1 00:00:01,040 --> 00:00:03,960 Speaker 1: Ray Dalio is the founder of the world's biggest hedge 2 00:00:04,000 --> 00:00:09,240 Speaker 1: fund firm, Bridgewater Associates, which manages one hundred sixty billion dollars. 3 00:00:09,480 --> 00:00:12,920 Speaker 1: Dalio has joined Warren Buffett and Bill Gates Pledge, promising 4 00:00:12,960 --> 00:00:15,520 Speaker 1: to give more than half of his fortune to charitable 5 00:00:15,560 --> 00:00:20,360 Speaker 1: foundations within his lifetime. Through his Daio Foundation, he's directed 6 00:00:20,400 --> 00:00:23,560 Speaker 1: millions of dollars in donations to the David Lynch Foundation, 7 00:00:23,840 --> 00:00:28,720 Speaker 1: and organization that sponsors and promotes research on transcendental meditation. 8 00:00:29,120 --> 00:00:32,760 Speaker 1: Also working to make sure Bridgewater survives him. Dhaio moved 9 00:00:32,800 --> 00:00:36,320 Speaker 1: in twenty eighteen to turn Bridgewater into a partnership and 10 00:00:36,400 --> 00:00:39,879 Speaker 1: give employees more of a stake in the firm. Daio 11 00:00:39,960 --> 00:00:42,879 Speaker 1: sat down with David Rubinstein, co founder of the Carlisle 12 00:00:42,920 --> 00:00:45,400 Speaker 1: Group and host of the Bloomberg television show Peer to 13 00:00:45,479 --> 00:00:49,680 Speaker 1: Peer Conversations. They discussed what he looks for in an employee, 14 00:00:49,920 --> 00:00:53,320 Speaker 1: how he's preparing for a possible recession, and whether or 15 00:00:53,320 --> 00:00:56,200 Speaker 1: not he'd ever take a job in government. You are 16 00:00:56,560 --> 00:00:58,920 Speaker 1: seen as somebody who has said it might be a 17 00:00:59,040 --> 00:01:01,600 Speaker 1: chance of a recession at some point. Do you see 18 00:01:01,600 --> 00:01:04,000 Speaker 1: any chance of a recession in two thousand nine or 19 00:01:04,040 --> 00:01:08,920 Speaker 1: two I'm big on principles, right, so I think that 20 00:01:09,000 --> 00:01:13,319 Speaker 1: it's important to understand how the economic machine works. And 21 00:01:13,400 --> 00:01:16,199 Speaker 1: so when I'm looking at that, I want to maybe 22 00:01:16,280 --> 00:01:20,639 Speaker 1: take a few minutes and get into the important things 23 00:01:20,720 --> 00:01:25,600 Speaker 1: that are pertained to a recession. Because a recession, you know, 24 00:01:26,120 --> 00:01:30,560 Speaker 1: whether you it's two negative quarters of GDP and we're 25 00:01:30,560 --> 00:01:35,039 Speaker 1: going to be hovering I think fairly close to that level, 26 00:01:35,400 --> 00:01:38,000 Speaker 1: and there's a certain variation around it. But the bigger 27 00:01:38,120 --> 00:01:44,360 Speaker 1: things are a combination of the absence of effectiveness of 28 00:01:44,680 --> 00:01:47,640 Speaker 1: central bank policies. So I hope we can talk about 29 00:01:47,680 --> 00:01:52,240 Speaker 1: those together with the wealth gap, the large wealth gap. 30 00:01:52,440 --> 00:01:55,160 Speaker 1: So when the next downturn comes, what that will look 31 00:01:55,240 --> 00:02:01,200 Speaker 1: like socially, politically and so on. UM the elections, which 32 00:02:01,320 --> 00:02:07,640 Speaker 1: is a issue between um let's say capitalists and socialists 33 00:02:07,760 --> 00:02:11,079 Speaker 1: or the rich and the poor. And then the emergence 34 00:02:11,440 --> 00:02:16,280 Speaker 1: of China UM and in relationship to the United States. 35 00:02:16,320 --> 00:02:21,360 Speaker 1: Those four factors are factors that have not existed since 36 00:02:21,400 --> 00:02:24,840 Speaker 1: the thirties. I think they're unique, and so when we 37 00:02:24,919 --> 00:02:28,359 Speaker 1: get into the question of the recession, I think it's 38 00:02:28,480 --> 00:02:32,600 Speaker 1: how that will affect those other things, and those things 39 00:02:32,600 --> 00:02:35,720 Speaker 1: affected in the investment world, your firm was quite known, 40 00:02:36,000 --> 00:02:39,280 Speaker 1: well known for quite some time before the last recession. 