the sock and you
Speaker 5: value it a billion dollars. Okay, now you're a billionaire,
Speaker 5: and now that company is worth a billion dollars.
Speaker 3: But what happens is it really worth a billion?
Speaker 2: Child or teenagers at some point had this idea, Right,
Speaker 2: I'm going to start a company and then Tracy, I'm
Speaker 2: going to sell her a dollar's worth of share.
Speaker 4: But it's just this friend and suddenly, oh, I'm.
Speaker 5: A billionaires and wealth is being created.
Speaker 2: Suddenly, Like I think everyone has this scheme at some
Speaker 2: point in their life.
Speaker 5: Okay, But the importance thing to realize is wealth is
Speaker 5: different from money. Okay, wealth you can't you can't spend wealth.
Speaker 5: You have to sell wealth in order to get money
Speaker 5: to go buy things. Okay. And so how do the
Speaker 5: bubbles happen? Okay, The bubbles happen in the way that
Speaker 5: you create these needs for money, and then the wealth
Speaker 5: rises and then there's a need to sell it. For example,
Speaker 5: let's imagine that we put in wealth taxes. Okay, Okay,
Speaker 5: what's going to happen? Those are going to need to
Speaker 5: sell some of that stock to be able to get
Speaker 5: up the cash to be able to pay taxes. Right,
Speaker 5: whether for whatever reason, the need for cash happens, and
Speaker 5: you want to make a conversion from wealth to money
Speaker 5: to be able to come up with the money, and
Speaker 5: all the bubbles it's worked this way. There's not enough cash,
Speaker 5: and there's the desire for that cash, and then you
Speaker 5: sell it and the dynamic begins to work in reverse.
Speaker 5: So that's all I'm talking about is mechanics. So when
Speaker 5: you ask me the question, and I look at today today,
Speaker 5: it looks like another one of those Okay, who's got
Speaker 5: the wealth? And then where is the vulnerability that can
Speaker 5: Is this real wealth or is it accounting wealth? And
Speaker 5: then and people make the mistake of thinking will it
Speaker 5: produce an income over its time in order to justify
Speaker 5: that valuation. That's not what make bubbles okay, because the
Speaker 5: answer to that question did not change between nineteen twenty
Speaker 5: eight and nineteen thirty one. It's not like they found
Speaker 5: out the answer and then they say, Okay, that's okay.
Speaker 5: It's this dynamic between wealth and money okay. So there's
Speaker 5: a mechanics to the way this happens, right, And if
Speaker 5: you understand those, and it goes back a long time.
Speaker 5: If you go back to the Old Testament, the year
Speaker 5: of you believe. Okay, how do you deal with debt
Speaker 5: and you have to pay back the debt because debt
Speaker 5: is a need for money. I have to pay deliver
Speaker 5: money on my debt. So it's important to understand those mechanics.
Speaker 2: One of the things that you hear a lot when
Speaker 2: people characterize the economy today of twenty twenty five is
Speaker 2: that a lot of it is writing on people's wealth.
Speaker 2: People talk about, you know, the K shaped recovery. They
Speaker 2: talk about how people in the higher income or wealth
Speaker 2: quintiles are really driving consumption, et cetera. Then we look
Speaker 2: at these large obligations that we have, whether national debt
Speaker 2: or just the obligations to care for seniors, et cetera.
Speaker 2: Is this sort of where it comes together that at
Speaker 2: some point, maybe we don't call it a well text,
Speaker 2: et cetera, but where the political entity feels compelled to
Speaker 2: go after the quote wealth, the wealth that exists on paper.
Speaker 5: Yes, and it's happened over and over and over again
Speaker 5: for basically the same reasons. Okay, if you look at
Speaker 5: the thirties for example, or it's the same you need
Speaker 5: the money, Okay, so just watch what's happening right there's
Speaker 5: a small group between one and ten percent of the
Speaker 5: population that this is going unbelievably great for right, And
Speaker 5: then there's the bottom sixty percent. The bottom sixty percent
Speaker 5: are having problems being productive and being affected. Sixty percent
Speaker 5: of Americans have the lowest sixth grade reading level. Okay,
Speaker 5: the stock ownership of the top ten percent, they own
Speaker 5: about ninety percent of the stocks. The bottom sixty percent
Speaker 5: own about five percent of the stocks. So we're seeing
Speaker 5: this wealth, and who are you going to get the
Speaker 5: money from the way you used to get the money
Speaker 5: was that you would borrow the money, would the debt
Speaker 5: would continue to rise relative to d GDP or relative
Speaker 5: to your incomes, and then you'd spend. Well, we're close
Speaker 5: to not being able to have that happen for mechanical
Speaker 5: reasons that are worth understanding. One man's that's or another
Speaker 5: man's assets. And if you're holding a lot of bonds,
Speaker 5: a lot of government bonds, that's a lot of debt.
Speaker 5: Is that a good storehold of wealth? And then when
Speaker 5: you have the political or geopolitical problems that are going on, conflicts,
Speaker 5: then the foreign ownership owners of those who own about
Speaker 5: a third of the bonds may not want to hold
Speaker 5: those bonds because they think it may not be a
Speaker 5: good store old of wealth, either because it's being depreciated
Speaker 5: or because they may have sanctions. So if you go back,
Speaker 5: like into the thirties before, there's always the economic war,
Speaker 5: including the financial war, in which entities are cut off
Speaker 5: sanction we call them now. Okay, So there is this
Speaker 5: dynamic in which and it's not just an American dynamic,
Speaker 5: it's a UK dynamic, it's a France dynamic, it's a
Speaker 5: Chinese dynamic in which we're at a point where it's
Speaker 5: not easy to keep doing it the way we were
Speaker 5: doing it, by selling more and more of those bonds
Speaker 5: in that way, and so then we'll look at it.
