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Ray Dalio's Bridgewater exit package could amount to billions of dollars

• toomuchtodo 4y ago
  https://archive.is/LLqk3 https://archive.is/LLqk3
• fl0ps 4y ago
  He put significant heart into the company, not to mention groundbreaking work like Pure Alpha. I'll never see a fractional cent of what he's made but I only remain impressed by what I've read by him and seen of him. Good for Ray for successfully negotiating the hell out of his exit!
  • paulpauper 4y ago
    Isn't his strategy just a mix of various asset classes? Bonds have done really well for the past 2 decades, save for 2022. I think it shows the dangers of overcrowded strategies like what happened last year.
    • mydogcanpurr 4y ago
      Isn't coding just ifs and for loops?
      • sp332 4y ago
        Ok, and we don't make a billion dollars doing it.
        • Kranar 4y ago
          You're literally on a site founded by a billionaire who coded.
          • djbusby 4y ago
            He is not We.
          • sidlls 4y ago
            The rate at which finance mints extremely wealthy workers dwarfs the rate at which software does.
            • lotsofpulp 4y ago
              I would bet on the opposite, at least since 2008.
            • Kranar 4y ago
              Doesn't look like it dwarfs it. According to Forbes, 15% of billionaires are in finance, 12% are in fashion, 9% are in tech.
              • sidlls 4y ago
                The comparison would be more accurate with the relative sizes of each industry. Pretty sure there are more software engineers than people working in similarly skilled finance jobs.
            • smabie 4y ago
              I think it's probably pretty pretty similar actually. I would say tech probably has worse median outcomes but better right tail outcomes than finance.
          • sp332 4y ago
            Viaweb was sold for about $50 million worth of Yahoo stock. So more than 95% of the first billion was from something other than coding.
    • fl0ps 4y ago
      Not a finance guy, but from what I read and listened to, yes: "The fund combined multiple uncorrelated return strategies that are leveraged appropriately to maximize returns, while lowering risk." (from CNBC). I think this was a novel approach at the time, finetuning those gains specifically due to lack of correlation, further to specific assets within each class. Side-note, cool asset coorelation (or lack thereof) map: https://www.guggenheiminvestments.com/mutual-funds/resources/interactive-tools/asset-class-correlation-map https://www.guggenheiminvestments.com/mutual-funds/resources...
      • Galanwe 4y ago
        To be fair, there really is nothing exceptional in this particular sentence. It's basically just a textual explanation of Markowitz optimization, known since the 50s. To me it's as interesting as a trader telling you his secret is "to buy low and sell high".
        • smabie 4y ago
          A couple sentence explanation of every trading strategy always seems obvious and trivial. Devil is always in the details.
    • Jack_Hacker 4y ago
      In Principles, he describes some high-level decision making processes. Bridgewater is split into groups of about 300 people. Within those groups, smaller groups are formed to discuss particular strategies. Everybody has "baseball cards" of their coworkers with stats showing peer-rated talent in various sub-domains. When a decision is made, there are two rounds of voting: a raw vote, and a vote weighted by stats (e.g. somebody whose peers have rated them as knowledgeable about agricultural trades would have more votes in this phase). If the two rounds of voting don't align, they try to keep discussing the issue until they do align (though there are tie-breaker rules if deadlock is reached). I'm not saying this system is perfect, but it's interesting to me as a meta-strategy for evaluating potential strategies.
      • deleted 4y ago
        [deleted]
      • fl0ps 4y ago
        Absolutely loved Principles so much that I bought copies for my team members and some leadership. I implemented small measures of radical transparency with the teams I managed where it made business sense as well. Wasn't always popular with fellow managers but my people absolutely trusted me (and produced accordingly). The book is highly recommended even if you don't implement half of what he's suggesting as it's based on hard-won experience. His Principles tweets are largely expounding on what's in the Principles book if you don't want to buy it, with some regurgitation which I felt was kind of marketing driven to promote book sales. Definitely worth the read.
    • lotsofpulp 4y ago
      What is Bridgewater’s risk adjusted return compared to SP500 for the last 10 and 20 years? From mid 2017: https://www.bloomberg.com/news/features/2017-08-10/bridgewater-s-ray-dalio-has-a-plan-to-outlive-himself https://www.bloomberg.com/news/features/2017-08-10/bridgewat... > Since the beginning of 2012, Bridgewater’s Pure Alpha II has posted an annualized return of 2.5 percent, according to a document reviewed by Bloomberg Markets, a far cry from its historic average of 12 percent. It’s down 2.8 percent this year through July. (A smaller Bridgewater hedge fund, Pure Alpha Major Markets, has fared better, as has the company’s long-only product.)
      • smabie 4y ago
        Not really appropriate to compare a market neutral product's Sharpe with the S&P. That said, Bridgewater hasn't done that great for awhile.