41 00:02:39,280 --> 00:02:41,720 Speaker 1: It was a very successful firm before. But in the 42 00:02:41,800 --> 00:02:45,640 Speaker 1: last recession, your firm performed extremely well, maybe better than 43 00:02:45,680 --> 00:02:48,640 Speaker 1: any of any other major hedge fund. So as I 44 00:02:48,720 --> 00:02:54,280 Speaker 1: recall your up or something like that during the worst year, So, um, 45 00:02:54,440 --> 00:02:58,040 Speaker 1: are you anticipating a recession now and are you changing 46 00:02:58,040 --> 00:03:01,160 Speaker 1: your investment approaches or your not quite where you were 47 00:03:01,360 --> 00:03:05,720 Speaker 1: in two thousand seven. In two thousand seven, it was 48 00:03:06,880 --> 00:03:10,280 Speaker 1: pretty easy, I think, to calculate that these debts that 49 00:03:10,360 --> 00:03:13,480 Speaker 1: we're going to come do and that the there was 50 00:03:13,520 --> 00:03:17,080 Speaker 1: not an adequate amount of funding, and so that sort 51 00:03:17,120 --> 00:03:20,840 Speaker 1: of debt crisis was something we anticipated and we were 52 00:03:20,880 --> 00:03:24,480 Speaker 1: positioned well for. When I go through those calculations, it's 53 00:03:24,520 --> 00:03:27,440 Speaker 1: not the same. In other words, the amount of maturing 54 00:03:27,520 --> 00:03:31,240 Speaker 1: debt and that whole problem doesn't look the same. It 55 00:03:31,280 --> 00:03:34,520 Speaker 1: looks more like a gradual squeeze having to do with 56 00:03:35,920 --> 00:03:38,720 Speaker 1: quite a lot of debt of a certain type. But 57 00:03:38,960 --> 00:03:47,040 Speaker 1: with that um also pension liabilities and healthcare particularly as 58 00:03:47,120 --> 00:03:51,080 Speaker 1: that produces a greater squeeze. We have large deficits and 59 00:03:51,120 --> 00:03:54,280 Speaker 1: so on. So so the amount of promises that we 60 00:03:54,360 --> 00:03:57,200 Speaker 1: have are large, but they're going to be coming at 61 00:03:57,280 --> 00:04:00,600 Speaker 1: us at a more gradual pace, and I that's going 62 00:04:00,680 --> 00:04:04,520 Speaker 1: to produce a squeeze. I think related to that, what's 63 00:04:04,560 --> 00:04:09,760 Speaker 1: important is that when you don't have monetary policy being 64 00:04:09,800 --> 00:04:13,840 Speaker 1: able to be effective, um what kind of monetary policy 65 00:04:13,920 --> 00:04:17,240 Speaker 1: we will have, we will have more than likely a 66 00:04:17,360 --> 00:04:21,479 Speaker 1: lot of debt monetization. On fiscal policy, there's no room 67 00:04:21,520 --> 00:04:23,760 Speaker 1: for additional tax cuts, you agree, because we already have 68 00:04:23,800 --> 00:04:26,600 Speaker 1: such a big deficit, so you couldn't really cut taxes 69 00:04:26,680 --> 00:04:29,400 Speaker 1: any anymore. Or do you not agree with that? I 70 00:04:29,440 --> 00:04:33,720 Speaker 1: believe that in terms of spending that probably there will 71 00:04:33,760 --> 00:04:37,960 Speaker 1: be increases in spending that probably will not be well funded. 72 00:04:38,240 --> 00:04:40,040 Speaker 1: And when you ask about that, I think we have 73 00:04:40,120 --> 00:04:43,760 Speaker 1: a political question, and that's which is relevant to also 74 00:04:43,800 --> 00:04:48,560 Speaker 1: the markets. Between now and the elections, we're probably going 75 00:04:48,640 --> 00:04:52,560 Speaker 1: to have very different policies, but policies maybe more of 76 00:04:52,600 --> 00:04:56,240 Speaker 1: the left and policies more of the right, more extreme policies, 77 00:04:56,279 --> 00:04:59,440 Speaker 1: greater polarity, and the choice will be greater. And how 78 00:04:59,480 --> 00:05:01,599 Speaker 1: those choice as are made are is going to be 79 00:05:01,680 --> 00:05:04,560 Speaker 1: very important to not only the size of the deficits, 80 00:05:04,600 --> 00:05:08,120 Speaker 1: but the nature of taxation. So I think that I 81 00:05:08,160 --> 00:05:12,599 Speaker 1: think that UM. When I'm looking at the presidential candidates, 82 00:05:12,920 --> 00:05:15,240 Speaker 1: what I do is I look at what their policies 83 00:05:15,279 --> 00:05:18,760 Speaker 1: are stated policies in terms of UM, any of their 84 00:05:18,839 --> 00:05:22,120 Speaker 1: various policies, and I look at that as a probabilistic basis. 85 00:05:22,560 --> 00:05:25,320 Speaker 1: So I think when we have to answer that, we 86 00:05:25,400 --> 00:05:30,920 Speaker 1: can't um um. You you like, after the election, you 87 00:05:31,000 --> 00:05:36,600 Speaker 1: might get taxes raised by UM on the wealthy or 88 00:05:36,839 --> 00:05:41,320 Speaker 1: you have corporations, you can reverse those tax those tax policies, 89 00:05:41,640 --> 00:05:44,160 Speaker 1: and you're probably going to get an increase in spending. 90 00:05:44,520 --> 00:05:46,719 Speaker 1: All right, let's talk for a moment about how you 91 00:05:46,839 --> 00:05:49,720 Speaker 1: came to be, Let's say, one of the most respected 92 00:05:49,839 --> 00:05:54,400 Speaker 1: commentators on economic and financial policy, which is starting your firm. 93 00:05:54,480 --> 00:05:58,320 Speaker 1: So you grew up in Long Island and where you 94 00:05:58,360 --> 00:06:01,719 Speaker 1: from a wealthy family? No, my dad was a jazz musician, 95 00:06:01,880 --> 00:06:04,840 Speaker 1: very lower middle class fan. When you were a young boy, 96 00:06:04,960 --> 00:06:07,160 Speaker 1: were you interested in the financial world or what were 97 00:06:07,160 --> 00:06:09,200 Speaker 1: you most interested in with growing up on Long Island. 