Speaker 5: You can't raise, you can't borrow like you used to.
Speaker 5: Number two. I went to Washington, speaking leaders on both sides.
Speaker 5: I said, we got to get the budget down to
Speaker 5: three percent of GDP, and you can do with that
Speaker 5: if you take it for this, a little bit of
Speaker 5: this and that, and you can do that. The answer
Speaker 5: I get is, and it's the same in the UK,
Speaker 5: it's the same in France, same role around the world.
Speaker 5: You have to understand that I can't I have to
Speaker 5: make one of two pledges or both. I will not
Speaker 5: raise your taxes and I will not cut your benefits. Okay,
Speaker 5: so now we talk ball.
Speaker 3: It's not that much.
Speaker 5: You can't borrow, you can't keep it up as it was.
Speaker 5: You can't raise the taxes politics, okay, you can't cut
Speaker 5: the spending. Okay. So there we are. It's different. The
Speaker 5: world is very different from I was thinking about your
Speaker 5: tenth year anniversary. Okay, twenty fifteen. Yeah, okay, so think
Speaker 5: about how different the world is as a function of
Speaker 5: these five forces. Right, that's what it looks like.
Speaker 3: Right, absolutely, So can we talk about this in a
Speaker 3: US context specifically since you brought up DC, but it
Speaker 3: feels like US especially has changed in ten years, so
Speaker 3: rising inequality, the deficit is higher than ever, and we
Speaker 3: also have an administration which seems to be redefining America's
Speaker 3: place in the world. How does that fit into again
Speaker 3: your five forces framework? And I guess I should bring
Speaker 3: up the debasement trade as well, because this was a
Speaker 3: big theme earlier in the year, that the idea that
Speaker 3: you know, people don't want to be in the dollar
Speaker 3: because they don't know what's going to happen with the debt,
Speaker 3: or because they're worried about sanctions and limits on currencies.
Speaker 5: It's all the same, isn't it. And it's all interrelated, right,
Speaker 5: I mean, okay, and it's all understandable, right, it's all.
Speaker 5: You have a financial limitation, you have large wealth gaps,
Speaker 5: You reach the point that you don't want to negotiate
Speaker 5: your sick and tired. The electorate is sick and tired
Speaker 5: of hearing these excuses. They want populism. So populism arises
Speaker 5: from this, and populism of the left and populism of
Speaker 5: the right. So they've greater polarity, and they say, I
Speaker 5: don't want to compromise my things. I want it delivered.
Speaker 5: So win for me, okay, win for me my values,
Speaker 5: my way of operating. And therefore you have irreconcilable differences.
Speaker 5: And so if you look at history, the people who
Speaker 5: arise or of the same character, have you produce populists
Speaker 5: because of that set of circumstances. While the world is changing. Okay,
Speaker 5: so what is the place in the world we can't
Speaker 5: sustain what we were doing before. Think of the relationship,
Speaker 5: let's say between the United States and China by way
Speaker 5: of example. Okay, the dynamic of Chinese will sell inexpensive
Speaker 5: their goods cost effectively. Americans buy it, send them the money.
Speaker 5: The Chinese take the money and they put it into bonds.
Speaker 5: That dynamic can't exist anymore. First of all, they don't
Speaker 5: trust each other. Everybody's worried, Okay. The United States will worry,
Speaker 5: can I can't be dependent on imports from China? The
Speaker 5: Chinese worry that I can't be dependent that you're going
Speaker 5: to give me. I'm a creditor. Am I going to
Speaker 5: get my money? If you study history, maybe because of conflict,
Speaker 5: I can be a problem. You lose the middle class
Speaker 5: because they are the manufacturers. You ship manufacturing to China,
Speaker 5: and so you don't have the man and you say
Speaker 5: we have to bring back manufacturing. We need self sufficiency. Okay,
Speaker 5: So now self sufficiency means you cannot continue that dynamic anymore. Right,
Speaker 5: And then what do you do when there's the challenge
Speaker 5: the wars that are not the military wars, the trade war,
Speaker 5: the technology war, the geopolitical influence war. It's not like
Speaker 5: you can go to what was imagined in the world
Speaker 5: post World War two period that the United States said
Speaker 5: we're going to have a multilateral world order we're going
Speaker 5: to have a United Nations and we're going to go vote,
Speaker 5: and we're going to have a World Bank, and we're
Speaker 5: going to have all these world organ a World Trade
Speaker 5: Organization and so on. We're going to have those types
Speaker 5: of things. Well, that's that's naive. We're past that. So
Speaker 5: we switch from a multilateral world order to a unilateral
Speaker 5: world order where power matters. Right, that's what's going on. Right.
Speaker 3: So, Joe, I'm kind of laughing here because I'm thinking
Speaker 3: back to both of us studied international relations right in college.
Speaker 3: I'm thinking how much time I spent studying international institutions
Speaker 3: like the World Trade Organization and then un Yeah, totally irrelevant.
