Speaker 1: Bloomberg Audio Studios, podcasts, radio News.
Speaker 2: Let's go back to Bloomberg Investo conference for a conversation
Speaker 2: here with the CEO of Bridgewater Associates, Near Bardea, speaking
Speaker 2: with Bloomberg's Shanali Bassic.
Speaker 1: I have to embrace that change in the macro paradigm
Speaker 1: and prep yourself for a different reality. I saw other
Speaker 1: two quick things and then kind of touch on how
Speaker 1: Bridgewaters align itself for it. The second thing that has
Speaker 1: happened during that time is that while wealth got distributed,
Speaker 1: I talked about Asia and China, the Middle East, profess
Speaker 1: actually got a lot more concentrated. If you look at
Speaker 1: our institutional investors, they have more than doubles their allocations
Speaker 1: to private assets, even if you look at their liquid
Speaker 1: part of the portfolio, unbelievably concentrated.
Speaker 3: In the US.
Speaker 1: I heard the questions kind of in the end of
Speaker 1: the last interview of is US still a great place
Speaker 1: to invest? Well, a lot of the investments has gone
Speaker 1: to US equities. Seventy cents of every dollar inequities has
Speaker 1: gone to USE equities, and.
Speaker 3: That means that they are incredibly.
Speaker 1: Vulnerable into this new economic shariatim. And the third thing,
Speaker 1: which I want to talk about more a little bit later.
Speaker 1: Is all this is happening when we are facing a
Speaker 1: once in a generation technological disruption. We've been talking about
Speaker 1: AI for a long time, but here the intelligence is
Speaker 1: here and the macroeconomic impacts of that are just trickling in.
Speaker 1: So capicks this year will double last year, and it
Speaker 1: starts to move the needle. But the questions around productivity
Speaker 1: and they're for employment and social implications is still outstanding.
Speaker 1: Bridgewater's playbook has been looking at this for a long
Speaker 1: time and saying, how do we position ourselves across these
Speaker 1: three things in order to be there for our clients
Speaker 1: when they need us most.
Speaker 3: And having talked about that more.
Speaker 2: Yeah, let's start with the last piece of that because
Speaker 2: on a daylight today, maybe everyone's thinking about the short term,
Speaker 2: but the long term trend has been thinking about what
Speaker 2: AI would do.
Speaker 4: What is the good, the bad, and the ugly of
Speaker 4: it all.
Speaker 1: So, man, there's so much words that are being said
Speaker 1: about topic, and I'm going to add some words on
Speaker 1: top of that, but I'll kind of.
Speaker 3: Give you our frame or to think care about it.
Speaker 1: We've been forever thinking about the best combinations of humans
Speaker 1: and technology because if you think about our mission, our
Speaker 1: mission is to understand how the world works through combining
Speaker 1: humans and technology, because no one human mind can wrap
Speaker 1: their head around everything in the world, and that means
Speaker 1: that we've always searched for how technologies can replace what
Speaker 1: humans are doing, so humans can do what technology can't do.
Speaker 1: And what I can tell you is that I think
Speaker 1: it's a fool's errand to try to be precise about
Speaker 1: how this is going to play out. I'll give you
Speaker 1: two examples of that. What I said technology is here.
Speaker 1: You know, one school is saying we are headed to
Speaker 1: agentic full agentic AI, which means we will sit back
Speaker 1: and everything's got to be replaced by AI. That could happen.
Speaker 1: Others are saying this is going to be a general
Speaker 1: purpose technology, which is still very impactful, but it's wildly
Speaker 1: different than fully agentic AI, and people can be very
Speaker 1: specific about where they think that's gonna land.
Speaker 3: I don't think anybody knows.
Speaker 1: And the most important thing to suffroect yourself for a
Speaker 1: wide range of ACOMA.
Speaker 3: Will give you another example, which I think is.
Speaker 1: Really important to kind of process with regards to.
Speaker 3: The macroeconomic paradigms TIF.
Speaker 1: Thing and that is that, you know, the optimists say, yes,
Speaker 1: we are in a modern mercantilist world. If the opposite
Speaker 1: of globalization, a world where we have less efficiencies because
Speaker 1: government are trying to avoid the vulnerability of globalization.