98 00:06:09,440 --> 00:06:11,440 Speaker 1: I got hooked on the markets when I was twelve 99 00:06:11,600 --> 00:06:14,560 Speaker 1: because I used to caddy and I would take my 100 00:06:14,640 --> 00:06:17,040 Speaker 1: money and I put in the markets and everybody was 101 00:06:17,120 --> 00:06:21,640 Speaker 1: chatting about the markets. So, UM, how did you do well. 102 00:06:21,680 --> 00:06:25,039 Speaker 1: The first stock I bought, I bought because it was 103 00:06:25,080 --> 00:06:27,000 Speaker 1: the only company I ever heard of that was selling 104 00:06:27,040 --> 00:06:30,480 Speaker 1: for less than five dollars a year, and I figured 105 00:06:30,520 --> 00:06:32,440 Speaker 1: I could buy more shares, so if what up, I'd 106 00:06:32,480 --> 00:06:36,240 Speaker 1: make more money. That was my strategy work and it worked, 107 00:06:37,320 --> 00:06:40,440 Speaker 1: and it worked because this company was about to go 108 00:06:40,520 --> 00:06:44,159 Speaker 1: broke and somebody came along and acquired it, and it 109 00:06:44,279 --> 00:06:47,080 Speaker 1: by luckily, Um, it went up. And I said, this 110 00:06:47,120 --> 00:06:51,120 Speaker 1: game is easy, and I m then decided that I 111 00:06:51,120 --> 00:06:53,160 Speaker 1: would be involved in the markets. And this game is 112 00:06:53,200 --> 00:06:56,240 Speaker 1: anything but easy. So in high school, were you interested 113 00:06:56,279 --> 00:06:58,680 Speaker 1: in academics or were you a good student? No? I 114 00:06:58,720 --> 00:07:01,919 Speaker 1: hated high school. Did you go to high school you 115 00:07:01,960 --> 00:07:04,960 Speaker 1: cut classes? Or what did you do? I did cut 116 00:07:05,000 --> 00:07:07,880 Speaker 1: classes a fair amount and cut classes to go surfing. 117 00:07:08,080 --> 00:07:09,720 Speaker 1: Did you have a hard time getting into a good 118 00:07:09,720 --> 00:07:12,320 Speaker 1: school in college? Yeah? I got into c W Post 119 00:07:12,320 --> 00:07:17,320 Speaker 1: College on probation, probation on probation, okay, and but you 120 00:07:17,400 --> 00:07:21,480 Speaker 1: did well there. I loved college. Okay. I love college 121 00:07:21,520 --> 00:07:25,920 Speaker 1: because well, uh, besides mixing all the fun that college 122 00:07:25,920 --> 00:07:28,640 Speaker 1: gives you, it also, um, what I liked is that 123 00:07:28,720 --> 00:07:30,800 Speaker 1: I could pick the subjects that I was interested in 124 00:07:31,280 --> 00:07:34,280 Speaker 1: and I so I loved college. Right, you must have 125 00:07:34,320 --> 00:07:36,760 Speaker 1: done recent well because you got into Harvard Business School. Yeah, 126 00:07:36,800 --> 00:07:40,600 Speaker 1: I did. I got great grades when you graduated. What 127 00:07:40,600 --> 00:07:43,000 Speaker 1: did you do? So in my two years? It's a 128 00:07:43,000 --> 00:07:46,000 Speaker 1: two year school. Um and in my summer I like 129 00:07:46,120 --> 00:07:48,800 Speaker 1: to trade commodities. I got into trade and commodities. Now 130 00:07:48,840 --> 00:07:52,720 Speaker 1: this is now, uh, the summer of seventy two and 131 00:07:52,920 --> 00:07:56,840 Speaker 1: um so nobody ever for more of a business school 132 00:07:56,840 --> 00:07:59,680 Speaker 1: went into commodity division. But I went to Merrill Lynches 133 00:08:00,000 --> 00:08:02,320 Speaker 1: hodity division. I said, hey, can you give me a job? 134 00:08:02,640 --> 00:08:05,360 Speaker 1: The director of commodities in that summer gave me a 135 00:08:05,440 --> 00:08:09,840 Speaker 1: job to help him. Around three, we have the oil shock. 136 00:08:11,320 --> 00:08:14,600 Speaker 1: Bear market in stocks. Commodities is the hottest thing. And 137 00:08:14,600 --> 00:08:18,520 Speaker 1: I was hired as director of commodities at Dominic and Dominic, 138 00:08:18,720 --> 00:08:21,920 Speaker 1: having never done anything in the director of commodities, but 139 00:08:21,960 --> 00:08:24,960 Speaker 1: I was hired. And that's so that's what I So 140 00:08:25,000 --> 00:08:27,960 Speaker 1: you left that eventually though, to set up your own firm. 141 00:08:28,040 --> 00:08:33,360 Speaker 1: Yeah so I. Uh that was seventy seventy four, big 142 00:08:33,360 --> 00:08:38,079 Speaker 1: bear market in stocks. Uh, Dominic and Dominic essentially went broke. 