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Hedge Fund Is Building an Algorithmic Model From Its Employees’ Brains

252 points by newscasta 10y ago

zitterbewegung 10y ago
I have heard that Amazon tried to do this with hiring with really bad results.
- alexc05 10y ago
  Can you expand on this at all? An article anywhere with a detailed write up? It sounds fascinating.
ajamesm 10y ago
FYI, I was able to dodge the paywall and read the article by copying the URL into Google to get their referral, then clicking the top link.
- Vindicis 10y ago
  Ah, it wasn't working for me until I turned off uBlock, for whatever reason, incase someone also has this issue.
- FT_intern 10y ago
  not sure why the regular search links aren't working anymore when you click web. The link in "Top stories" section worked
  - puddintane 10y ago
    Seems to be related to the title - if I take the article title from the actual page, google's first result works. However if I take the title from here it goes to the paywall. I wonder if Google has recently adjusted the algorithm for this? Makes me wonder if they actually like paywalls, as I've always thought Google was against them.
- LeoPanthera 10y ago
  Click the "Web" link under the title to skip the paywall.
arcanus 10y ago
How could any quant models not be based on the brains of their inventors?
- sailfast 10y ago
  From the article, it doesn't appear this has anything to do with quant models - they're looking to optimize how their employees conduct the work and how they are managed as personnel. This does not seem to target their trading strategies at all.
deleted 10y ago
[deleted]
Malic 10y ago
Sounds like a horrible place to work! If things go as planned, "Horrible Place to Work(tm)" will have in install package for it.
- julienchastang 10y ago
  Yeah, really. "The pressure is such that those who stay sometimes are seen crying in the bathrooms, said five current and former staff members." What's the upshot? Seven figure salaries or something?
  - lintiness 10y ago
    there are people crying in the bathrooms at every big firm on the planet.
    - bbcbasic 10y ago
      Solution is to move the bathrooms into the open plan. No more slacking or being aa wimp in private. Or even better give everyone nappies so they can clean themselves on their own dime. Once they get home.
    - ashnyc 10y ago
      yes very true. And everyone is taking pills just to keep up with the pressure . I much rather have an AI take over these tasks then taking more pills
jkestelyn 10y ago
The 1980s called, they want their expert systems back.
- arisAlexis 10y ago
  exactly what I thought, this is a new gen expert system
Vindicis 10y ago
It reminds of "managing the numbers". Not to say Dalio himself doesn't know what he's doing. But translating that to software, yeah...good luck. It's challenging enough to translate simple trading systems into machine code, and have it reproduce human results. At least that's my experience. To distill your knowledge and wisdom down to a set of algorithms, the complex interactions, discretion on when to use and ignore certain ones, being able to learn from results by adding in new "rules" and discarding old ones that no longer work such that you've identified the correct parameters/situations applicable? Best of luck with that one. Not a place I'd ever want to work.
- devoply 10y ago
  Not to mention the fact that there is incentive for the people you are trying to use to try to mess you up. There are so many little mistakes you could make that would result in significant errors when added up that it would make the end result worthless. And it's in their interest to do that... the employees.
  - SonicSoul 10y ago
    not necessarily. some (maybe most?) black box quants own their algorithm even if they leave the Hedge Fund. And of course they make profits while the algos are used. So the architects of the system are incentivized for it to work well.
    - whatok 10y ago
      > some (maybe most?) black box quants own their algorithm even if they leave the Hedge Fund. I've never observed this be the case at all.
      - SonicSoul 10y ago
        this was the case at 2 funds I've worked at. So I assumed it was the norm
      - slowrabbit 10y ago
blazespin 10y ago
Bridgewater manages $160 billion, the most of any hedge-fund firm. It has earned clients twice as much total profit as any rival, says LCH Investments NV, a firm that puts client money into hedge funds. Mr. Dalio personally earned $1.4 billion last year, according to research firm Institutional Investor’s Alpha.
eternalban 10y ago
How are they gonna get the model to snort Coke?
- sharemywin 10y ago
  tell her it will make her thinner. It's on page 57 of the manual.
  - koltaggar 10y ago
    These are by far the best two comments
    - the_duke 10y ago
      Yep. I disagree with the downvotes.
chollida1 10y ago
I think this.... > Mr. Dalio returned to run Bridgewater earlier this year after stepping back to a mentor role six years ago. Is what's driving almost all of his new found desire for a unified AI to run everything. Here you have a man who by any measure has been wildly successful, he tried stepping back and letting other take over but ended up finding that the team he left in charge didn't make the exact decisions he would have. If the story ended there it wouldn't be in any way surprising, who hasn't left a team and second guessed the decisions that the new leaders have made. It turns out that when you are worth 15 Billion one of the things you can do is hire a shit load of AI experts, like one of the heads of IBM's Watson team, to build an AI to make decisions based on WWRDD, "What would Ray Dalio Do"? Since his first retirement failed, this is his new take on how to have his second retirement go smoother. Just build an AI that bases all decisions on the Bridge water principles that he wrote down years ago. see: https://www.principles.com/ https://www.principles.com/ As an aside, he recently let Tony Robbins publish his ideal portfolio, the all weather portfolio. It's actually a pretty strong portfolio for the average person. http://awealthofcommonsense.com/2014/11/back-testing-tony-robbins-weather-portfolio/ http://awealthofcommonsense.com/2014/11/back-testing-tony-ro... http://www.moneysense.ca/invest/raining-on-the-all-seasons-portfolio/ http://www.moneysense.ca/invest/raining-on-the-all-seasons-p...