Speaker 3: The optimists say, well, we are headed to a productivity miracle.
Speaker 1: It's going to be great because these technologies are going
Speaker 1: to more than an offset whatever we lose from the
Speaker 1: less collaborative world.
Speaker 3: Okay, that could happen, It could totally happen.
Speaker 1: But the passive is say, hey, the reason we're here
Speaker 1: in the first place is because we're massive gains in
Speaker 1: this macroeconomic paradigm that were distributed very unequally.
Speaker 3: We had big winners and losers.
Speaker 1: Well, the passive is say, AI is going to exacerbate
Speaker 1: that tremendously when we have massive winners and losers. It's
Speaker 1: going to be the show up into society. How those
Speaker 1: things net out has such a wide cone. And I
Speaker 1: think again into fool's errands to kind of try to
Speaker 1: predict exactly what's going to happen. So my advice and
Speaker 1: what we do with Bridgewater, we try to be practitioners.
Speaker 1: So get your hands dirty. Understand that technology deeply and
Speaker 1: then prep yourself for wide range of outcomes of how
Speaker 1: this could play out.
Speaker 2: Speaking of getting your hands dirty, Bridgewater has been using
Speaker 2: AI for its own processes. Late last year, you launched
Speaker 2: a fund over at Bridgewater starting with two billion dollars
Speaker 2: that uses machine learning as the primary basis for decision making,
Speaker 2: is built on proprietary technology.
Speaker 4: What have you learned from this in terms.
Speaker 2: Of how machine learning based investing is different from human
Speaker 2: lad investing.
Speaker 3: So I'd say I feel very lucky.
Speaker 1: Because of Bridge Orks DNA as we're coming to this
Speaker 1: inflection point I said earlier from the eighties, the idea
Speaker 1: that no human brain and can possibly get their head
Speaker 1: around everything.
Speaker 3: In the world.
Speaker 1: Men that we always try to replace humans with machines.
Speaker 1: So we are not moving from a human lead.
Speaker 3: Investment process to a machine let investment process. We are moving.
Speaker 1: We were using scientific calculators, and then we were using
Speaker 1: the seal sheets, and then we were using the most
Speaker 1: complicated expert system.
Speaker 3: This is AI before AI.
Speaker 1: To make investment decisions in a systematic, fundamental way. So
Speaker 1: for us, this is another step along in ARC and
Speaker 1: what we have learned through this process of what we
Speaker 1: call AA this is the artificial.
Speaker 3: Intelligent Investment Associate.
Speaker 1: That's the strategy that we rolled out and begin able
Speaker 1: to last year is that it does the same thing
Speaker 1: our people do by a machine learning first way. We
Speaker 1: learned through scientific breakthroughs within Bridgewater that you can reason
Speaker 1: you can generate alpha in a machine learning first way.
Speaker 1: That strategy compete with our expert system in humans. It
Speaker 1: generates unique alpha that is uncoordinated to what our humans do.
Speaker 1: That's been running out for a year and a half
Speaker 1: and it's comparable. And that's mind blowing in the space
Speaker 1: of possibility, what can happen? And so one last thing
Speaker 1: beyond the numbers that are happening this year or in
Speaker 1: any given short period of times, the most important thing
Speaker 1: is it keeps us up to date on where things
Speaker 1: are going, not only within the asset management industry, but
Speaker 1: also as you think about how this is going to
Speaker 1: impact the macroeconomy.
Speaker 2: So it's interesting. At the time of the launch, your
Speaker 2: cocio at Bridgewater, Bregg Jensen said, the fund had the
Speaker 2: potential to change the hiring and composition of staff. What
Speaker 2: skills do you think the future employees of Bridgewater are
Speaker 2: going to need? And you know, we were kind of
Speaker 2: joking a little earlier.
Speaker 4: Maybe the junior.
Speaker 2: Analysts don't go away, but boy do they have to
Speaker 2: be doing something.