143 00:08:38,200 --> 00:08:41,320 Speaker 1: I went to, uh, what was Sandy Walls firm? Cbd 144 00:08:41,400 --> 00:08:44,520 Speaker 1: L E. L. Hayden Stone at the time became Shearson 145 00:08:44,559 --> 00:08:47,319 Speaker 1: Hayden Stone Lean blah blah blah. Because it did all 146 00:08:47,320 --> 00:08:51,560 Speaker 1: those mergers, I became in charge of institutional commodities, in 147 00:08:51,559 --> 00:08:54,320 Speaker 1: other words, hedging of all different things, and that put 148 00:08:54,360 --> 00:08:59,160 Speaker 1: me with all different futures markets. And then we got 149 00:08:59,280 --> 00:09:05,400 Speaker 1: into the environment where um seventy four you got into 150 00:09:05,520 --> 00:09:10,560 Speaker 1: this environment where interest rates, tightness of monetary policy, all 151 00:09:10,600 --> 00:09:13,200 Speaker 1: of those things were driving all the markets. So that 152 00:09:13,280 --> 00:09:17,120 Speaker 1: got me hooked on those markets. Anyway, I got fired 153 00:09:17,120 --> 00:09:20,240 Speaker 1: from there because I was a bit rowdy. Did you 154 00:09:20,280 --> 00:09:22,760 Speaker 1: punch somebody? Did you punch your boss in the face? 155 00:09:22,840 --> 00:09:24,480 Speaker 1: Or yes, I punched my bost in the face. That's 156 00:09:24,520 --> 00:09:27,000 Speaker 1: not a good way to print that was, but that was. 157 00:09:28,480 --> 00:09:31,040 Speaker 1: It was New Year's Eve. We got drunk on New 158 00:09:31,120 --> 00:09:34,840 Speaker 1: Year's Eve and somebody other than your boss. You didn't 159 00:09:34,840 --> 00:09:40,280 Speaker 1: think of that anyway, But it didn't. It didn't last long. 160 00:09:41,840 --> 00:09:44,120 Speaker 1: And that's how I started the firm because I was 161 00:09:44,960 --> 00:09:47,199 Speaker 1: because the clients still wanted to do business. The year 162 00:09:47,280 --> 00:09:50,280 Speaker 1: was that and you started the firm. So it grew 163 00:09:50,320 --> 00:09:53,280 Speaker 1: true from one or two employees to how many. Well, 164 00:09:53,559 --> 00:09:57,760 Speaker 1: in nineteen two it was I think there were eight 165 00:09:57,800 --> 00:10:02,680 Speaker 1: employees and at one point and then I had a 166 00:10:02,920 --> 00:10:06,600 Speaker 1: terrible eighty two so UM, and then it came down 167 00:10:06,600 --> 00:10:09,240 Speaker 1: to one employee. So nineteen eighty three or so, it 168 00:10:09,320 --> 00:10:12,320 Speaker 1: was just me, you have to borrow money from your father. Yeah, 169 00:10:12,360 --> 00:10:14,920 Speaker 1: so let me tell you about the moment um. So 170 00:10:15,080 --> 00:10:21,760 Speaker 1: nineteen eight, nineteen seventy nine, eight eight one. I calculated 171 00:10:21,760 --> 00:10:23,920 Speaker 1: the American banks had lent a lot more money to 172 00:10:24,200 --> 00:10:26,920 Speaker 1: emerging countries than those countries are going to get paid back. 173 00:10:27,320 --> 00:10:30,480 Speaker 1: And I anticipated that there would be a debt crisis 174 00:10:30,880 --> 00:10:35,440 Speaker 1: and with that an economic crisis. So that was my thinking. UM. 175 00:10:35,559 --> 00:10:39,320 Speaker 1: In August nine eighty to Mexico defaulted on its debt 176 00:10:40,120 --> 00:10:43,520 Speaker 1: and a number of countries followed. And so because I 177 00:10:43,559 --> 00:10:46,400 Speaker 1: said that, UM, I got a lot of attention about that, 178 00:10:46,480 --> 00:10:49,200 Speaker 1: and I thought that was going to be producing a 179 00:10:49,240 --> 00:10:51,760 Speaker 1: bear market in stocks. And I could not have been 180 00:10:51,760 --> 00:10:55,240 Speaker 1: wrong more wrong. August nine eighty two was the exact 181 00:10:55,240 --> 00:10:58,200 Speaker 1: bottom of the stock market. And I was wrong. And 182 00:10:58,280 --> 00:11:02,679 Speaker 1: as a result of that, UM, let's take my employees 183 00:11:02,800 --> 00:11:05,959 Speaker 1: or UM, I had to let them go. I lost 184 00:11:05,960 --> 00:11:08,720 Speaker 1: money for myself, I lost money for and I had 185 00:11:08,720 --> 00:11:11,120 Speaker 1: to borrow four thousand dollars for my dad. It was 186 00:11:11,160 --> 00:11:13,680 Speaker 1: the most painful, one of the most painful experiences, but 187 00:11:13,760 --> 00:11:16,800 Speaker 1: it was one of the best experiences that ever happened 188 00:11:16,800 --> 00:11:21,120 Speaker 1: to me in my life because it changed my perspective 189 00:11:21,120 --> 00:11:24,960 Speaker 1: about decision making. It made um. It may gave me 190 00:11:25,120 --> 00:11:28,760 Speaker 1: the humility that I needed and fear of being wrong 191 00:11:28,880 --> 00:11:32,440 Speaker 1: in my decisions, while I was able to maintain my aggressiveness. 