- JabavuAdams 10y ago
  Wish I'd had a WWJCD (What Would Jim Comey Do?) AI before the election. That bloody letter cost me a lot of money. Actually, it's my own fault, really -- anytime I have a bright idea for a discretionary trade, empirically I lose money. EDIT> What makes this not a total non-sequiter is that James Comey worked at Bridgewater before become the FBI director.
- dsacco 10y ago
  Ray Dalio is a fascinating person. He purchased a one-word .com to share his personal and management principles, and now he is attempting to train a learning system to automate and preserve his decision-making. There's a movie script somewhere in here. Exaggerate the narcissism, advance the science 50-100 years and we've got an eccentric billionaire that causes an artificial intelligence uprising. Like something between Transcendence and Westworld. A few other thoughts from reading the article: • Dalio seems like a classic case of someone pursuing immortality in whatever way he can. His coming out of retirement, his efforts to leave a legacy of "radical transparency" and to make his company an "altar of openness", etc. He is also 67 years old. He may feel as though he is "running out of time", and I've seen an uptick in media mentions surrounding him and Bridgewater. There's quite a few religious themes here. • Bridgewater might be an excellent case study in radical changes that result in success, but it also might not. In particular, there are two challenges. First is the culture of Wall St, which lends itself more to a "show me the results" manifesto and can probably tolerate a culture of open criticism more than most other companies. The other is that Bridgewater is a single datapoint. We know almost nothing about the inner workings of e.g. RenTech, but they are just as impressive (albeit with lower AUM) and have a more "academic" culture. Does the culture matter that much, or is the success a result of a confluence of other factors? Someone who appears to pride himself on his contrarian decision making like Dalio might see his culture as the defining differentiator responsible for his success. • I find it much more likely that Bridgewater's culture of open criticism (and elements of quantified self?) is like Zappos Holacracy and Valve's "no managers" manifestos, rather than a new set of principles to be brought down from on high. Each of these companies prides itself, and to some extent claims is the reason for its success, on a culture that was deliberately implemented instead of organically grown. After you see enough of these I feel you start to become "culture agnostic", and from my point of view I don't feel any of them has a causal relationship with profitability or productivity. • A nitpick here - it seems hypocritical to reduce a culture of "radical transparency." If you decide to change the status quo from radical transparency for 100% of the staff to radical transparency for 10% of the staff, then what is so radical about it? Equally, what does it mean to only dole out radical transparency to those "responsible enough" to receive it? That sounds like...transparency.
sailfast 10y ago
"Hit a nerve - a prized attribute." It would be interesting to see how quickly the company as a whole (and the system, if possible) responds to the results of incentives. Does the culture quickly regress to fooling the algorithm or does a cat and mouse game result? Either way not something I'd want to use to drive culture, but an interesting take on how to "institutionalize" a culture and cultural norms even long after one has left the business.
- cheez 10y ago
  They already have a system that people game all the time. It doesn't work.
sharemywin 10y ago
That has got to be the worst case of group think ever. What happens if you challenge one of the "principles"?
- Declanomous 10y ago
  Sounds like you lose upside down Christmas trees at the company party, get demoted from co-CEO, get fired, or get chewed out so hard you cry in the bathroom. Honestly, I just read a few other articles about Bridgewater Associates, and even though it seems cult-like, I think the principles probably help prevent group-think. For instance, the second most important goal is no talking about people behind their back. If any of the companies I worked at had this rule, I'd think they were trying to make people toe the company line. However, this rule actually supports the first rule, encouraging transparency, really well. For instance, have you ever been in a situation where you are doing something wrong, only to find out later that people noticed but nobody told you? The consequences aren't that bad if your tie is on backward, but I've made expensive mistakes because nobody spoke up, and I've been in organizations where there was such a negative stigma around "confrontation" that mistakes happened all the time and gossip was rampant. Studies have shown that groups that are told they much come to a consensus make worse decisions than groups that are encouraged to disagree. The difference can be pretty marginal, but