Speaker 1: Different, which has always been the case truly, because when
Speaker 1: you have an expert system that does a lot of
Speaker 1: what humans do in other funds, as an example, you
Speaker 1: really start to move people to do what machines couldn't do.
Speaker 1: So we have been shifting the type of humans we
Speaker 1: bring into Bridgewater for fifty years, and that means from
Speaker 1: really looking for analytical skills and financial backgrounds to people
Speaker 1: that are conceptual and can ask philosophical question and query
Speaker 1: as an example, because they're going to be very levered
Speaker 1: with technology and how they explore their questions. That's been
Speaker 1: constantly moving and I think this is a big shift,
Speaker 1: but it's a big shift in the same direction of
Speaker 1: what can humans do the future analysts, what can they
Speaker 1: do that machines can do. I'll say the one thing
Speaker 1: that is on my mind that I'm worried about. When
Speaker 1: you think about that arc, you have to think about
Speaker 1: what trains people over time.
Speaker 3: So there are basic.
Speaker 1: Jobs that people have in many places where you sleep
Speaker 1: under your desk and you do the tough work that
Speaker 1: then leads you to be able to do the higher level,
Speaker 1: more conceptual things. One of the things we're thinking about is, hey,
Speaker 1: we are well positioned already to replace a lot of
Speaker 1: the basic tasks with machines, But what does that mean
Speaker 1: to talent development over a long period of time. You
Speaker 1: have to be conscious not only of today, but what
Speaker 1: does that mean for your talent strategy over long term?
Speaker 2: You know, how does this fit into the broader trajectory
Speaker 2: of Bridgewater. When I think about where you stand today,
Speaker 2: You've inherited this firm that's now roughly a half century old.
Speaker 4: How do you position the firm for the future.
Speaker 2: This is all in the scope of positioning for the
Speaker 2: next fifty years.
Speaker 4: What is Bridgewater two point zero?
Speaker 1: So I think the best way to hit this is
Speaker 1: to go back to the three things that I've said,
Speaker 1: because it kind of it's where our heads are und
Speaker 1: There are.
Speaker 3: Things that have been that is a bad rocker Bridgewater.
Speaker 1: Bridgewater truly, and I think I said this on the
Speaker 1: stage years ago.
Speaker 3: Just after you were yeah yeah, with Eric Shatska.
Speaker 1: Bridge was about getting an incredible group of people together
Speaker 1: and have this very very unique culture that puts in
Speaker 1: the center of everything.
Speaker 3: The desire to be excellent.
Speaker 1: And constantly learn, because that's the only way to accomplish
Speaker 1: this incredible mission of mapping the deepest precenting of how
Speaker 1: the ward works in a systematic, fundamental way through combination
Speaker 1: of fewas of technlogy.
Speaker 3: That's stay the same.
Speaker 1: If you look at the three things that I've said,
Speaker 1: I said, the microeconomic paradigm is shifting, and because of that,
Speaker 1: that means that beta, the tailwind is done. Alpha generation,
Speaker 1: the positive uncredited alpha that pure off as an example,
Speaker 1: a return for thirty three years is more important than ever.
Speaker 1: A deep understanding of cause effect languages of how the
Speaker 1: world works more important than ever. We have to hold
Speaker 1: our hand the hands of our clients in days like
Speaker 1: today and months like the last month, where they're asking,
Speaker 1: how are these new policies going to flow through the economy?
Speaker 3: What's going on?
Speaker 1: So tremendous focus on improving the quality of understanding on
Speaker 1: our in our alpha.
Speaker 3: I said.
Speaker 1: The second thing is contort portfolios. For fifty years, you've
Speaker 1: said this. We're selling our fiftieth year this year. It's
Speaker 1: always been about partnering with CIOs and CEOs of the
Speaker 1: largest pools of capital in the world.
Speaker 3: And helping them achieve their goals.
Speaker 1: These are investment goals, resiliency, diversification. We've been very, very
Speaker 1: focused over the last couple of years to make sure
Speaker 1: that we can increase the impact act across their profilo
Speaker 1: because there are allocations of pure office is going to be small.
Speaker 3: But in a trillion dollar portfolio.