Speaker 2: Now, can I ask you a personal question? Not that personal,
Speaker 2: but we had you on the podcast in March and
Speaker 2: you were talking about the scale of the US debt
Speaker 2: and so forth, and it was, you know, this was
Speaker 2: on the eve of when the big tax cut negotiations
Speaker 2: were happening. It was clear that the White House wanted
Speaker 2: to push a tax cut, and as you mentioned, you
Speaker 2: went to DC and you know, you were say, fine,
Speaker 2: there are ways to get the budget deficit within three
Speaker 2: percent of GDP. This is not an insurmountable task. But
Speaker 2: you know, right now there does not seem to be
Speaker 2: any meaningful change in the spending or deficit trajectory. Did
Speaker 2: you find that personally demoralizing? You were concerned in March.
Speaker 2: Now here we are talking on November fourteenth, you know,
Speaker 2: the last eight months have your you got more concern earn?
Speaker 2: Did that experience have any effect on you.
Speaker 5: I've been in the markets for a very very long time.
Speaker 5: I'm a hyper realist. I view everything as a learning experience,
Speaker 5: and so when I don't get demoralized, I find it
Speaker 5: interesting and informative. So I was disappointed. I mean, it
Speaker 5: would have been better for everybody if we could work
Speaker 5: together and we can also find even if we couldn't
Speaker 5: agree on how to do it, just do it proportionately
Speaker 5: across things to make those changes to try to bring
Speaker 5: that in order. But it was a good reminder of
Speaker 5: where we are in the political cycle to understand the
Speaker 5: nature of that. And so that's what it is. You
Speaker 5: can't be idealistic, Yeah, you have to be realistic.
Speaker 2: I consider myself to be someone who every new experience
Speaker 2: is a learning environment and that's why I love the
Speaker 2: job that I have and everything is new and interesting.
Speaker 4: But occasionally things that.
Speaker 2: The news get to me a bit more than I
Speaker 2: wish they would.
Speaker 5: There's a there's a feeling in the stomachyah.
Speaker 2: Yeah, and it's like this is not just an intellectual exercise.
Speaker 2: This actually stakes.
Speaker 5: For but for me. Listen, I've been doing markets fifty years.
Speaker 5: Yeah okay, And a lot of motion can get in
Speaker 5: to the to the way of how is it the meditation.
Speaker 5: Meditation has a big effect. Oh yeh, yeah, you no, no,
Speaker 5: you're touching on something, right.
Speaker 2: Is this like a key element of separating the emotion
Speaker 2: from the learning.
Speaker 5: That's right. The ability this meditation, I would say, would
Speaker 5: be maybe the single most important reason for whatever success
Speaker 5: I've had. I mean meaning, it has given me an
Speaker 5: equanimity to step back, to see the arc, to accept
Speaker 5: there's a life cycle. Okay, I'm seventy six years old.
Speaker 5: I know where it is. People. You know, there's all
Speaker 5: sorts of things that we all go through and so on.
Speaker 5: To the ability to step back align the subliminal, the
Speaker 5: subconscious mind, which has an effect and the intellectual mind
Speaker 5: to be able to do that while still feeling the
Speaker 5: emotions but being able to look down on how does
Speaker 5: reality work and almost even things we don't wish were true.
Speaker 5: It's like the tooth Fairy or Santa Claus. Okay, we
Speaker 5: wish that we exist, but we can accept the fact
Speaker 5: that they don't exist. Don't have our preconception, and just
Speaker 5: learn here's reality and how to deal with reality. Meditation
Speaker 5: has helped me a lot to do that, But I
Speaker 5: think that's the right approach.
Speaker 3: Well, okay, so if you meditate and you recognize the
Speaker 3: arc of history, what do you actually do with that information,
Speaker 3: especially if you're trading or investing, Because I think part
Speaker 3: of the problem when we have these conversations is we
Speaker 3: talk about like, oh, the debt keeps going up, and
Speaker 3: there's political polarization, and it just seems like there aren't
Speaker 3: many solutions to those problems and there's not much we
Speaker 3: can do with that recognition.
Speaker 5: Well, I just disagree. I think that what I think
Speaker 5: you'll ask yourself, how does it work mechanistically? What effect
Speaker 5: can I have on how it's handled, How any difficult
Speaker 5: situation is handled, like being in dead and having these
Speaker 5: conflicts and so on, how do you handle it well
Speaker 5: for the for the greater good and whatever? And then
Speaker 5: or maybe you can't change the world. But you can
Speaker 5: deal with it yourself and what do I do to
Speaker 5: take care of myself, my family and so on? And
Speaker 5: you can you can deal with that by first understanding
Speaker 5: how does it work mechanistically. That's that's why I wrote
Speaker 5: these books. The last book is How Countries Go Broke.
Speaker 5: I'm not it's it's the mechanics of it. And so
Speaker 5: you could see it as indicators and you can do
Speaker 5: the calculation and you can line it up with what's happening,
Speaker 5: and you know where you are. You know how you
Speaker 5: can store your money, how do you what's a storehold
Speaker 5: of wealth? So you can have a skill and you
Speaker 5: can understand what's going on, and you can understand how
Speaker 5: to position yourself, and you can maybe bring it to
Speaker 5: Washington and or other places you can. You can bring
Speaker 5: it to Washington. But it's the mechanics. The podcast, it
Speaker 5: is not an ideology, Okay, to separate yourself from There
Speaker 5: are different views and different preferences. And there's the left
Speaker 5: and the right. And I can't tell you whether the
Speaker 5: left or the right, that's a different question. But whether
Speaker 5: you're of the left or you're of the right, they're
Speaker 5: dealing with the same mechanics, and if you understand those mechanics,
Speaker 5: then you as a policy maker can do it. And
Speaker 5: now we're in a situation. Of course that policy politics
Speaker 5: is part of that mechanics. Okay, now we have to
Speaker 5: accept the politics, and then we have to say where
Speaker 5: are we going and how do we best deal with that?