a marginal difference in return can result in huge gains or huge losses when you are dealing with markets. It definitely reflects poorly on a company when stories come out about employees crying in the bathroom. One can only imagine the psychological horrors that must go on at such a company! However, in my experience, there is a certain kind of person whose entire self-worth is based on their success. They are typically very high achieving, but failure is an anathema to them. They try to avoid failure at all costs. They end up under incredible strain, because failure is inevitable. I've known a lot of people like this. There was one person I knew who was so stressed when she didn't know a question on an exam that she ended up vomiting all over the test. Another time, I caused a woman to cry in Model U.N. by vetoing her Security Council resolution as the Russian Federation. If you know anything about Russia and the Security Council, a veto is not exactly an uncommon measure from them. However, it meant we ended 5 days of debate on an issue without passing a resolution. She took the veto as hard as if I had vetoed a judgement of her character. She was a grad student at a prestigious school, so I'd say she had to have been in her mid-20s, which is definitely old enough to be working at a high-powered investment firm. I personally think I'd like that environment. I do really well when I have a lot of autonomy, and I don't need much supervision to work. I hate it when people don't criticize my work. It just makes me paranoid; I know I'm not perfect, and I know there are flaws. I learn from every critique and failure. I know a lot of people that would have a mental breakdown in that environment though. It's hard to tell who those people are ahead of time though, because they are such high-achieving individuals, and their anxiety about failure is basically invisible. So, to answer your question more seriously, I think their continued success is evidence that they must comfortable challenging their beliefs. However, I do think a holy book full of principles seems a little cult-like, especially in light of the fact that they are building an AI clone of their CEO.
Hydraulix989 10y ago
You can't possibly get enough training data for this.
- adventurer 10y ago
  I don't think it is fair to say it is not possible. There is an AI system out there that has correctly predicted the superfecta for the Kentucky Derby based soley on user predictions. http://www.newsweek.com/artificial-intelligence-turns-20-11000-kentucky-derby-bet-457783 http://www.newsweek.com/artificial-intelligence-turns-20-110...
  - burkaman 10y ago
    UNU is not AI, it's polling. Bridgewater would like to develop an AI that minimizes human input, not just a better method of combining different human opinions.
  - bbcbasic 10y ago
    I work for a company that bets on the horses, and yet they use broadly similar techniques. But this doesn't replace humans at all. Also as an aside, correctly predicting a superfecta happens quite a lot, and it is hard to tell from sample size of 1 if this was luck, skill or a combination of both. Probably a combination of both - their algo may have reduced the odds to 200-1 for example, and luck did the rest.
  - Hydraulix989 10y ago
    They said that about Nate Silver, too, then Trump got elected.
- the_duke 10y ago
  Not until you can (video)tape all meetings and interactions, analyse body language and spoken content.
JabavuAdams 10y ago
Horrible, but I can sympathize. Living alone now after 22 years of co-habiting. Tempted to encase myself in cameras and sensors and train a model of ... me. What would Jaba do? If it's a dumb thing, then help him not do it...
cmurf 10y ago
I'm gonna guess these employees have a work for hire contract of some sort, so that their ideas or potentially copyrightable or patentable methods, belong to their employer.
- hendzen 10y ago
  So does every large technology company including Google, Apple, Twitter, Facebook, Netflix, etc.
  - vitus 10y ago
    As do a number of major universities (CMU, Harvard, MIT, Stanford, and plenty more, I'm sure). If I had to guess, these contracts are generally a lot more prevalent in fields where people are regularly creating intellectual property.
- leroy_masochist 10y ago
  They have one of the most onerous non-competes of any asset manager, especially for people who touch any of their strategies.
bedhead 10y ago
I would assign a small chance to Bridgewater being a ponzi scheme. I am not the first person to be skeptical of the firm and there have constantly been rumors about them.
nradov 10y ago
Odd, I submitted the same story but it wasn't picked up as a duplicate. https://news.ycombinator.com/item?id=13238860 https://news.ycombinator.com/item?id=13238860
leroy_masochist 10y ago
Since reading it maybe 6 or 7 years ago, I've thought Principles is a great handbook for personal reflection and self-improvement, especially in that it continually guides all discussion back to the lodestar of thinking for oneself and asking "is this true?". However, I'd also say that Principles is a lousy "how to manage people" manual, because it tries to algorithmically describe how to deal with unpleasant interactions that require emotional intelligence, and harps really hard on the concept of "the truth will set you free and if you can't handle the truth you need to GTFO of our culture". Reading this article has reinforced that opinion. Two other random observations here: - These guys are a big Palantir client...I wonder if Palantir has any role in building this new system. They weren't mentioned in the article. - Isn't "Overseer" is a really, really fucking bad formal job title for anyone at any organization?