Speaker 1: They're going to want to know that you have the
Speaker 1: capability to invest, not in the US as an example,
Speaker 1: if everyone's investing in the US.
Speaker 3: We've been really focused on building and capability to invest
Speaker 3: in China as an example.
Speaker 1: Are our Onshore strategy lasts and return thirty percent? And
Speaker 1: I say that not because of the number. I say
Speaker 1: it because it shows where our focus has been. And
Speaker 1: the last thing is we've talked about, which is in
Speaker 1: a world that technology technology is going to disrupt us tremendously,
Speaker 1: making sure that you have a partner in Bridgewater.
Speaker 3: That is the curve that is where.
Speaker 1: The scientific breakthroughs are happening that you can lean on
Speaker 1: to show you where things are headed.
Speaker 3: Those are the big three areas that we've been focused on.
Speaker 3: For now.
Speaker 2: We'll get back to where things are headed, but before
Speaker 2: we get there, I just want to give the audience
Speaker 2: a chance to get to know you a little bit,
Speaker 2: because the more I've learned about you, the more your
Speaker 2: story is kind of like nothing I've ever It is
Speaker 2: like nothing I've ever seen in finance. So you didn't
Speaker 2: graduate from high school initially, you eventually went to Warton
Speaker 2: and then you started at Bridgewater as a thirty.
Speaker 4: Three year old intern.
Speaker 1: How I mean, sir, my Jewish mother, for you saying
Speaker 1: that I didn't graduate high school on this stage is
Speaker 1: probably like her heart is broken right now, But it's true.
Speaker 1: And I've never shared with this. Actually, So I've said
Speaker 1: many times that I look different. I know I'm different.
Speaker 1: The amount of people that commented on the fact that
Speaker 1: I'm not wearing a tie today, I am different. I
Speaker 1: come from the outside of the world. I come from Israel.
Speaker 1: I've talked historically about being a third generation to grandparents
Speaker 1: that were Jewish refugees, family that was murdered in.
Speaker 3: The Holocaust, and I talked about how the.
Speaker 1: Story of my life is connected to seeing them establish
Speaker 1: a country. And I talked about how an incredible group
Speaker 1: of people with values can do incredible things. And I
Speaker 1: always jump the story and say and then I ended
Speaker 1: up a Bridgewater. To your point, if you doubleclated on
Speaker 1: that story, and I've been reflecting this a lot lately.
Speaker 3: I was a bad student in high school.
Speaker 1: I didn't get a diploma on the other of twelve
Speaker 1: years and I was very, very lucky that in Israel
Speaker 1: there is a mandatory service that everybody.
Speaker 3: Has to do with the age of eighteen.
Speaker 1: And because people like my grandparents that come from Libya
Speaker 1: and Hungary and Poland, looking different, different backgrounds, different languages,
Speaker 1: needed to come together to accomplish this really incredible task
Speaker 1: of putting a country together. They knew they had to
Speaker 1: make the most out of the told human capability and
Speaker 1: do that.
Speaker 3: Through the service.
Speaker 1: So the service ignores everything that happens up until the
Speaker 1: age of eighteen, and based on your merit, reassesses you.
Speaker 3: I tested at.
Speaker 1: Eighteen thinking that I was incompetent and tested extremely highly,
Speaker 1: and that changed my life.
Speaker 3: It led to a very successful service.
Speaker 1: And the reason that's important is because fifteen years later,
Speaker 1: you're right, I am a thirty three year old already
Speaker 1: with gray hair.
Speaker 3: Winter intern in Bridgewater.
Speaker 1: It's me and six other hung over Dartmouth twenty year olds,
Speaker 1: and my English is not great and I'm out of
Speaker 1: context and it's pretty confusing, and to say that I
Speaker 1: feel lost is not even the beginning of it. But again,
Speaker 1: I'm at an organization that is trying to make the
Speaker 1: most in an amertocratic way out of these human capital
Speaker 1: that it has because we're trying to accomplish this incredible goal.
Speaker 3: And it leads me to kind of three big lessons. One,
Speaker 3: luck matters. Luck matters.