192 00:11:32,440 --> 00:11:35,720 Speaker 1: So it changed my whole approach to decision making. You 193 00:11:35,800 --> 00:11:39,160 Speaker 1: paid your father back with equity in Bridgewater or just 194 00:11:39,920 --> 00:11:44,319 Speaker 1: interest now with without interest and with a big hug. Okay, 195 00:11:45,200 --> 00:11:48,560 Speaker 1: so um. From that time on, you began to rely 196 00:11:48,640 --> 00:11:51,960 Speaker 1: a lot more on arithmetic or algorithms and other kinds 197 00:11:51,960 --> 00:11:54,520 Speaker 1: of things. No, no, no no. The big thing was, and 198 00:11:54,840 --> 00:11:57,360 Speaker 1: this is like the biggest message that I think that 199 00:11:57,400 --> 00:11:59,640 Speaker 1: I would get across that I'm trying to convey in 200 00:11:59,640 --> 00:12:04,880 Speaker 1: printce of and so on, UM, is that so many 201 00:12:05,000 --> 00:12:09,960 Speaker 1: people in there have opinions in their heads that might 202 00:12:10,000 --> 00:12:14,400 Speaker 1: be wrong, and they're too attached to them. And if 203 00:12:14,559 --> 00:12:19,160 Speaker 1: you know how to um operate with a certain amount 204 00:12:19,200 --> 00:12:22,560 Speaker 1: of uncertainty and stress test your opinions in a different way, 205 00:12:23,120 --> 00:12:25,920 Speaker 1: you get away from your ego, get away from all that, 206 00:12:27,080 --> 00:12:30,719 Speaker 1: you can learn a lot about raising your probablies and 207 00:12:30,800 --> 00:12:33,480 Speaker 1: being right. So what it made me want to do 208 00:12:33,520 --> 00:12:36,559 Speaker 1: is find the smartest people I could find who disagreed 209 00:12:36,600 --> 00:12:40,520 Speaker 1: with me, and then I could have conversations with them. 210 00:12:40,600 --> 00:12:43,720 Speaker 1: Um and only after I found the smartest people that 211 00:12:43,880 --> 00:12:46,600 Speaker 1: I could find who disagreed with me, would I be 212 00:12:46,720 --> 00:12:50,120 Speaker 1: able to make a decision. In addition to know how 213 00:12:50,160 --> 00:12:54,120 Speaker 1: to improve my return to risk ratio by being able 214 00:12:54,160 --> 00:12:58,080 Speaker 1: to diversify well to create. And so I wanted all 215 00:12:58,120 --> 00:13:01,679 Speaker 1: the upside, but I wanted be able to control the downside. 216 00:13:01,800 --> 00:13:04,840 Speaker 1: And so I would say a number of lessons that 217 00:13:04,880 --> 00:13:07,240 Speaker 1: I'd like to, you know, sort of pass along. First 218 00:13:07,240 --> 00:13:09,680 Speaker 1: of all, the value of mistakes, the value of painful 219 00:13:09,720 --> 00:13:13,280 Speaker 1: mistakes and learning and reflecting on them has been a big, 220 00:13:13,320 --> 00:13:16,839 Speaker 1: big thing. Finding the smartest people who could work with you. 221 00:13:17,559 --> 00:13:21,360 Speaker 1: That's what created an idea meritocracy at Bridgewater. And it's 222 00:13:21,440 --> 00:13:24,920 Speaker 1: that back and forth in terms of the thoughtful disagreement 223 00:13:25,480 --> 00:13:28,440 Speaker 1: and then also raising your probabilities of being right in 224 00:13:28,440 --> 00:13:31,520 Speaker 1: those ways. So that's humility, that fear of being wrong, 225 00:13:31,920 --> 00:13:34,760 Speaker 1: combined with still the audacity to go for the great 226 00:13:34,800 --> 00:13:37,400 Speaker 1: results and how to do that well is really the 227 00:13:37,440 --> 00:13:39,480 Speaker 1: most important thing I learned. But you now use a 228 00:13:39,520 --> 00:13:43,360 Speaker 1: lot of computer related algorithms to help you navigate the market. 229 00:13:43,920 --> 00:13:46,439 Speaker 1: You know, algorithms, or what we call them today, equations 230 00:13:46,480 --> 00:13:48,720 Speaker 1: is what we used to call and so you would 231 00:13:48,720 --> 00:13:52,040 Speaker 1: write that down. And what I learned is by being 232 00:13:52,120 --> 00:13:55,040 Speaker 1: clear that I could tell how that decision would have 233 00:13:55,040 --> 00:13:57,959 Speaker 1: worked in the past in all different environments. So it 234 00:13:58,000 --> 00:14:00,559 Speaker 1: gave me a lot of perspective on making that decision. 235 00:14:00,840 --> 00:14:03,040 Speaker 1: I could test it through the Great Depression and so on, 236 00:14:03,440 --> 00:14:07,839 Speaker 1: and then I could find that I used that same algorithm, 237 00:14:07,880 --> 00:14:11,480 Speaker 1: I could take data from and have the computer make 238 00:14:11,559 --> 00:14:14,800 Speaker 1: decisions in parallel with me, and so, and that does 239 00:14:14,840 --> 00:14:17,120 Speaker 1: what I recommend for everybody. I recommend they write down 240 00:14:17,120 --> 00:14:20,720 Speaker 1: their principles and then realize that almost any of those 241 00:14:20,760 --> 00:14:25,040 Speaker 1: principles can then be converted into algorithms. And so the 242 00:14:25,080 --> 00:14:29,080 Speaker 1: computer was making decisions in parallel with me making decisions. 