- zzrg 10y ago
  I assume "overseer" is a bit tongue in cheek.
- turc1656 10y ago
  > Isn't "Overseer" is a really, really fucking bad formal job title for anyone at any organization? Yeah. At my company we just include anyone who would fit that billing as a member of the Panopticonal Oversight Committee so that they can also keep their regular title.
bjornlouser 10y ago
"Though outsiders expected Mr. Ferrucci would use his talents to help find hidden signals in the financial markets, his job has focused more narrowly on analyzing the torrent of data the firm gathers about its employees. The data include ratings employees give each other throughout the work day, called 'dots'" This -- Isn't -- JEOPARDY!! This is shit.
brilliantcode 10y ago
I had a good chuckle reading this article: > At Bridgewater, most meetings are recorded, employees are expected to criticize one another continually, people are subject to frequent probes of their weaknesses, and personal performance is assessed on a host of data points, all under Mr. Dalio’s gaze. I think this is a testament to the disconnect between people in this space and technology. The idea that some mythical holy grail technology will produce alpha is as illusive as relying on automated trades. > Bridgewater says about one-fifth of new hires leave within the first year. The pressure is such that those who stay sometimes are seen crying in the bathrooms, said five current and former staff members. This article is based on interviews with them and more than a dozen other past and present Bridgewater employees and others close to the firm. And it confirms my suspicions. I stopped reading here because it's another PR piece for Bridgewater. I think we will see a small homage to Bridgewater in Mr. Taleb's upcoming books as an example of "techno-irrational exuberance" along with other hilarious empty suit moments described in the book Fooled By Randomness.
ry4n413 10y ago
https://www.bloomberg.com/news/articles/2016-09-11/bridgewater-said-to-get-22-5-billion-in-new-money-since-2015 https://www.bloomberg.com/news/articles/2016-09-11/bridgewat...
dkarapetyan 10y ago
Another megalomaniac looking for religion where it can not be found: radical transparency, humans and economies as machines, personality tests to determine stratums, daily ratings called "dots" (which incidentally is what Palantir calls their ratings as well). Then again maybe the article makes the place sound more like a cult than it actually is in reality.
ashnyc 10y ago
I am a big believer is what he is doing. I worked both in financial firm and now have my own small factory. There is so much wast in financial firms. in the early 1990s, people with MBA where getting 100k a year for just doing spreadsheets. On top of that, it is not a full days worth of work. the work was not rewarding and it was high stress. The paycheck was great, for sure. I am trying to do that same thing now with my small manufacturing shop. Ordering of raw materials, Manufacturing allocation, labor etc are all controlled by a software. These are all boring jobs that an AI will do a much better job at.
- saosebastiao 10y ago
  Why does it have to be an artificial intelligence? The field of Operations Research has basically perfected automated and optimized decision making in pretty much every heavy industry out there, and they've been doing it since before computers even existed by using mathematical modeling.
alexc05 10y ago
> Mr. Dalio has the highest stratum score at Bridgewater, and the firm has told employees he has one of the highest in the world. So this billionaire is designing a human-ranking system based on some criteria on which he scores number one in the world? In examining a system for bias I certainly hope they factor in the fact that the guy who paid billions for scientists to research factors under the "total human awesomeness scale" also somehow managed to find that the guy signing all the cheques was the same guy scoring a perfect 10 million every time. I wonder if the scientists working on quantifying human greatness for Kim Jong-Un are using the same scale? Couch it in whatever scientific BS you want, it sounds like we just read some sort of billionaire's ego-rotica.
- dasfaha 10y ago
  The strata in the article are based on the work of psychologist Elliot Jacques who as far as I can tell created this independently of Dalio and Bridgewater. Strata are related to a person's ability to handle complexity, and Jacques argued that this is related to the time horizon a person can handle. For example, the role of a shop floor employee selling widgets does not need to consider what happens more than 1-3 months in the future, however the store manager has to think about a year into the future, the owner of the chain has to consider what happens 2-3 years down the line and so on. He devised an interview protocol to determine at which level a person is capable of thinking at to be use to match employee's with roles for which they are suitable. Being in the highest stratum means having a time horizon of 20-30 of which Jacques believed only a handful of people are capable of in each generation.
  - pdog 10y ago
    Dr. Jaques divided people into eight strata based on their innate capabilities and limits. Most of us if we're honest with ourselves are on the level of Strata 1–4. (Even to presume we're Stratum 4 is being generous.) Strata 5–8 are the rarefied elites. They're typically CEOs of large companies and business leaders. Stratum 9 and higher—like Mr. Dalio—are the rare geniuses who are capable of thinking into the far future (100+ years) and working on problems of extraordinary complexity.
known 10y ago
There is no algorithm for trader's instincts;