        • Galanwe 4y ago
          > Not really appropriate to compare a market neutral product's Sharpe with the S&P Why? I tend to find it okay to compare Sharpes so long that the returns exhibit a somewhat close distribution. I would expect both the S&P and an equity market neutral L/S to have normally distributed returns.
  • jquery 4y ago
    I remain appalled by everything I've read by him and seen of him. Shame on him for refusing to set the stage for the next generation, and instead being an avatar of greed and avarice.
• yieldcrv 4y ago
  > “Should I not invest in the United States because of our own human rights leadership?” I agree with that retort. It undercuts a "whataboutism" fallacy because its not saying the United States has similar facets to China as a deflection, its about whether an action of an individual is disqualified due to those overlapping realities.
  • maxbond 4y ago
    I don't see why you think this isn't whataboutism. You could rephrase it as, "What about the attitude towards human rights in the United States? Should I not invest there either?" without changing it's meaning. Whether the statement relates to an individual or organization's choices is orthogonal to whether it's whataboutism or a deflection. You can't take whataboutism and transmute it into a good faith response by rephrasing it to emphasize your own agency. That seems an absurd suggestion to me, I don't really understand where you're coming from. A statement is whataboutism if it introduces irrelevant information in order to assert a moral equivalence. If the question is, "Are you concerned about China's human rights record?" (as distinct from, say, "Which of these countries has the better human rights record?"), then the United States is not the subject and pivoting the conversation over to the United States is whataboutism. > In a CNBC interview in the fall of 2021, Mr. Dalio dismissed concerns about China’s human rights track record, likening the country’s government to a “strict parent.” (Bridgewater manages billions of dollars for companies partly owned by the Chinese government.) > “Should I not invest in the United States because of our own human rights leadership?” he asked. Can you honestly tell me that referring to, say, the genocide of the Uighur people, as merely "strict parenting" is an honest and good faith engagement in the discussion with no elements of deflection and no attempt to minimize and dismiss the problem?
    • yieldcrv 4y ago
      My perspective is the line of questioning was to suggest having no exposure to China. At best other companies just reduced exposure to that one state in China or avoided the output of that state. I can completely see a standard thats not different enough than exposure to other major markets to go further than that. If you have a different view on what he was responding to at all, then I could see why you would say that.
• eigenvalue 4y ago
  I don't even see what the issue is here. He started the company, built it up to be a large, successful firm, and is the main reason why they now have so many long-term, institutional clients. He's supposed to just give this away to the workers? He's well within his rights to do basically whatever he wants! Most big hedge funds actually close up shop and become family offices to the founder when the founder decides to slow down (e.g, Stan Druckenmiller, Soros, Icahn, etc.), which is way worse for employees. He could do that, or he could sell the firm, or take it public, or anything else that his voting shares legally allow him to do. Selling the firm to the top employees, and offering them generous "seller financing" terms to do so over 10 years, actually seems like a good deal for them, and has the added benefit of clearly determining who actually believes in the company and its prospects over the long term. These are not regular "rank and file" employees, anyway-- the average net worth of these people is probably at least $30mm. If I allow myself to be cynical, what this really sounds like to me was an attempt to use his regrettable comments (about China acting like a "strict parent" towards dissenters) as a bludgeon to extort him into giving away an extremely valuable asset to his top executives--who were basically betraying him by trying to force him out in the first place. If I were in his place, I would terminate all of those executives and promote younger, more loyal workers to replace them, and then sell the company to them after they prove themselves for a few years.
  • dereg 4y ago
    There is no issue here. This is simply a story of the transfer of ownership between a company's founder to employees. The framing is incredibly weird, I hate it. The article could simply be rewritten as (not GPT3): - Ray started to sell the ownership of Bridgewater in the mid 2010s, but retained a controlling interest in the company. - He financed the buyout of his shares, providing liquidity to employees. - There were struggles finding leadership that could competently carrying the fund forward. - Current leadership has a vision of how the fund should operate going forward, and that vision conflicts with some of Ray's stated principles. - As a result, leadership wants to buy him out entirely, but probably do not have the funds to do so. As a result, Ray is converting his ownership into non-voting preferred stock, conferring him dividend until the sooner of Bridgewater or Dalio's death. All I can say is finally. The early stories of Bridgewater (pre 250 employees) from former employees with whom I have talked make Bridgewater seem like a truly special place to have worked at. Ray facilitated meetings across the org in a very personal, constructive way. Then AUM ballooned and they went to 2,000+ employees in a snap. Then they brought in consultants like IBM to scale their intimate management style and the last vestige of magic dissolved. The fund was a zombie asset aggregator for a good 5-7 years. We'll see how it goes going forward.