243 00:14:29,280 --> 00:14:33,040 Speaker 1: That type of partnership between me and the computer and 244 00:14:33,040 --> 00:14:36,680 Speaker 1: not also expressing the algorithms was invaluable not only in 245 00:14:36,680 --> 00:14:39,320 Speaker 1: the quality of the decision making, but also the quality 246 00:14:39,360 --> 00:14:41,680 Speaker 1: of the relationships that I had with people I worked with. 247 00:14:42,160 --> 00:14:44,720 Speaker 1: Bridgewater would not be said to be an easy place 248 00:14:44,760 --> 00:14:47,640 Speaker 1: to work, or is that fair or not? Because that's 249 00:14:47,680 --> 00:14:51,160 Speaker 1: fair because many people common this is a very intense environment, 250 00:14:51,160 --> 00:14:53,360 Speaker 1: and some of them don't survive. Those that do, presumably 251 00:14:53,360 --> 00:14:57,000 Speaker 1: are are adopting your principles. But are you love it 252 00:14:57,080 --> 00:15:01,560 Speaker 1: or hated? Um, you have a big attrition rate from 253 00:15:01,680 --> 00:15:03,640 Speaker 1: young people coming in or I would say in the 254 00:15:03,680 --> 00:15:08,320 Speaker 1: first eighteen months probably about we have protocols and you 255 00:15:08,400 --> 00:15:12,480 Speaker 1: have to understand your weaknesses as well as your strengths. 256 00:15:12,840 --> 00:15:16,560 Speaker 1: And so people coming to that are almost of two types. 257 00:15:16,960 --> 00:15:19,760 Speaker 1: There are the people who say, um, well they I 258 00:15:19,800 --> 00:15:23,480 Speaker 1: suppose almost all come that. I'm excited about that. And 259 00:15:23,480 --> 00:15:26,400 Speaker 1: they're excited about that because they said, yes, I would 260 00:15:26,480 --> 00:15:29,080 Speaker 1: like to know my weaknesses as well as my strengths, 261 00:15:29,480 --> 00:15:31,800 Speaker 1: and I would like to be able to talk about 262 00:15:31,840 --> 00:15:36,680 Speaker 1: anything and have it thrashed out. And uh, that's who 263 00:15:36,720 --> 00:15:40,320 Speaker 1: it works for. But it takes getting used to because 264 00:15:40,520 --> 00:15:45,640 Speaker 1: when you're really talking about the strengths, weaknesses and differences 265 00:15:45,680 --> 00:15:49,640 Speaker 1: and ideas. Our brains have been programmed in a certain way, 266 00:15:49,920 --> 00:15:54,080 Speaker 1: partially because of genetics and partially because of our environments, 267 00:15:54,120 --> 00:15:59,800 Speaker 1: in which disagreement is thought of as producing a fighting 268 00:16:00,040 --> 00:16:03,760 Speaker 1: up a reaction or weaknesses are something that becomes a 269 00:16:03,840 --> 00:16:06,360 Speaker 1: challenge for people to look at. So that's the essence 270 00:16:06,360 --> 00:16:09,480 Speaker 1: of what I suppose. I'm a young college graduate and 271 00:16:09,520 --> 00:16:12,480 Speaker 1: I want to go to Bridgewater and make money and learn. 272 00:16:13,200 --> 00:16:15,600 Speaker 1: What would be the qualities that you would look for 273 00:16:15,680 --> 00:16:18,520 Speaker 1: in me to make it likely that I would succeed? 274 00:16:18,720 --> 00:16:20,440 Speaker 1: Do you want somebody as a first in his class 275 00:16:20,520 --> 00:16:23,120 Speaker 1: or her class? You want somebody that's a student, body, president, 276 00:16:23,160 --> 00:16:25,920 Speaker 1: an athlete? What is it that you look for When 277 00:16:25,960 --> 00:16:28,320 Speaker 1: I look at people, I look at them in uh 278 00:16:28,560 --> 00:16:35,280 Speaker 1: three dimensions of a person, values, abilities, and skills um. 279 00:16:35,520 --> 00:16:39,360 Speaker 1: Most companies higher for skills UM. I believe it should 280 00:16:39,360 --> 00:16:42,080 Speaker 1: be the other way around. I look at their values. 281 00:16:43,400 --> 00:16:46,520 Speaker 1: Values means like, what are the motivations? What are the missions? 282 00:16:46,720 --> 00:16:50,280 Speaker 1: So and it skills is least important. Then you look 283 00:16:50,280 --> 00:16:53,200 Speaker 1: at abilities and abilities is the way of thinking? Is 284 00:16:53,200 --> 00:16:55,880 Speaker 1: somebody a big picture thinker or somebody creative? And I 285 00:16:55,920 --> 00:16:58,160 Speaker 1: want to put together a mix of those right people? 286 00:16:58,600 --> 00:17:03,160 Speaker 1: And then skills? Can you program? Do you know those things? 287 00:17:03,520 --> 00:17:06,960 Speaker 1: That's important, but it's least important. So what I look 288 00:17:07,040 --> 00:17:13,240 Speaker 1: for is really character characters number one um uh and 289 00:17:13,520 --> 00:17:16,560 Speaker 1: UM to be on a mission and then it applies 290 00:17:16,600 --> 00:17:19,399 Speaker 1: to the particular job they have. So when I'm referring 291 00:17:19,440 --> 00:17:21,960 Speaker 1: to values, I'm referring to is this a person of 292 00:17:22,000 --> 00:17:25,800 Speaker 1: good character? Number? One? Now, over your let's say thirty 293 00:17:25,880 --> 00:17:28,600 Speaker 1: years as an investor at Bridgewater, what is your track? 