Speaker 1: I was lucky to be in a society where I
Speaker 1: got a second shot in the service, and I was
Speaker 1: lucky to come across a Bridgewater.
Speaker 3: I could have come across a different organization.
Speaker 1: The second thing, and I connected it back to the
Speaker 1: AI point that you talked about, differences in thinking and
Speaker 1: unique contributions are very valuable, and I think that's especially
Speaker 1: true in a world where a lot of the generic
Speaker 1: intelligence is going to be commoditized.
Speaker 3: And the third thing is the way to.
Speaker 1: Capture unique ways of thinking is to aspire these to
Speaker 1: have a real meritocracy.
Speaker 3: That's true in Israel, it's true at Bridgewater.
Speaker 1: I think that is the key in US unlocking and
Speaker 1: facing some of the biggest challenges we have as corporations
Speaker 1: and as a society.
Speaker 2: So another major part of your background, as you've been
Speaker 2: talking about, is your Israeli heritage, and you were talking
Speaker 2: about complicated geopolitics. In the past year alone, you've been
Speaker 2: back to Israel, You've spent a lot of time in
Speaker 2: the Middle East, including Saudi Arabia, Qatar, Bahrain. All in
Speaker 2: your capacity as the CEO of Bridgewater, what can you
Speaker 2: share about the trajectory of the Middle East and do
Speaker 2: you see a path to peace when it comes to
Speaker 2: the conflict in Israel.
Speaker 1: Wow, let me start where I feel like I have to.
Speaker 3: October seventh.
Speaker 1: Is incredibly personal for me, and not just Ocstober sevens,
Speaker 1: but also what happens subsequently. There's still fifty nine hostages
Speaker 1: in Gaza. There's suffering in Gaza, They're suffering in Israel,
Speaker 1: They're suffering in the entire region. These are family members,
Speaker 1: my community. These my community at Bridgewater. Some of them
Speaker 1: are neighboring countries. These are partners of Bridgewater and neighboring countries.
Speaker 1: It's been a year and a half of trauma, truly trauma,
Speaker 1: and my heart goes to everyone on this.
Speaker 3: It is important for.
Speaker 1: Me to say that I'm proud to be Jewish. I'm
Speaker 1: proud to be Israeli. I'm proud of my country men
Speaker 1: and women, and I feel very lucky that I've had
Speaker 1: the chance in this job, to your point, to go
Speaker 1: around the world and including in the Middle East and
Speaker 1: places that matter and represent hopefully the best of Israel,
Speaker 1: and learn about the best in many of the countries
Speaker 1: that you've mentioned, forge real friendships with people and incredible,
Speaker 1: incredible leaders. And your question about where things are had
Speaker 1: I've said this before. I have a deep belief that
Speaker 1: look tragedy and trauma and suffering leads to resiliency, and
Speaker 1: resiliency leads to evolution. If you look at the Second
Speaker 1: World War and the new World order they came out of.
Speaker 1: If you look at a great depression and the new
Speaker 1: economic paradigm that came out of, if you look at
Speaker 1: the Holocaust and my grandparents rising from the ashes and
Speaker 1: building a country. If I said that a great group
Speaker 1: of people can come together and share values and force
Speaker 1: a different future, I go back to all the people
Speaker 1: that are in the Middle East, not just in Israel,
Speaker 1: but in Saudi Arabia and Bahrain, in the UA. There's
Speaker 1: an incredible resilient generation that has suffered a lot, and
Speaker 1: I am actually more hopeful than ever that that generation
Speaker 1: can create a completely different future going forward to the
Speaker 1: Middle East and one hundred year piece.
Speaker 4: What role does Saudi Arabia, does Katar?
Speaker 2: Does the US play in negotiating peace here?
Speaker 4: And is there a two point zero version of the
Speaker 4: Abraham Accords?
Speaker 3: I mean, that's really not for me to answer.
Speaker 1: The thing I would say is yes, I think that
Speaker 1: Saudi Arabia, the US, the Ua baharein. When I say
Speaker 1: there's a generation, there's a generation of leaders. Then when
Speaker 1: I talk to these people, they're.