• metadat 4y ago
  > during the heat of the exit negotiations, Mr. Dalio described the hedge fund as his “property rights,” according to one employee, and indicated that he expected to be compensated accordingly. Bridgewater is a publicly traded company which manages public institutional resources and funds. Why should it continue to pay out to the founder after they've departed? Has Mr. Ray not already received numerous remarkably healthy payouts along the way? I don't understand how this makes any sense, what am I missing? Edit: thank you @jmillikin, super helpful. This makes a tremendous difference. Had not heard of Bridgewater until today. https://www.google.com/search?q=is+Bridgewater+publicly+traded https://www.google.com/search?q=is+Bridgewater+publicly+trad... Card: > Is Bridgewater Associates a public company? > Bridgewater Associates is a public company headquartered in Connecticut with an estimated 1,500 employees. F google, got it dead wrong.
  • jmillikin 4y ago
    > Bridgewater is a publicly traded company No it's not. > Why should it continue to pay out to the founder after they've departed? Because distribution of profits is based on ownership. > Has Mr. Ray not already received numerous remarkably healthy payouts > along the way? One of the benefits of building a cashflow-positive business is that it can return profits that exceed the initial investment.
    • deleted 4y ago
      [deleted]
  • andsoitis 4y ago
    Even of Bridgewater was a public company, that does not mean it is a public good / owned by society at large / owned by the government. A public company is one that is publicly traded. In other words anyone can buy shares in it which means you become a part owner. You can read more here: https://en.wikipedia.org/wiki/Public_company https://en.wikipedia.org/wiki/Public_company
  • kennend3 4y ago
    > This makes a tremendous difference. Had not heard of Bridgewater until today. If this is the case, why did you feel a need to respond here? You have no clue what you are talking about, but made many wild statements based on "is Bridgewater a public company"? To borrow a bridgewaterism... Everyone is entitled to an opinion, just some are worth a lot less. (meritocracy)
• chaostheory 4y ago
  What’s interesting is that Dalio believes in a massive upcoming crash and a major paradigm change in the markets ie stocks and indexes will no longer always go up long term
  • mym1990 4y ago
    A revolution some might say
  • beepbooptheory 4y ago
    Not smart with economics, is the mainstream idea that it will always go up long term? I always kind thought crashes were inevitable occurrence, and that its gotta go down for it to go back up again. And inflation and the ever higher line and so forth is just ultimately a superficial thing to keep things moving. Or rather, wouldn't it be more rational to strive for the line to stay even? Such that we can save all the tumult, the upticks in suicide, the poverty.
    • deleted 4y ago
      [deleted]
    • rr808 4y ago
      > its gotta go down for it to go back up again. I think that is the point. If it crashes it'll inevitably go back up is the expected behavior. It isn't always true, Japanese market is still lower than 1989. Measured in dollars most international markets have gone sideways for 25 years.
      • SirLJ 4y ago
        That’s why passive investing is great for the regular investor, provided a little research is done to avoid buy and “hope” trap…
      • ac29 4y ago
        > Measured in dollars most international markets have gone sideways for 25 years. This is not even remotely true if you include dividends.
• lancewiggs 4y ago
  McKinsey's Marvin Bower, the person who truly created the firm, made the critical decision to walk away when he was done without extracting anything. He thus set the standard for future generations of partners, and the result was the creation of an enduring global firm* run by the current partnership group. Dalio's approach means that the firm is set up to prioritise his personal wealth, not investor and existing partner outcomes. Future partners and investors can read into that as they will, but it doesn't seem sustainable. *like it or not.
  • miguelazo 4y ago
    Yet ironically, McKinsey is now totally disgraced.
    • uoaei 4y ago
      For reasons having nothing to do with ownership structure, so that doesn't seem as relevant.
      • lmm 4y ago
        It's all related. Maybe that kind of disgraceful behaviour is less likely when the company is closely identified with an individual whose reputation is at stake (whether that's Dalio, Bower or anyone else), and so a pattern where companies close up as that person retires rather than becoming enduring standalone brands would be better for society.
        • uoaei 4y ago
          A whole lot of supposition and not a whole lot of substance.
          • lmm 4y ago
            I'm not saying it's necessarily the case, I'm saying it's possible. You can't just assert that ownership structure has nothing to do with it without evidence for that.
• robswc 4y ago
  Interesting company. I wonder if their "unique culture" is still around or if its toned down now that he's left.
• ruralthinker 4y ago
  The main complaint here is Dalio claims to be transparent, he frequently broadcasts his company meetings in the interest of transparency. In this case the article is implying he wasn't transparent about his plan to extract billions from the business. There was no video call showing the negotiations, heck there was not even an email to the employees. He kept employees in the dark, in short they are saying he is a hypocrite, and he is a fake social media influencer who says one thing in public and does the opposite in private.