252 points by newscasta 10y ago

zitterbewegung 10y ago

I have heard that Amazon tried to do this with hiring with really bad results.

alexc05 10y ago
Can you expand on this at all? An article anywhere with a detailed write up? It sounds fascinating.

ajamesm 10y ago

FYI, I was able to dodge the paywall and read the article by copying the URL into Google to get their referral, then clicking the top link.

Vindicis 10y ago
Ah, it wasn't working for me until I turned off uBlock, for whatever reason, incase someone also has this issue.
FT_intern 10y ago
not sure why the regular search links aren't working anymore when you click web. The link in "Top stories" section worked
- puddintane 10y ago
  Seems to be related to the title - if I take the article title from the actual page, google's first result works. However if I take the title from here it goes to the paywall. I wonder if Google has recently adjusted the algorithm for this? Makes me wonder if they actually like paywalls, as I've always thought Google was against them.
LeoPanthera 10y ago
Click the "Web" link under the title to skip the paywall.

arcanus 10y ago

How could any quant models not be based on the brains of their inventors?

sailfast 10y ago
From the article, it doesn't appear this has anything to do with quant models - they're looking to optimize how their employees conduct the work and how they are managed as personnel. This does not seem to target their trading strategies at all.

deleted 10y ago

[deleted]

Malic 10y ago

Sounds like a horrible place to work! If things go as planned, "Horrible Place to Work(tm)" will have in install package for it.

julienchastang 10y ago
Yeah, really. "The pressure is such that those who stay sometimes are seen crying in the bathrooms, said five current and former staff members." What's the upshot? Seven figure salaries or something?
- lintiness 10y ago
  there are people crying in the bathrooms at every big firm on the planet.
  - bbcbasic 10y ago
    Solution is to move the bathrooms into the open plan. No more slacking or being aa wimp in private. Or even better give everyone nappies so they can clean themselves on their own dime. Once they get home.
  - ashnyc 10y ago
    yes very true. And everyone is taking pills just to keep up with the pressure . I much rather have an AI take over these tasks then taking more pills

jkestelyn 10y ago

The 1980s called, they want their expert systems back.

arisAlexis 10y ago
exactly what I thought, this is a new gen expert system

Vindicis 10y ago

It reminds of "managing the numbers". Not to say Dalio himself doesn't know what he's doing. But translating that to software, yeah...good luck. It's challenging enough to translate simple trading systems into machine code, and have it reproduce human results. At least that's my experience. To distill your knowledge and wisdom down to a set of algorithms, the complex interactions, discretion on when to use and ignore certain ones, being able to learn from results by adding in new "rules" and discarding old ones that no longer work such that you've identified the correct parameters/situations applicable? Best of luck with that one. Not a place I'd ever want to work.

devoply 10y ago
Not to mention the fact that there is incentive for the people you are trying to use to try to mess you up. There are so many little mistakes you could make that would result in significant errors when added up that it would make the end result worthless. And it's in their interest to do that... the employees.
- SonicSoul 10y ago
  not necessarily. some (maybe most?) black box quants own their algorithm even if they leave the Hedge Fund. And of course they make profits while the algos are used. So the architects of the system are incentivized for it to work well.
  - whatok 10y ago
    > some (maybe most?) black box quants own their algorithm even if they leave the Hedge Fund. I've never observed this be the case at all.
    - SonicSoul 10y ago
      this was the case at 2 funds I've worked at. So I assumed it was the norm
    - slowrabbit 10y ago

blazespin 10y ago

Bridgewater manages $160 billion, the most of any hedge-fund firm. It has earned clients twice as much total profit as any rival, says LCH Investments NV, a firm that puts client money into hedge funds. Mr. Dalio personally earned $1.4 billion last year, according to research firm Institutional Investor’s Alpha.

eternalban 10y ago

How are they gonna get the model to snort Coke?

sharemywin 10y ago
tell her it will make her thinner. It's on page 57 of the manual.
- koltaggar 10y ago
  These are by far the best two comments
  - the_duke 10y ago
    Yep. I disagree with the downvotes.