Speaker 5: You can do all of that.
Speaker 2: You know, Sometimes our truths that we don't want to
Speaker 2: exist and maybe we try to turn our face or
Speaker 2: we imagine the truth.
Speaker 5: And they think that's bad. Well yeah, right, and so
Speaker 5: I don't want no, No, it's just reality. You know.
Speaker 2: There's one of the phrases that the CCP has over
Speaker 2: in China seeking truth from facts, And it sounds very obvious,
Speaker 2: but it is very hard to do it. It can
Speaker 2: be hard to just look at facts and actually observe
Speaker 2: the world as it is rather than.
Speaker 5: As I think part of it is a habit. I mean,
Speaker 5: I think that if we're if we're taught the emotional
Speaker 5: like what is real? Reality is interesting, Reality is beautiful
Speaker 5: in a sense. If you take evolution and things die
Speaker 5: and and and things happen, they may not. It's like
Speaker 5: if you recognize that and you think that way and
Speaker 5: it's all part of that evolution and you and you
Speaker 5: can get that in your mindset. That's so much better
Speaker 5: than being a than saying I don't know, dying is bad.
Speaker 5: I mean to give that as an example, or this
Speaker 5: thing is bad, and when we approach it that this
Speaker 5: thing is bad and so on, then it's that fault
Speaker 5: of that thing, rather than Okay, how does the system work?
Speaker 5: And then how do I then deal with the system
Speaker 5: to get the best outcome? Because we could deal with
Speaker 5: the system, For example, the mechanics today has a lot
Speaker 5: to do with how people deal with each other. Right.
Speaker 5: In other words, if we were collectively being able to
Speaker 5: solve these problems and put the collective well being ahead,
Speaker 5: we would have a lot less wars, we'd have a
Speaker 5: lot better solving of problems, not the ideological and I
Speaker 5: have to fight for that kind of thing. So it's
Speaker 5: an approach. That approach could be taken on and taught.
Speaker 3: This is the idea that you can't control the world,
Speaker 3: but you can control your reactions.
Speaker 5: You can influence the world. People together, world leaders if
Speaker 5: they were to try to say what is the common
Speaker 5: good and how do we work it out mechanistically so
Speaker 5: that Okay, somebody's going to give here and somebody is
Speaker 5: going to give there, and then we but that'll produce
Speaker 5: a better outcome than if we go to war. You know,
Speaker 5: there's there are better approaches that leaders of countries. Yes,
Speaker 5: there's leaders countries can do this, and also individuals can
Speaker 5: do this in terms of what they're going to be
Speaker 5: with others.
Speaker 3: Have you ever considered going into politics or policy? Is
Speaker 3: that something that not?
Speaker 5: Since I smart enough, because you know what, I think
Speaker 5: it's I have great admiration, great appreciation for the people
Speaker 5: who take on that life that we have a challenge
Speaker 5: in terms of even how the system works because there
Speaker 5: are so many people right now who have opinions want
Speaker 5: to fight for those opinions. They determine the votes, then
Speaker 5: they create people who are acting out. It's not an
Speaker 5: effective I do think it's very difficult to be successful.
Speaker 2: I do think though, I am worried how often you
Speaker 2: counterintelligent people, thoughtful people, et cetera. And when you ask
Speaker 2: them if they ever consider elected office, immediately like it's
Speaker 2: it's actually a little bit. It is disturbing how quickly
Speaker 2: basically anyone saying would have that anyone who's saying of
Speaker 2: course I would never go into elected office or never
Speaker 2: pursue elected office because you look around the environment's miserable.
Speaker 2: But then you think, well, what kind of filter does
Speaker 2: that have on the actual leaders that we end up do.
Speaker 6: Get it is a reality, no, I know. But when
Speaker 6: you think about that filter and you think about, okay,
Speaker 6: you want quality leadership, et cetera, Well, look think about
Speaker 6: anyone who seems like normally saying immediately says, of course
Speaker 6: I would never go into elected.
Speaker 5: Right, So let's just look at that for a minute
Speaker 5: and take it through the perspective that I'm u trying
Speaker 5: to convey. We look at that and how it's different
Speaker 5: from ten or twenty years ago, and how the people are.
Speaker 5: So the first thing we should do is besides saying
Speaker 5: that's terrible, we should look at why is that? Okay?
Speaker 5: Does that make sense? Yes? Why we can answer that
Speaker 5: it makes sense. There's the clash that the party alignment
Speaker 5: be analytical okay, and then say, okay, what do we do? Okay?
Speaker 5: So maybe you're contributing it to good things in your way,
Speaker 5: and you know, but you have to be practical. If
Speaker 5: you're going to have an effect, you have to have
Speaker 5: an effect on the people who have their hands on
Speaker 5: the levers of power. They affect things, not us chatting
Speaker 5: away here, okay, and the voters maybe, But what can
Speaker 5: you do to help to bring about it? Or what
Speaker 5: do you need to do yourself in order to do that?
Speaker 5: So you have to be analytical and mechanical about what
Speaker 5: the cause effect relationships, because it comes back to the
Speaker 5: mechanics cause effect relationship. If you understand the cause effect relationships,
Speaker 5: like how politics works, how the populations work, you can
Speaker 5: be analytical in doing that. But also the cause you
Speaker 5: can get ahead of the game because the causes happened
Speaker 5: before the effects. And if you know the cause effect
Speaker 5: relationship and you could see the causes and imagine the effects,
Speaker 5: you can be ahead of the game.