294 00:17:28,640 --> 00:17:32,000 Speaker 1: Every year you've made money virtually for your investors? Well 295 00:17:32,040 --> 00:17:35,399 Speaker 1: at eighteen and the late last eighteen years? Eighteen have 296 00:17:35,440 --> 00:17:39,880 Speaker 1: the last eighteen Yes, that's not too bad. Um about uh, 297 00:17:40,119 --> 00:17:44,320 Speaker 1: is it too late to invest with you? Or who 298 00:17:44,320 --> 00:17:46,720 Speaker 1: can invest with you? Anybody? And any credit investor you're 299 00:17:46,720 --> 00:17:50,720 Speaker 1: not taking are are? We're closed to new investments in 300 00:17:50,920 --> 00:17:53,840 Speaker 1: that pure alpha strategy? And our clients are all institute 301 00:17:53,920 --> 00:17:56,919 Speaker 1: large institutions. And you have two basic strategies that you 302 00:17:57,960 --> 00:18:00,800 Speaker 1: provide investors. That's right, and I think that will be 303 00:18:00,800 --> 00:18:04,200 Speaker 1: helpful for people to understand the nature of that. There 304 00:18:04,280 --> 00:18:07,480 Speaker 1: is a strategic asset allocation. Next, what is your best 305 00:18:07,520 --> 00:18:11,159 Speaker 1: diverse by portfolio? If you had no idea what was 306 00:18:11,160 --> 00:18:15,000 Speaker 1: going to happen, what would you hold. That's what we 307 00:18:15,119 --> 00:18:20,600 Speaker 1: call our all weather strategy strategy. It's a portfolio of assets. Um. 308 00:18:20,680 --> 00:18:23,320 Speaker 1: And then we have what we call our pure alpha strategy. 309 00:18:23,600 --> 00:18:30,080 Speaker 1: Because there's a separation between alpha and beta. So most 310 00:18:30,119 --> 00:18:34,800 Speaker 1: investors make the mistake of separating those two and think 311 00:18:34,880 --> 00:18:36,639 Speaker 1: that they're going to make money in the market, and 312 00:18:36,840 --> 00:18:39,840 Speaker 1: in the zero sum game, they're probably going to lose 313 00:18:39,880 --> 00:18:44,080 Speaker 1: money from making those bets. So there's the strategic asset 314 00:18:44,119 --> 00:18:47,800 Speaker 1: allocation mix, which is the all weather beta piece, and 315 00:18:47,840 --> 00:18:50,560 Speaker 1: then there's the alpha. In other words, Okay, now I 316 00:18:50,560 --> 00:18:52,920 Speaker 1: think it's a good time to move this way that way, 317 00:18:52,920 --> 00:18:56,040 Speaker 1: and that's the alpha stress. Um, it's too too late 318 00:18:56,080 --> 00:18:58,080 Speaker 1: for friends and family to get into your fund right, 319 00:18:58,960 --> 00:19:02,600 Speaker 1: there's no opening, not gonna open any anytime soon. Okay. 320 00:19:03,119 --> 00:19:06,639 Speaker 1: So important part of your life has been transcendental meditation. 321 00:19:07,280 --> 00:19:09,760 Speaker 1: You do this twice a day. When did you start 322 00:19:09,920 --> 00:19:12,600 Speaker 1: and why is it so important to you? Um? I 323 00:19:12,760 --> 00:19:18,640 Speaker 1: started in nineteen sixty nine or so. I've started because 324 00:19:18,680 --> 00:19:22,160 Speaker 1: the Beatles, uh did it and then and I learned 325 00:19:22,200 --> 00:19:25,640 Speaker 1: about it and I thought it was but I it's Uh, 326 00:19:25,720 --> 00:19:29,920 Speaker 1: it's a it's a very important thing. I would say. Um, 327 00:19:31,920 --> 00:19:34,360 Speaker 1: it's the greatest gift that I think I can give anyone. 328 00:19:35,000 --> 00:19:40,399 Speaker 1: It gives a combination of an equanimity, uh, the you know, 329 00:19:40,440 --> 00:19:43,240 Speaker 1: a calmness, so no matter what's coming at you. You 330 00:19:43,280 --> 00:19:46,520 Speaker 1: can approach it with that sort of calmness. It gives 331 00:19:46,600 --> 00:19:49,720 Speaker 1: one a creativity because it is a process of going 332 00:19:50,080 --> 00:19:53,359 Speaker 1: transcending is a process of going into your subconscious mind 333 00:19:53,760 --> 00:19:58,359 Speaker 1: and relaxing. So it's UM, it's been very helpful. So 334 00:19:58,400 --> 00:20:00,280 Speaker 1: now you are one of the wealthiest up in the 335 00:20:00,359 --> 00:20:02,800 Speaker 1: United States, one of the most successful investors. So you 336 00:20:02,920 --> 00:20:04,840 Speaker 1: now have a fair amount of wealth to give away, 337 00:20:04,840 --> 00:20:06,919 Speaker 1: and you were one of the original signers of the 338 00:20:06,960 --> 00:20:10,280 Speaker 1: Giving Pledge. What are the philanthropic interests that are most 339 00:20:10,320 --> 00:20:14,440 Speaker 1: appealing to you. My interests are I guess I would 340 00:20:14,440 --> 00:20:18,640 Speaker 1: say two big interests. I'm really thrilled about ocean exploration. 