chollida1 10y ago

I think this.... > Mr. Dalio returned to run Bridgewater earlier this year after stepping back to a mentor role six years ago. Is what's driving almost all of his new found desire for a unified AI to run everything. Here you have a man who by any measure has been wildly successful, he tried stepping back and letting other take over but ended up finding that the team he left in charge didn't make the exact decisions he would have. If the story ended there it wouldn't be in any way surprising, who hasn't left a team and second guessed the decisions that the new leaders have made. It turns out that when you are worth 15 Billion one of the things you can do is hire a shit load of AI experts, like one of the heads of IBM's Watson team, to build an AI to make decisions based on WWRDD, "What would Ray Dalio Do"? Since his first retirement failed, this is his new take on how to have his second retirement go smoother. Just build an AI that bases all decisions on the Bridge water principles that he wrote down years ago. see: https://www.principles.com/ https://www.principles.com/ As an aside, he recently let Tony Robbins publish his ideal portfolio, the all weather portfolio. It's actually a pretty strong portfolio for the average person. http://awealthofcommonsense.com/2014/11/back-testing-tony-robbins-weather-portfolio/ http://awealthofcommonsense.com/2014/11/back-testing-tony-ro... http://www.moneysense.ca/invest/raining-on-the-all-seasons-portfolio/ http://www.moneysense.ca/invest/raining-on-the-all-seasons-p...

JabavuAdams 10y ago
Wish I'd had a WWJCD (What Would Jim Comey Do?) AI before the election. That bloody letter cost me a lot of money. Actually, it's my own fault, really -- anytime I have a bright idea for a discretionary trade, empirically I lose money. EDIT> What makes this not a total non-sequiter is that James Comey worked at Bridgewater before become the FBI director.
dsacco 10y ago
Ray Dalio is a fascinating person. He purchased a one-word .com to share his personal and management principles, and now he is attempting to train a learning system to automate and preserve his decision-making. There's a movie script somewhere in here. Exaggerate the narcissism, advance the science 50-100 years and we've got an eccentric billionaire that causes an artificial intelligence uprising. Like something between Transcendence and Westworld. A few other thoughts from reading the article: • Dalio seems like a classic case of someone pursuing immortality in whatever way he can. His coming out of retirement, his efforts to leave a legacy of "radical transparency" and to make his company an "altar of openness", etc. He is also 67 years old. He may feel as though he is "running out of time", and I've seen an uptick in media mentions surrounding him and Bridgewater. There's quite a few religious themes here. • Bridgewater might be an excellent case study in radical changes that result in success, but it also might not. In particular, there are two challenges. First is the culture of Wall St, which lends itself more to a "show me the results" manifesto and can probably tolerate a culture of open criticism more than most other companies. The other is that Bridgewater is a single datapoint. We know almost nothing about the inner workings of e.g. RenTech, but they are just as impressive (albeit with lower AUM) and have a more "academic" culture. Does the culture matter that much, or is the success a result of a confluence of other factors? Someone who appears to pride himself on his contrarian decision making like Dalio might see his culture as the defining differentiator responsible for his success. • I find it much more likely that Bridgewater's culture of open criticism (and elements of quantified self?) is like Zappos Holacracy and Valve's "no managers" manifestos, rather than a new set of principles to be brought down from on high. Each of these companies prides itself, and to some extent claims is the reason for its success, on a culture that was deliberately implemented instead of organically grown. After you see enough of these I feel you start to become "culture agnostic", and from my point of view I don't feel any of them has a causal relationship with profitability or productivity. • A nitpick here - it seems hypocritical to reduce a culture of "radical transparency." If you decide to change the status quo from radical transparency for 100% of the staff to radical transparency for 10% of the staff, then what is so radical about it? Equally, what does it mean to only dole out radical transparency to those "responsible enough" to receive it? That sounds like...transparency.

sailfast 10y ago

"Hit a nerve - a prized attribute." It would be interesting to see how quickly the company as a whole (and the system, if possible) responds to the results of incentives. Does the culture quickly regress to fooling the algorithm or does a cat and mouse game result? Either way not something I'd want to use to drive culture, but an interesting take on how to "institutionalize" a culture and cultural norms even long after one has left the business.

cheez 10y ago
They already have a system that people game all the time. It doesn't work.

sharemywin 10y ago

That has got to be the worst case of group think ever. What happens if you challenge one of the "principles"?

