In 1975, Ray Dalio founded Bridgewater Associates in his New York apartment. Now, it's the world's largest hedge fund, managing $150 billion. He reportedly took home nearly $4 billion in a single year.
Dalio also has a philosophical take on the world. Last fall, he released a video on YouTube, explaining how he thinks the economy works. He said of the video, "It's in 30 minutes a description of how I believe the economic machine works, in other words I believe the economy works like a machine. I believe most things work like a machine. I'm a market participant. I'm a global macro economic investor. And so it's from -- I think, a very practical perspective."
Dalio explains in the video, "When you buy a beer from a bartender with cash, the transaction is settled immediately but when you buy a beer with credit, it's like starting a bar tab."
In a recent interview, "CBS This Morning" co-host Charlie Rose said to Dalio, "Some would say the following. 'If I had made billions of dollars, because I had a unique understanding of the way the economy works, I'm going to keep it to myself'."
Dalio replied, "Well, that's why I say when I'm 64 years old. I'm going to -- you know, in the stage of my life where I think this is valuable. I think that people take 30 minutes, watch it, and understand it."
Dalio has been studying the macro-economy for more than 40 years.
Asked about what his take is on income inequality, Dalio said, "It's mostly a function of technology in a global workplace. In other words, technology is having an effect on that productivity that means that you don't need people the same way that you did before. And it's a big -- it'll be a big issue. And it'll be a big -- a much bigger issue going forward."
The firm runs on Dalio's distinct set of principles, which encourage radical transparency, and to challenge one's own beliefs.
"What we do is we step back and we get to basically the fundamentals of how people think differently," Dalio said. "What people are good or bad at. What they're like. We get at what they're like. And then what to do about that. It's like going into an intellectual Navy SEALs. That's what the experience is like, and the key question is, can you get over ego barrier -- it's painful, there's a mental pain like a physical pain in the Navy SEALs, can you get over the ego barrier. Can you just find out what's true?"
Rose said, "OK, but I mean, you said you have to leave your ego outside, yet, is there not within you, a huge ego?"
"No," Dalio said.
Rose said, "Wait, let me hear this, ego because you want to be the biggest and best hedge fund. You want to say, 'I have defined the economic machine, which is the way the economies of the world work. 'I'm laying it out for you. This is the way it works. Not that.' Why isn't that ego?"
Dalio said, "I think it could be motivated -- people could think of it as motivated by ego."
Asked if it's altruism, Dalio said, "It is, so I've -- only you could decide, OK? Somebody in my position could say, 'OK, no.' But I'm saying that I'm 64 years old. I don't want to have fears, fears of things -- of being open. Fears of -- in other words, I'm not going let a fear stand in the way of something that I believe is valuable."
Asked what he wants after
all the success he's had, Dalio said he just wants to evolve. "Everything
is just personal evolution," he said. "And what happens is I think
the natural order of things is that you have these different challenges. And then, and then you accomplish those
challenges and then evolve. And so I've
had a wonderful family, wonderful friends. And I've evolved a lot. And I've been places. And I've learned a lot. And I still have a voracious appetite."
Visit EconomicPrinciples.org for more information, and to view the video produced by Dalio.