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There was a NYT article about Bridgewater and Dalio last week: https://www.nytimes.com/2023/11/01/business/how-does-the-worlds-largest-hedge-fund-really-make-it

by slibhb 3y ago

There was a NYT article about Bridgewater and Dalio last week: https://www.nytimes.com/2023/11/01/business/how-does-the-worlds-largest-hedge-fund-really-make-its-money.html https://www.nytimes.com/2023/11/01/business/how-does-the-wor... If these articles are right, the picture I'm coming away with is that Dalio had some good strategies that gave him an edge decades ago but now his competitors have caught up and pulled ahead. Apparently Bridgewater no longer has any quantitative edge and it's really just Dalio and a few close advisors making calls from the gut. Plus all this weird nonsense about "principles".

toomuchtodo 3y ago
Same deal with Bill Gross (“the bond king”). Macro tailwind, a few good compounding successes, and riding that draft for the remainder. They don’t retire, they just graduate to “thought leaders” because what else are you going to do with that much free time and ego. The money no longer matters, all that is left is to chase status. https://www.google.com/search?q=bill+gross+lucky https://www.google.com/search?q=bill+gross+lucky https://www.cnbc.com/video/2013/04/03/great-investors-more-lucky-than-good.html https://www.cnbc.com/video/2013/04/03/great-investors-more-l... https://www.reuters.com/article/us-janus-henderson-billgross/bill-gross-once-wall-streets-bond-king-retires-after-rocky-second-act-idUSKCN1PT19T https://www.reuters.com/article/us-janus-henderson-billgross... https://www.sec.gov/news/press-release/2016-252 https://www.sec.gov/news/press-release/2016-252 (ETF pricing violations mentioned in the book) https://us.macmillan.com/books/9781250120854/thebondking https://us.macmillan.com/books/9781250120854/thebondking (highly recommend the book "The Bond King" for deep background on Gross' professional career and PIMCO)
- steveBK123 3y ago
  Yeah that's the thing with investing. Markets change, trades get crowded, data/tech gets commoditized, and strategies stop working. If you do not have a process and evolve, you are roadkill. So some guys who are early, big and right can attract a halo that long outlives its reality. To build some piece of tech you need to have some sort of process, and it is probably replicable to building another piece of tech. It is entirely possible to just get lucky right place, right time and make a killing investing for a good run before your lack of process catches up with you. Half the "Big Short" guys fall under the same category as Dalio & Gross. But hey, if you make your number and then can graduate into "thought leadership" its not such a bad gig either.
  - voisin 3y ago
    Not all strategies stop working. See “The Super-investors of Graham-and-Doddsville” https://gromnitsky.users.sourceforge.net/lit/buffet1984/ https://gromnitsky.users.sourceforge.net/lit/buffet1984/
  - aatd86 3y ago
    Buffett seems to do quite well for himself from what we often hear.
    - tonyedgecombe 3y ago
      Or maybe not: https://seekingalpha.com/article/4423498-berkshire-hathaway-versus-s-and-p-500-through-years https://seekingalpha.com/article/4423498-berkshire-hathaway-...
      - aatd86 3y ago
        Not bad, that seems to be exactly what the parent post says. Guess it's all about that smart beta :p /jk Investment rationale: "Just follow the herd, don't be a midwit."
mamonster 3y ago
Dalio is a perfect example of just how much finance has evolved over the last 30-40 years. Risk parity today is a turbo vanilla strategy that every systematic shop can offer and that a master student in fin. eng. can probably build, and yet in like 1990 this was the forefront of systematic investing and got you paid. Bridgewater today is still riding on the fact that they "invented" risk parity.
- financltravsty 3y ago
  Curious if there are any materials to do some autodidactic learning similar to what a financial engineering masters would get you. There are a lot of oft recommended books whenever the topic comes up, but they always border on too theoretical or outright "pop." I would imagine simply looking at a syllabus from something like Baruch and going through the recommended readings would be a starting point.
  - mamonster 3y ago
    I mean, if you have MFE prerequisites then sure. The prerequisites for modern financial engineering is having a good handle on probability theory and in particular stochastic calculus. It would also depend on the program. Baruch is more for quant strats and wants to send people to option market makers/funds or to banks to sell derivatives. Something like Carnegie Mellon MSCF(Computational Finance) is more oriented to send people to Bridgewater or AQR, which run systematic strats(risk parity, factor, alternative risk premia, portable alpha, etc.).