Declanomous 10y ago
Sounds like you lose upside down Christmas trees at the company party, get demoted from co-CEO, get fired, or get chewed out so hard you cry in the bathroom. Honestly, I just read a few other articles about Bridgewater Associates, and even though it seems cult-like, I think the principles probably help prevent group-think. For instance, the second most important goal is no talking about people behind their back. If any of the companies I worked at had this rule, I'd think they were trying to make people toe the company line. However, this rule actually supports the first rule, encouraging transparency, really well. For instance, have you ever been in a situation where you are doing something wrong, only to find out later that people noticed but nobody told you? The consequences aren't that bad if your tie is on backward, but I've made expensive mistakes because nobody spoke up, and I've been in organizations where there was such a negative stigma around "confrontation" that mistakes happened all the time and gossip was rampant. Studies have shown that groups that are told they much come to a consensus make worse decisions than groups that are encouraged to disagree. The difference can be pretty marginal, but a marginal difference in return can result in huge gains or huge losses when you are dealing with markets. It definitely reflects poorly on a company when stories come out about employees crying in the bathroom. One can only imagine the psychological horrors that must go on at such a company! However, in my experience, there is a certain kind of person whose entire self-worth is based on their success. They are typically very high achieving, but failure is an anathema to them. They try to avoid failure at all costs. They end up under incredible strain, because failure is inevitable. I've known a lot of people like this. There was one person I knew who was so stressed when she didn't know a question on an exam that she ended up vomiting all over the test. Another time, I caused a woman to cry in Model U.N. by vetoing her Security Council resolution as the Russian Federation. If you know anything about Russia and the Security Council, a veto is not exactly an uncommon measure from them. However, it meant we ended 5 days of debate on an issue without passing a resolution. She took the veto as hard as if I had vetoed a judgement of her character. She was a grad student at a prestigious school, so I'd say she had to have been in her mid-20s, which is definitely old enough to be working at a high-powered investment firm. I personally think I'd like that environment. I do really well when I have a lot of autonomy, and I don't need much supervision to work. I hate it when people don't criticize my work. It just makes me paranoid; I know I'm not perfect, and I know there are flaws. I learn from every critique and failure. I know a lot of people that would have a mental breakdown in that environment though. It's hard to tell who those people are ahead of time though, because they are such high-achieving individuals, and their anxiety about failure is basically invisible. So, to answer your question more seriously, I think their continued success is evidence that they must comfortable challenging their beliefs. However, I do think a holy book full of principles seems a little cult-like, especially in light of the fact that they are building an AI clone of their CEO.

Hydraulix989 10y ago

You can't possibly get enough training data for this.

adventurer 10y ago
I don't think it is fair to say it is not possible. There is an AI system out there that has correctly predicted the superfecta for the Kentucky Derby based soley on user predictions. http://www.newsweek.com/artificial-intelligence-turns-20-11000-kentucky-derby-bet-457783 http://www.newsweek.com/artificial-intelligence-turns-20-110...
- burkaman 10y ago
  UNU is not AI, it's polling. Bridgewater would like to develop an AI that minimizes human input, not just a better method of combining different human opinions.
- bbcbasic 10y ago
  I work for a company that bets on the horses, and yet they use broadly similar techniques. But this doesn't replace humans at all. Also as an aside, correctly predicting a superfecta happens quite a lot, and it is hard to tell from sample size of 1 if this was luck, skill or a combination of both. Probably a combination of both - their algo may have reduced the odds to 200-1 for example, and luck did the rest.
- Hydraulix989 10y ago
  They said that about Nate Silver, too, then Trump got elected.
the_duke 10y ago
Not until you can (video)tape all meetings and interactions, analyse body language and spoken content.

JabavuAdams 10y ago

Horrible, but I can sympathize. Living alone now after 22 years of co-habiting. Tempted to encase myself in cameras and sensors and train a model of ... me. What would Jaba do? If it's a dumb thing, then help him not do it...

cmurf 10y ago

I'm gonna guess these employees have a work for hire contract of some sort, so that their ideas or potentially copyrightable or patentable methods, belong to their employer.

hendzen 10y ago
So does every large technology company including Google, Apple, Twitter, Facebook, Netflix, etc.
- vitus 10y ago
  As do a number of major universities (CMU, Harvard, MIT, Stanford, and plenty more, I'm sure). If I had to guess, these contracts are generally a lot more prevalent in fields where people are regularly creating intellectual property.
leroy_masochist 10y ago
They have one of the most onerous non-competes of any asset manager, especially for people who touch any of their strategies.

bedhead 10y ago

I would assign a small chance to Bridgewater being a ponzi scheme. I am not the first person to be skeptical of the firm and there have constantly been rumors about them.

nradov 10y ago

Odd, I submitted the same story but it wasn't picked up as a duplicate. https://news.ycombinator.com/item?id=13238860 https://news.ycombinator.com/item?id=13238860

leroy_masochist 10y ago

Since reading it maybe 6 or 7 years ago, I've thought Principles is a great handbook for personal reflection and self-improvement, especially in that it continually guides all discussion back to the lodestar of thinking for oneself and asking "is this true?". However, I'd also say that Principles is a lousy "how to manage people" manual, because it tries to algorithmically describe how to deal with unpleasant interactions that require emotional intelligence, and harps really hard on the concept of "the truth will set you free and if you can't handle the truth you need to GTFO of our culture". Reading this article has reinforced that opinion. Two other random observations here: - These guys are a big Palantir client...I wonder if Palantir has any role in building this new system. They weren't mentioned in the article. - Isn't "Overseer" is a really, really fucking bad formal job title for anyone at any organization?