Speaker 3: Is there anything in your very long career experience that
Speaker 3: didn't match up with previous examples or cycles in history?
Speaker 5: All the time? I mean, I mean object nineteen seventy one.
Speaker 5: In other words, I had a preconception. I walk on
Speaker 5: the floor of the stock exchange and I realized, wow, Okay,
Speaker 5: now I go to the thirties and I learned something.
Speaker 4: About a bridgewater. An interesting time.
Speaker 5: I can get. But what I've learned is that whatever
Speaker 5: success in life I've had is also more because I
Speaker 5: know how to deal with what I don't know than
Speaker 5: anything I know. Okay, I learned that. Okay, I know
Speaker 5: some things, but what I don't know about what the
Speaker 5: future is, and so it's still very large. So I
Speaker 5: learned how to diversify. I learned how through financial engineering,
Speaker 5: in terms of controlling I could, through diversification, improve my
Speaker 5: return to risk ratio by a factor of five by
Speaker 5: keeping the return the same and diversifying well, that will
Speaker 5: reduce the risk without reducing the returns. That's mechanics that
Speaker 5: came from my knowing that I don't know that I
Speaker 5: can't be sure. Okay, So when you're analytical that way
Speaker 5: and you view these things as a puzzle, then there
Speaker 5: are all these puzzles and you have to solve the puzzles.
Speaker 5: But if you can do it calmly and analytically and
Speaker 5: so on, you can engineer the mechanics or how you're
Speaker 5: dealing with it. That's what I mean by principles for
Speaker 5: dealing with reality and.
Speaker 3: What about it? Bridgewater was there ever, and like, oh yes.
Speaker 5: Allthing all the time. You know, I knew what I wanted. Okay,
Speaker 5: that was that's an advantage if you start a company,
Speaker 5: you can make it what you want, what the culture
Speaker 5: should be, and you know in one sentence, I wanted
Speaker 5: meaningful work and meaningful relationships through radical truthfulness and radical transparency. Okay,
Speaker 5: So I really believe that if you can have meaningful work,
Speaker 5: in other words, something you're in to the mission and
Speaker 5: you have great relationships with people or in that mission,
Speaker 5: maybe it's you two with odd lots Okay, I don't
Speaker 5: know what it is. But if you're on that mission
Speaker 5: and you have a great relationship and so on, that's magical.
Speaker 5: But you also need to have radical truthfulness. In other words,
Speaker 5: if you don't think he's doing a good job and
Speaker 5: he or vice versa or something, it's like a team.
Speaker 5: You've got to put together a team. I'm not picking
Speaker 5: on you.
Speaker 3: We're pretty honestly.
Speaker 5: Let me finish answer this question, okay, because I haven't
Speaker 5: gotten to the challenges. Okay, I want that. I believe
Speaker 5: in that truthfulness and so on. So then there are
Speaker 5: trade offs. Not everybody likes that, okay, not everybody. You know,
Speaker 5: there's an aversion to looking at mistakes. There's an aversion
Speaker 5: to looking at weaknesses. How do you get over that?
Speaker 5: I have to face these questions and deal with it.
Speaker 5: That's what to my first book, Principles of Life and Work.
Speaker 5: But in other words, when we recognize that knowing our
Speaker 5: weakness is is a great thing, it's a great power.
Speaker 5: So how do you objectively get to the notion of
Speaker 5: knowing your strengths and weaknesses? And I created personality profile
Speaker 5: tests for your listeners. Go to it's a free test.
Speaker 5: Principles you you can go online and learn about your
Speaker 5: nature and what your nature is and how you deal
Speaker 5: with things. So there's the constant encountering reality what your
Speaker 5: goals are and what your aspirations are. And so I
Speaker 5: encounter that. I thought, that's your question, and I encounter that,
Speaker 5: and then you realize you encounter obstacles, and then you
Speaker 5: view those obstacles as puzzles as you that you have
Speaker 5: to solve in order to get better, because you have choices,
Speaker 5: and if you make better choices, you get better outcomes.
Speaker 5: So that I'm giving that as an example. So recognizing
Speaker 5: that it's not the best place for some people, and
Speaker 5: that other people couldn't possibly work anywhere else because they
Speaker 5: can't get them meaningful work and bringing relationship or the
Speaker 5: truthfulness you know, the truthfulness the politics, politics that goes
Speaker 5: on in companies and so on. These people, a lot
Speaker 5: of them could can't work anywhere else because they can't
Speaker 5: get that truthfulness and that spirit. So yes, it's constantly
Speaker 5: finding these things out through discovering of interacting with reality
Speaker 5: and then solving puzzles and developing principles.
Speaker 2: It occurs to me when you're talking about this, like
Speaker 2: it's become very popular, maybe in the last ten years,
Speaker 2: but probably a little bit longer. People love to talk
Speaker 2: about corporate culture. This place is a good corporate culture,
Speaker 2: this place is a bad corporate culture. What is the
Speaker 2: corporate culture of Silicon Valley? What is the corporate culture
Speaker 2: of the big banks, et cetera. I mean, you clearly
Speaker 2: were One thing you're clearly very ahead of the curve
Speaker 2: is just thinking about this term corporate culture.
Speaker 5: You know, there's a term, and it's just like what
Speaker 5: do you want to do? How do you want to
Speaker 5: behave with each other? I mean, we don't have to
Speaker 5: even use the word corporate culture in any relationship. If
Speaker 5: you have a marriage, if you have friendships, if you
Speaker 5: have partnerships, it's you have to face the question of
Speaker 5: how you'd want to be with each other.