by slibhb 3y ago

toomuchtodo 3y ago

Same deal with Bill Gross (“the bond king”). Macro tailwind, a few good compounding successes, and riding that draft for the remainder. They don’t retire, they just graduate to “thought leaders” because what else are you going to do with that much free time and ego. The money no longer matters, all that is left is to chase status. https://www.google.com/search?q=bill+gross+lucky https://www.google.com/search?q=bill+gross+lucky https://www.cnbc.com/video/2013/04/03/great-investors-more-lucky-than-good.html https://www.cnbc.com/video/2013/04/03/great-investors-more-l... https://www.reuters.com/article/us-janus-henderson-billgross/bill-gross-once-wall-streets-bond-king-retires-after-rocky-second-act-idUSKCN1PT19T https://www.reuters.com/article/us-janus-henderson-billgross... https://www.sec.gov/news/press-release/2016-252 https://www.sec.gov/news/press-release/2016-252 (ETF pricing violations mentioned in the book) https://us.macmillan.com/books/9781250120854/thebondking https://us.macmillan.com/books/9781250120854/thebondking (highly recommend the book "The Bond King" for deep background on Gross' professional career and PIMCO)

steveBK123 3y ago
Yeah that's the thing with investing. Markets change, trades get crowded, data/tech gets commoditized, and strategies stop working. If you do not have a process and evolve, you are roadkill. So some guys who are early, big and right can attract a halo that long outlives its reality. To build some piece of tech you need to have some sort of process, and it is probably replicable to building another piece of tech. It is entirely possible to just get lucky right place, right time and make a killing investing for a good run before your lack of process catches up with you. Half the "Big Short" guys fall under the same category as Dalio & Gross. But hey, if you make your number and then can graduate into "thought leadership" its not such a bad gig either.
- voisin 3y ago
  Not all strategies stop working. See “The Super-investors of Graham-and-Doddsville” https://gromnitsky.users.sourceforge.net/lit/buffet1984/ https://gromnitsky.users.sourceforge.net/lit/buffet1984/
- aatd86 3y ago
  Buffett seems to do quite well for himself from what we often hear.
  - tonyedgecombe 3y ago
    Or maybe not: https://seekingalpha.com/article/4423498-berkshire-hathaway-versus-s-and-p-500-through-years https://seekingalpha.com/article/4423498-berkshire-hathaway-...
    - aatd86 3y ago
      Not bad, that seems to be exactly what the parent post says. Guess it's all about that smart beta :p /jk Investment rationale: "Just follow the herd, don't be a midwit."

mamonster 3y ago

Dalio is a perfect example of just how much finance has evolved over the last 30-40 years. Risk parity today is a turbo vanilla strategy that every systematic shop can offer and that a master student in fin. eng. can probably build, and yet in like 1990 this was the forefront of systematic investing and got you paid. Bridgewater today is still riding on the fact that they "invented" risk parity.

financltravsty 3y ago
Curious if there are any materials to do some autodidactic learning similar to what a financial engineering masters would get you. There are a lot of oft recommended books whenever the topic comes up, but they always border on too theoretical or outright "pop." I would imagine simply looking at a syllabus from something like Baruch and going through the recommended readings would be a starting point.
- mamonster 3y ago
  I mean, if you have MFE prerequisites then sure. The prerequisites for modern financial engineering is having a good handle on probability theory and in particular stochastic calculus. It would also depend on the program. Baruch is more for quant strats and wants to send people to option market makers/funds or to banks to sell derivatives. Something like Carnegie Mellon MSCF(Computational Finance) is more oriented to send people to Bridgewater or AQR, which run systematic strats(risk parity, factor, alternative risk premia, portable alpha, etc.).