zzrg 10y ago
I assume "overseer" is a bit tongue in cheek.
turc1656 10y ago
> Isn't "Overseer" is a really, really fucking bad formal job title for anyone at any organization? Yeah. At my company we just include anyone who would fit that billing as a member of the Panopticonal Oversight Committee so that they can also keep their regular title.

bjornlouser 10y ago

"Though outsiders expected Mr. Ferrucci would use his talents to help find hidden signals in the financial markets, his job has focused more narrowly on analyzing the torrent of data the firm gathers about its employees. The data include ratings employees give each other throughout the work day, called 'dots'" This -- Isn't -- JEOPARDY!! This is shit.

brilliantcode 10y ago

I had a good chuckle reading this article: > At Bridgewater, most meetings are recorded, employees are expected to criticize one another continually, people are subject to frequent probes of their weaknesses, and personal performance is assessed on a host of data points, all under Mr. Dalio’s gaze. I think this is a testament to the disconnect between people in this space and technology. The idea that some mythical holy grail technology will produce alpha is as illusive as relying on automated trades. > Bridgewater says about one-fifth of new hires leave within the first year. The pressure is such that those who stay sometimes are seen crying in the bathrooms, said five current and former staff members. This article is based on interviews with them and more than a dozen other past and present Bridgewater employees and others close to the firm. And it confirms my suspicions. I stopped reading here because it's another PR piece for Bridgewater. I think we will see a small homage to Bridgewater in Mr. Taleb's upcoming books as an example of "techno-irrational exuberance" along with other hilarious empty suit moments described in the book Fooled By Randomness.

ry4n413 10y ago

https://www.bloomberg.com/news/articles/2016-09-11/bridgewater-said-to-get-22-5-billion-in-new-money-since-2015 https://www.bloomberg.com/news/articles/2016-09-11/bridgewat...

dkarapetyan 10y ago

Another megalomaniac looking for religion where it can not be found: radical transparency, humans and economies as machines, personality tests to determine stratums, daily ratings called "dots" (which incidentally is what Palantir calls their ratings as well). Then again maybe the article makes the place sound more like a cult than it actually is in reality.

ashnyc 10y ago

I am a big believer is what he is doing. I worked both in financial firm and now have my own small factory. There is so much wast in financial firms. in the early 1990s, people with MBA where getting 100k a year for just doing spreadsheets. On top of that, it is not a full days worth of work. the work was not rewarding and it was high stress. The paycheck was great, for sure. I am trying to do that same thing now with my small manufacturing shop. Ordering of raw materials, Manufacturing allocation, labor etc are all controlled by a software. These are all boring jobs that an AI will do a much better job at.

saosebastiao 10y ago
Why does it have to be an artificial intelligence? The field of Operations Research has basically perfected automated and optimized decision making in pretty much every heavy industry out there, and they've been doing it since before computers even existed by using mathematical modeling.

alexc05 10y ago

> Mr. Dalio has the highest stratum score at Bridgewater, and the firm has told employees he has one of the highest in the world. So this billionaire is designing a human-ranking system based on some criteria on which he scores number one in the world? In examining a system for bias I certainly hope they factor in the fact that the guy who paid billions for scientists to research factors under the "total human awesomeness scale" also somehow managed to find that the guy signing all the cheques was the same guy scoring a perfect 10 million every time. I wonder if the scientists working on quantifying human greatness for Kim Jong-Un are using the same scale? Couch it in whatever scientific BS you want, it sounds like we just read some sort of billionaire's ego-rotica.

dasfaha 10y ago
The strata in the article are based on the work of psychologist Elliot Jacques who as far as I can tell created this independently of Dalio and Bridgewater. Strata are related to a person's ability to handle complexity, and Jacques argued that this is related to the time horizon a person can handle. For example, the role of a shop floor employee selling widgets does not need to consider what happens more than 1-3 months in the future, however the store manager has to think about a year into the future, the owner of the chain has to consider what happens 2-3 years down the line and so on. He devised an interview protocol to determine at which level a person is capable of thinking at to be use to match employee's with roles for which they are suitable. Being in the highest stratum means having a time horizon of 20-30 of which Jacques believed only a handful of people are capable of in each generation.
- pdog 10y ago
  Dr. Jaques divided people into eight strata based on their innate capabilities and limits. Most of us if we're honest with ourselves are on the level of Strata 1–4. (Even to presume we're Stratum 4 is being generous.) Strata 5–8 are the rarefied elites. They're typically CEOs of large companies and business leaders. Stratum 9 and higher—like Mr. Dalio—are the rare geniuses who are capable of thinking into the far future (100+ years) and working on problems of extraordinary complexity.

known 10y ago

There is no algorithm for trader's instincts;