Speaker 3: Yeah, well, how do you actually shape the culture? Then?
Speaker 5: Well, two ways. I know what I believe is best whatever,
Speaker 5: but I'm not actually sure. And then I go through
Speaker 5: the question and answer. I believe I should have an
Speaker 5: idea meritocracy that's a different from values. Different people can
Speaker 5: live their lifestyles, different kinds of lifestyles, freedom of choice
Speaker 5: to operate that way. But I kind of know what
Speaker 5: I believe is best and what I want, and then
Speaker 5: I have openness to debate is that right? Is that
Speaker 5: the best? Because if you have an idea of meritocracy
Speaker 5: where you can have anybody debate anything, you know, anybody
Speaker 5: at Bridgewater at any time could could challenge me on anything.
Speaker 5: And I felt the obligation for everybody to hear that
Speaker 5: exchange of why I think this is best and not
Speaker 5: and then let people make decisions or enlighten me when
Speaker 5: it comes to that trade off, because otherwise they wouldn't
Speaker 5: be invested in it, you know.
Speaker 2: To take it on a practical level, how do you
Speaker 2: deal with in an environment in which people are encouraged
Speaker 2: to be transparent and to be critical even senior people
Speaker 2: or junior people. How do you avoid the pitfall.
Speaker 4: Of bullying in mobs?
Speaker 2: Because I think this is actually very relevant when you
Speaker 2: think about politics, we think about social media, et cetera.
Speaker 2: How do you prevent an environment of openness from turning
Speaker 2: into mob psychology?
Speaker 5: None of them is perfect. Yeah, okay, okay, But first
Speaker 5: of all, first you go and you paint the picture
Speaker 5: of how it should be, okay, And you know that
Speaker 5: not anyone's view is objective, okay, is your point of
Speaker 5: view and your point of view may be different, and
Speaker 5: highlight that. So if you go to ted Talks, there's
Speaker 5: a Ted talk I gave, and it shows how we
Speaker 5: I created a tool called a dot collector, which everybody
Speaker 5: has put as we're having meetings, putting their thoughts in
Speaker 5: and so on and their reactions so we feel free
Speaker 5: to give your thoughts bring it up, including critical thoughts
Speaker 5: and not. Then you get to what I call believability
Speaker 5: decision waited decision making. How do you get about whether
Speaker 5: this person is a better decision maker? What the strengths
Speaker 5: and weaknesses of a person, of each person is so
Speaker 5: that they can play their role well, if you if
Speaker 5: you set that out as your aspiration. You'll find ways
Speaker 5: of doing that. Like there may be tests, there may
Speaker 5: be you know, how do you pick your doctor. You
Speaker 5: know you have.
Speaker 2: One who has an appointment open, Yeah, that's pretty much it.
Speaker 5: You know what to get three smart people, the three
Speaker 5: best or the two best, get a second opinion, and
Speaker 5: you want to make sure. So it's the same thing
Speaker 5: in picking people there and how do you do that?
Speaker 5: You want that and then you have to let people
Speaker 5: know that that's good for them and it's good for
Speaker 5: the organization, that it's fair. Okay, that the process is fair.
Speaker 5: It's not one person making a pronouncement of what another
Speaker 5: person is like that. You go through the cases and
Speaker 5: you say, oh, that case happened that way, and it
Speaker 5: happened again. What do you think and so on? You
Speaker 5: work your way. Once you have the notion that the
Speaker 5: system is fair and you're just trying to get at
Speaker 5: what's true and what are people's strengths and weaknesses and
Speaker 5: so on, you're making great leaps toward that. As this
Speaker 5: thing from most companies in which they don't talk about
Speaker 5: that and you know, or they're behind the scenes, Like
Speaker 5: I had a rule if you talk behind somebody's back
Speaker 5: three times or more critically, you're out, okay if but
Speaker 5: you're always free to bring it up and deal with it,
Speaker 5: because let's deal with it. Let's try to find out
Speaker 5: what the problem is and deal with it that way.
Speaker 5: So on the bullying, they can tell the bully, Okay,
Speaker 5: you can tell the book why why did you do that?
Speaker 5: Why is that that way? But in any case, that
Speaker 5: was my path, whether you choose it different path, I
Speaker 5: think you have to agree that getting a truthfulness teams
Speaker 5: sports teams have to do this right, So how do
Speaker 5: you select I'm sorry, you're not doing a good job
Speaker 5: at that thing. You have to deal with it and
Speaker 5: you have to make the team great. It's like that.
Speaker 3: Well, so now I have to ask what do you
Speaker 3: think about multi strats and the pod shops because the
Speaker 3: culture that you're laying out where everyone is sort of
Speaker 3: talking to each other and challenging each other, seems very
Speaker 3: very different to the multi strat model that seems to
Speaker 3: be much more predicated on, you know, little teams that
Speaker 3: are sort of often doing their own thing.
Speaker 5: There's different ways to play the game. That's a totally
Speaker 5: valid way to play the game, and maybe related maybe
Speaker 5: it's just a totally utilitarian way. In that way, is
Speaker 5: it effective in making the investment decision? Can be very
Speaker 5: effective for lots of reasons. I can digress into uncorrelated
Speaker 5: return streams, many operations blah blah blah blah blah that
Speaker 5: could be very effective may not be effective of creating
Speaker 5: the meaningful relationships and those types of things. Therefore, you're
Speaker 5: going to have a continuity and a competitiveness problem. In
Speaker 5: other words, people will go.