Speaker 3: Just like me. They have the same exact aspirations as
Speaker 3: I am.
Speaker 1: And I think a coalition of that group of people
Speaker 1: in Israel and in the region is the way to
Speaker 1: create what you call the second Abram Accord, and it's coming.
Speaker 1: I'm more hopeful today, Chanelli, honesty that have been five
Speaker 1: years ago, because out of this suffering there's a crystallization
Speaker 1: of the realization that creates the necessity to evolve and
Speaker 1: take the region in a different direction.
Speaker 2: And I want to get your thoughts clearly on this,
Speaker 2: because the human toll has been devastating, both in Israel
Speaker 2: and in Gaza and beyond. Really at this point how
Speaker 2: do you see the conflict playing out, given that the
Speaker 2: ceasefire talks have stalled.
Speaker 3: Well, if I.
Speaker 1: Said that, it's a fool's err and to guess where
Speaker 1: AI is going, this is truly a fool's erin to guess.
Speaker 1: But I would say this, until Bill the hostages are released,
Speaker 1: there is no solution. Also, until there is a future
Speaker 1: for the Palestinian.
Speaker 3: People, there is no solution. And there are solutions that.
Speaker 1: Can be put together, but they will be put together
Speaker 1: by a new generation taking leadership and coming together and
Speaker 1: making sacrifices the previous generations were.
Speaker 3: I'm willing to do.
Speaker 2: You know, a lot of people look around and they say,
Speaker 2: in the wake of World War Two, when you look now,
Speaker 2: there are a lot of the protections that were put
Speaker 2: in place to make sure that the world didn't fracture again,
Speaker 2: some of those protections are now under threat, particularly with
Speaker 2: the changing guards across countries.
Speaker 4: Do you worry about that?
Speaker 1: I mean, personally yes, I think that's a part of
Speaker 1: the macroeconomic paradigm that is also a geopolitical paradigm that
Speaker 1: has shifted the world post World War Two.
Speaker 3: Out of the trauma of World War Two started a.
Speaker 1: Series of events that led us to not only for
Speaker 1: protections and institutions, but increased collaboration decade after decade after decade,
Speaker 1: leading us to a long period of extreme collaboration over
Speaker 1: the last thirty years. There is no question that that paradigm,
Speaker 1: geopolitical and macroeconomic paradigm is being undone. Now there are
Speaker 1: reasons why that's getting undone. There are problems that were
Speaker 1: created that I mentioned earlier in this conversation that need
Speaker 1: to get fixed. But if that's not done well, you
Speaker 1: can instead of correcting the problems that the system.
Speaker 3: Had, you can create a disaster.
Speaker 1: And I worry that between correcting the problems and causing
Speaker 1: complete chaos, we can easily end up being in chaos.
Speaker 2: Before I let you go, this is kind of another
Speaker 2: bumber of a question, so I apologize, But do you
Speaker 2: think the world is more dangerous today than it's been
Speaker 2: in a long time?
Speaker 1: The world is more dangerous today than it's been in
Speaker 1: r in recent history. But I think this is one
Speaker 1: of the problems that we have as humans. If you
Speaker 1: go back not that long, go back one hundred and
Speaker 1: fifty years, if you're in the US and eighteen hundreds,
Speaker 1: it is tough you have militias.
Speaker 3: Women have no rights, black people have no rights.
Speaker 1: Then you have the Spanish Flu, then you have the
Speaker 1: Great Depression, then you have World War one, World War two,
Speaker 1: you have the assassination of Kennedy and Martin Luther King.
Speaker 1: We have a bias to remember the last thirty years,
Speaker 1: which will particularly come. So the world is more dangerous today,
Speaker 1: but this is not a bigger problem than we have
Speaker 1: seen in the history.
Speaker 3: Of our parents and grandparents.
Speaker 1: We can deal with this as long as we embrace reality,
Speaker 1: understand it well, and come together.
Speaker 3: To find solutions.
Speaker 2: Thank you for such a clear conversation that is near
Speaker 2: Bardaya of course, the CEO of for daughter, thank you.
Speaker 3: Thank you, our allies feat to be