341 00:20:18,760 --> 00:20:21,000 Speaker 1: This is something that's a big deal for me. But 342 00:20:21,119 --> 00:20:24,880 Speaker 1: we we have donate to many different things. UM. And 343 00:20:24,920 --> 00:20:28,720 Speaker 1: then important things for my wife and for me has 344 00:20:28,760 --> 00:20:33,040 Speaker 1: to do with the education of what are called disengaged 345 00:20:33,040 --> 00:20:37,840 Speaker 1: and disconnected UH students, those who would not get through 346 00:20:37,960 --> 00:20:40,520 Speaker 1: high school. So when you have the kind of platform, 347 00:20:40,560 --> 00:20:43,880 Speaker 1: you now have a virtue of your success as an investor. UM. 348 00:20:43,920 --> 00:20:45,720 Speaker 1: Do you find it easier to meet with heads of 349 00:20:45,760 --> 00:20:49,840 Speaker 1: state finance ministers, heads of countries and do you find 350 00:20:49,840 --> 00:20:52,040 Speaker 1: that to be appealing to do that? And give them 351 00:20:52,080 --> 00:20:56,240 Speaker 1: your views on these subjects. We find it mutually appealing. Yes, 352 00:20:56,320 --> 00:21:02,280 Speaker 1: I um, uh I that you know, from my point 353 00:21:02,280 --> 00:21:04,280 Speaker 1: of view, I'm very interested in the subject matter. But 354 00:21:04,320 --> 00:21:08,440 Speaker 1: I'm also interested in being able to UM have an impact, 355 00:21:08,560 --> 00:21:13,560 Speaker 1: being able to help and so sometimes in policies, UM 356 00:21:13,600 --> 00:21:17,680 Speaker 1: it's had a big, big effect. And like EACB policy 357 00:21:17,760 --> 00:21:20,560 Speaker 1: or other policies. So if a if somebody came to 358 00:21:20,600 --> 00:21:22,119 Speaker 1: you and said I'd like you to be the chairman 359 00:21:22,119 --> 00:21:24,080 Speaker 1: of the Fed or the secretary of the treasury, would 360 00:21:24,080 --> 00:21:26,000 Speaker 1: you ever go into government? Or that's not for you, 361 00:21:26,200 --> 00:21:28,439 Speaker 1: that's not for me. Today, the greatest pleasure of your 362 00:21:28,480 --> 00:21:32,119 Speaker 1: life is your family or financial success giving away money? 363 00:21:32,160 --> 00:21:35,760 Speaker 1: What do you most enjoy? No, the financial success has 364 00:21:35,800 --> 00:21:40,000 Speaker 1: never been It's an inadvertent thing that came largely because 365 00:21:40,040 --> 00:21:41,840 Speaker 1: I like to play a game that if you played 366 00:21:41,840 --> 00:21:45,120 Speaker 1: the game, well, you get the money. But the financial 367 00:21:45,160 --> 00:21:48,840 Speaker 1: success has never been uh. Pass taking care of my 368 00:21:48,920 --> 00:21:52,040 Speaker 1: family and living adequately. Uh, it's been a nice thing 369 00:21:52,080 --> 00:21:56,000 Speaker 1: to have it. No, UM, for me, the most important 370 00:21:56,000 --> 00:22:00,359 Speaker 1: thing in terms of saving really has been relationships. UM. 371 00:22:00,400 --> 00:22:04,680 Speaker 1: Meaningful work and meaningful relationships. These are the most important thing. Well, 372 00:22:04,720 --> 00:22:07,240 Speaker 1: I on a mission, to have a passion to work 373 00:22:07,240 --> 00:22:10,040 Speaker 1: with people that I liked to understand the subject. Well. 374 00:22:10,320 --> 00:22:13,800 Speaker 1: I love my game because it forces me to understand 375 00:22:13,880 --> 00:22:16,840 Speaker 1: macro economics the world and to bet on it in 376 00:22:16,960 --> 00:22:19,840 Speaker 1: relationship to other people. So it tests whether I have 377 00:22:19,920 --> 00:22:23,440 Speaker 1: that knowledge. I love that, and I'm glad that we've 378 00:22:23,480 --> 00:22:26,600 Speaker 1: taken it to a certain point. And then there's the 379 00:22:26,680 --> 00:22:29,320 Speaker 1: things that I've savor even more than that above all 380 00:22:29,359 --> 00:22:33,639 Speaker 1: else with seventy years old, and is the relationships, the 381 00:22:33,800 --> 00:22:37,439 Speaker 1: quality of the relationships, that sense of community. That's what 382 00:22:37,560 --> 00:22:41,040 Speaker 1: I treasure more than anything. Thank you very much for 383 00:22:41,080 --> 00:22:43,520 Speaker 1: an interesting conversation and it's a terrific read and I 384 00:22:43,560 --> 00:22:46,280 Speaker 1: highly recommend it. Thanks for writing it, Thank you for 385 00:22:46,359 --> 00:22:53,080 Speaker 1: having me. That was Bridgewater Associates co Chairman and co 386 00:22:53,240 --> 00:22:55,120 Speaker 1: chief investment Officer Ray Dalio.