Speaker 3: For, you know, which is what we've seen a little bit.
Speaker 5: More, a little bit more money, a little bit more.
Speaker 5: They're not in it together. They're not cheering their lives,
Speaker 5: they're not cheering their mission together, and so on. So
Speaker 5: maybe it's a fun, totally fine way for the investment management,
Speaker 5: but it's not a fine way for building a fifty
Speaker 5: year old I did this, I built a fifty year
Speaker 5: old organization, while others.
Speaker 2: It has raised a question like in those environments, like
Speaker 2: what is the franchise value? Because what happened? Right, what
Speaker 2: seems to be this model which has produced extraordinary returns
Speaker 2: for some investors. You do get the situation in which
Speaker 2: everyone is sort of a mercenary. I've never and then
Speaker 2: and everyone you know, you dangle these big paychecks and
Speaker 2: bonuses and you're.
Speaker 3: An independent contract basically.
Speaker 2: Yeah, it's hard to imagine that environment building a fifty
Speaker 2: year franchise.
Speaker 5: I think I think it's I think it's not going
Speaker 5: to last, and it's particularly in the area of an
Speaker 5: aire sire. I think that you're going to have and
Speaker 5: I'm going to try to help it. AI enabled ability
Speaker 5: to be an independent investment manager okay, like Uber. Okay,
Speaker 5: Uber's got a technology that they take the individual, they
Speaker 5: plug them into that that technology and whatever, and everybody
Speaker 5: can do that. In a sense, I think we're going
Speaker 5: to be moving more into that direction. So what is
Speaker 5: it that's a path that we can go down and
Speaker 5: that's a whole other path.
Speaker 3: Well, you said you're going to try to help it.
Speaker 3: What does that mean. Are you working on something?
Speaker 5: Well, I might. I'm building my own ability and I
Speaker 5: want to share how people can do certain things. That's it.
Speaker 4: But you don't think this model this because it's been
Speaker 4: very hot.
Speaker 2: Again, talk about things that have changed ten years. Ten
Speaker 2: years ago, we were not talking about multi strategy, talk
Speaker 2: about fund to fund. Yeah, fund of finds much more
Speaker 2: back then. You're it sounds that you're skeptical that this
Speaker 2: model will endure much will endure?
Speaker 5: Well, I think in everybody. I'm just looking at mechanisms. Yah, yeah, yeah,
Speaker 5: talk about okay, So what creates cohesiveness? You have to
Speaker 5: have the need for cohesiveness. Okay, what is the cohesiveness?
Speaker 5: What is the commitment? Okay? I think when we help
Speaker 5: each other. I believe in how people can help each other. Okay,
Speaker 5: are they helping each other? Can they be better? And
Speaker 5: that's the question, isn't it? Okay? So when we're thinking multistrap,
Speaker 5: if everybody's there and you put it together, that that
Speaker 5: could be done technologically very easily. Right, So is that
Speaker 5: going to stick it together? Okay? What is a relationship like? Okay,
Speaker 5: to be on the mission together and to have relationships
Speaker 5: and so on is invaluable not only in terms of
Speaker 5: effectiveness in terms of doing job because different people have
Speaker 5: different skills and you do that together, but it is
Speaker 5: also psychologically rewarding. The greatest source of happiness Okay, this
Speaker 5: is I think an important thing. Studies of happiness all
Speaker 5: around the world and so on shows that income past
Speaker 5: a certain level does not bring a higher level of happiness.
Speaker 5: Once you get the basics taken care of that. The
Speaker 5: greatest source of happiness is community. Yeah, do I have
Speaker 5: a sense of community? Okay? People who are there for
Speaker 5: me and I can help and I work for that.
Speaker 5: That's a powerful force and it's very rewarding. Okay, those
Speaker 5: are my thoughts.
Speaker 3: I have one more question, since we're being very retrospective
Speaker 3: here and nostalgic in some ways, do you think if
Speaker 3: you were setting out today, do you think you would
Speaker 3: have been able to create a bridgewater in the current environment?
Speaker 5: Yep, how would you say? I think, I think, and
Speaker 5: I think that everybody can. And that on entrepreneurship is
Speaker 5: so clearly an example that it is the greatest power.
Speaker 5: Money is not the greatest power. Money will seek out
Speaker 5: the people, the entrepreneur, the person who has the talent
Speaker 5: have enabled people, and then money will go to them
Speaker 5: to make them. That's what investors do. We try to
Speaker 5: find those people are going to make these new things.
Speaker 5: Wonderful things happen. So the talent of an individual to
Speaker 5: attract money, to attract the resources that are necessary for success. Okay,
Speaker 5: we can do that. Now. The question is how are you?
Speaker 5: Are you the next one of those who's got the
Speaker 5: ideas and can put that together and make the case
Speaker 5: for your supports that I need this and the other
Speaker 5: thing and grow and become better. Yes, I believe that
Speaker 5: we're in a period of time that that's very very good.
Speaker 5: You need different resources than you did. You know. The
Speaker 5: way I did it is I played. I was a kid.
Speaker 5: I played the markets. I like the markets. Then on
Speaker 5: one day I make a pitch to somebody. I did
Speaker 5: my thing, and then the World Bank gave me a
Speaker 5: five million dollar count. Okay, World Bank gives me a
Speaker 5: five million dollar account because we were just talking about markets,
Speaker 5: and they gave me a five million dollar count. And
Speaker 5: that's started me in the institutional asset management business. Then
Speaker 5: the next one gives me the account. Then I get
Speaker 5: to build a track record. Then I get to build
Speaker 5: the things I need. I mean right now, if you're
Speaker 5: running an operation, it can be expensive because you need
Speaker 5: compliance department, you have to deal with the regulatory things.
Speaker 5: You have a lot of those things expense, but you
Speaker 5: can find your way.
Speaker 2: Ray Dalli on Underbridgewater, thank you so much for coming
Speaker 2: on back on the podcast.
Speaker 5: So good to be back in Congratulations again for your
Speaker 5: ten years.
Speaker 4: Keep it up, Thank you so much. Well looking forward
Speaker 4: to our fifty aeth year.
Speaker 2: That'll be see if we can pull that up there, Yeah,
Speaker 2: we'll see.
Speaker 4: That was fantastic. Thank you so much for Tracy. Fifty
Speaker 4: years is insane. I mean, that's insane, like in any field.
Speaker 3: Media, it actually is.
Speaker 2: But when I like when I said that a lot
Speaker 2: of and when he said he ran that almost seems
Speaker 2: too hard to wrap my head around that you could
Speaker 2: run something for fifty a hedge fund that it could survive,
Speaker 2: Like that's an incredible track record.
Speaker 3: Yeah, well he said he was seventy six years old,
Speaker 3: so yeah, no, he must have started it very very young. Yeah,
Speaker 3: twenty six. Yeah, I don't know, I've I'm kind of
Speaker 3: in I'm in a strange mood now. I'm very like
Speaker 3: introspective and retrospective and thinking about the future. But I
Speaker 3: do think, you know, it is true he pioneered a
Speaker 3: lot of stuff like culture, and we hear a lot
Speaker 3: of stuff about Bridgewaters very special culture in some distinct culture.
Speaker 3: Distinct culture.
Speaker 2: Yeah, you know, I'll say a couple of things is that,
Speaker 2: you know, I feel like as a as a middle
Speaker 2: aged man, you know, you.
Speaker 4: Start to like change your view on the world and you're.
Speaker 2: Like, wait, does everything seem a little crazy objectively or
Speaker 2: is it just my state in life and.
Speaker 3: What I am I losing touch?
Speaker 2: No, I think it's important, and I actually would like
Speaker 2: the answer in some way to be that I'm losing touch,
Speaker 2: Like everything's totally fine. I'm just sort of like aging,
Speaker 2: sort of out of touch these days. And so I
Speaker 2: don't know whether I find it like reassuring or not.
Speaker 2: That No, Like, these are really big things that are
Speaker 2: going on, and all of these things, these big historical forces,
Speaker 2: we've got a bunch of them, all sort of converging
Speaker 2: at once.
Speaker 3: Well, they are big things going on. But I think
Speaker 3: one comforting thing, and this is why I think people
Speaker 3: tend to read history in times of change, because you
Speaker 3: feel very unsettled, you feel very insecure, and so you
Speaker 3: look back at history and just start seeing these patterns
Speaker 3: to raise point and then you're like, oh, okay, maybe
Speaker 3: things will be all right. But also you can read
Speaker 3: certain history books and think, oh god, things are going
Speaker 3: to be terrible.
Speaker 2: Yeah, I know it's all about the books, and I
Speaker 2: suppose it's about the time frame. I mean the other thing,
Speaker 2: and Ray mentioned is in terms of legacy, I do
Speaker 2: associate Bridgewater specifically with teaching lots of people about the
Speaker 2: sort of specific ways that you can achieve great returns
Speaker 2: through leverage plus diversity care right, which is sort of
Speaker 2: like the magic that they brought to it, which is
Speaker 2: we're going to diversify. And you typically associate diversification with
Speaker 2: I'm going to sleep better at night, but I'm a
Speaker 2: sacrifice return.
Speaker 4: Right, And that's fine.
Speaker 2: But the idea is like, well maybe you can like
Speaker 2: sort of you know, achieve both through leverage, and of
Speaker 2: course it worked really well and yeah, the results speak
Speaker 2: for This is also interesting comments about Mac. I'm glad
Speaker 2: you as multi, Yeah, multi, because that was very interesting.
Speaker 3: Well, this idea that relationships are like personal camaraderie is
Speaker 3: the glue that's sort of holds the whole thing together.
Speaker 2: I think if you talk to people in that in
Speaker 2: that world, like the money can be great obviously, but
Speaker 2: I never ever sounds like a particularly satisfying life in
Speaker 2: terms of, you know, everyone is aware that they're on
Speaker 2: a short leash, et cetera. There's not really much of
Speaker 2: a team, et cetera. It seems very mercenary and so forth.
Speaker 4: Someone else are leaving all the time, all the time.
Speaker 2: Yeah, and so it is interesting to think, you know,
Speaker 2: there have been some implosions, not really blow ups per se,
Speaker 2: but implosions. It does sort you do sort of wonder
Speaker 2: whether the balance of power or whether the how sustainable
Speaker 2: this model is. It's been a while since we've done
Speaker 2: a multi stride episode, so I should revisit it because
Speaker 2: there have been some developments.
Speaker 3: Yeah, all right, shall we leave it there.
Speaker 4: Let's leave it there.
Speaker 3: This has been another episode of the All Thoughts podcast.
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2: And I'm Joe Wisenthal. You can follow me at the Stalwart.
Speaker 2: Follow our producers Carmen Rodriguez at Carman armand Deesh Hall
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