His accomplishments in the markets have made him one of the wealthiest American’s today. But if you begin to dive deeper you realize that’s not what makes Ray so special…
At The Science of Success, we obsess over Evidence Based Growth and learning what makes peak performers and titans of their crafts tick. Through examining their lives and work, we can take years of their experiences and research and apply what they’ve learned to our own lives. Thus, leading happier, healthier, and (hopefully) wealthier lives.
So… what makes Ray Dalio so special?
For the sake of the rest of this article let’s go ahead and knock out the obvious. Ray started and continues to grow the world’s largest hedge fund, Bridgewater Associates. Bridgewater currently has over $160 Billion (with a B!) worth of assets under management.
This has lead to Ray himself amassing a net worth of over $17.7 Billion. This amount of wealth and drive obviously make him a “special” person in business. He has attained a status and created a life that most can only dream about, filled with the things many only ever see on their vision boards.
As with most incredible individuals and stories, this is just the WHAT of the situation. The HOW and the WHY behind Ray’s journey. The way he continues to approach life and the lessons he’s learned (and is still learning) is what makes him truly unique.
His First Job
Ray was born the only child of a jazz musician and a homemaker in Jackson Heights, Queens in 1949. Ray notes that at a young age, he was a terrible student and struggled in school.
“I was a bad student. I have a bad rote memory , and I didn’t like studying.” — Ray Dalio
Like many geniuses of their time who did not thrive in a classroom setting, Ray found other ways to contribute, learn, and make money. From the age of 12, he caddied at a local golf club near his home that was frequented by Wall Street investors. By listening to their tips and conversations Ray was able to begin learning about the stock market and made his first purchase of stock ever, investing in Northeastern Airlines.
Shortly after, Northeastern Airlines was taken over by another company and Ray saw his investment triple. What makes Ray’s beginnings unique is that despite not thriving within the traditional framework of education, he was able to find another way to absorb information. Continuing to learn about things that interested him, and put these learnings into action.
We see this time and again with several great young minds. Unable or unwilling to work within the confines of a traditional education, they find other ways to learn.
The golf course was near his childhood home, lucky. Those who frequented the course exposed him to Wall Street, lucky. Being taken under Donald Scott’s wing, lucky. However, all of this “luck” would have never come about had Ray not continued to work, put himself out there, and explore possibilities with an open mind, despite his poor rote memory and initial distaste for school.
Ray is very open about practicing mindfulness and it’s critical importance within his life. Most notably, Ray is an avid meditator and practices Transcendental Meditation which according to legend, he picked up after the Beatles visited India.
Meditation, more than any other factor, has been the reason for what success I’ve had — Ray Dalio
Ray practices meditation most mornings before heading into the office and follows his own technique…
“It’s just a mental exercise in which you are clearing your mind. Creativity comes from open-mindedness and centeredness — seeing things in a non-emotionally charged way.” — Ray Dalio
Not only does Ray practice Transcendental Meditation himself but he encourages his employees to incorporate the practice into their lives as well. Many claim his business and culture is built up of “intellectual NAVY SEALs”and he believes that Transcendental Meditation provides an effective balance to that drive and hard nosed determination.
If you’d like to put the power of Transcendental Meditation to the test yourself, here’s a guide to getting started, as well as an interview with Dan Harris who explains his method and his initial skepticism around the practice of meditation all together.
Removing His Ego
I imagine it must be hard to keep your ego in check as a billionaire. I’m also in no way saying that Ray, for his entire life, has had no ego. In the past there have been several stories of outlandish (yet always passionate) behavior. Including punching a former boss in the face over an argument.
On New Year’s Eve in 1974, Dalio went out drinking with his departmental boss, got into a disagreement, and slugged him…After being fired, he persuaded some of his clients to hire him as a consultant and founded Bridgewater, operating it out of his two-bedroom apartment. He was twenty-six years old. — John Cassidy, The New Yorker
While the story sounds a lot like something from a C+ Hollywood satire of the typical corporate office party with an open bar…it happens. We all act out and get cocky at times. You, me, and billionaires alike. The key is that we continue to grow, learn and mature through life, and Ray has done all three in spades. Ray has even commented on a video of himself from the 80s saying…
"I look at that now, I think, “What an arrogant jerk!” — Ray Dalio, TED Stage
You see, there is a large difference between cockiness and confidence.
To scream from the mountaintop that you are the best and put others down simply for the sake of it, is ego and cockiness. To be sure of your position and be able to unapologetically defend it, that is confidence.
In fact, Ray has spent considerable time, money, and effort attempting to remove his ego from any and all decision making. At Bridgewater, each employee is subject to direct and completely unfiltered feedback, and Ray is no exception. A great example of this is in the email below Ray received from Jim Haskel…
Ray — you deserve a “D-” for your performance today in the meeting … you did not prepare at all because there is no way you could have and been that disorganized. In the future, I/we would ask you to take some time and prepare and maybe even I should come up and start talking to you to get you warmed up or something but we can’t let this happen again. If you in any way think my view is wrong, please ask the others or we can talk about it.
Now take a moment here and think. What would happen if you sent this kind of email to your boss? You might be fired, be asked to join your boss in a private meeting, you might even be escorted out of the building…but not at Bridgewater. Not only was Ray pleased with the feedback, he decided to share the email with all of his employees and again on the TED stage. The feedback did not pull any punches… and hey, that’s the idea.
In his book Principles we see another example of Ray removing his ego, personal life, and accomplishments from the principles he hopes to share. The 567 page book is made up of two parts. The first dives into Ray’s personal journey and the second is pure principles and teachings. In the first few pages he offers the reader an out and invitation to skip the portion related to himself…
I wouldn’t mind if you decided to skip this part of the book. If you do read it, try to look past me and my particular story to the logic and merit of the principles I describe. Think about them, weight them, and describe how much if at all they apply to you and your own life circumstances — and specifically, whether they can help you achieve your goals, whatever they may be. — Ray Dalio, Principles
Ray aims to provide the reader (you) with the value of his life and learnings, without having to hear his story. Which undoubtably takes a large amount of humility, especially in a book you took the time to write.
My painful mistakes shifted me from having a perspective of “I know I’m right” to having one of “How do I know I’m right?” — Ray Dalio
Removing your ego from your daily decision making can have incredible benefits on your daily life. Whether you systematize the process like Ray, or just make a conscious effort to remove your personal feelings about yourself from the situation you’ll notice the positive effects immediately.
Something truly unique about Ray’s approach to managing his business culture is the idea of “Radical Transparency.” The idea that everything everyone says, feels, or does, is open for honest feedback and evaluation.
Many praise this style of management as the way of the future, others liken it to a cult. One of the tools in fostering this culture was invented by Bridgewater themselves and is known as The Dot Collector.
Bridgewater employees carry iPads into every meeting; as their coworkers speak, they register real-time feedback, grading one another on such criteria as assertiveness and open-mindedness, creativity, and maintaining high standards.
Over time, all those data points reveal the collective wisdom of the group — and, the thinking goes, expose each employee’s strengths and weaknesses. At first, Dalio says, receiving such candid feedback can be difficult. But eventually, he says, it challenges you to detach from your own ego. “It forces you to recognize that you are just one of those dots,” he says, “and now you have to make a choice: Do you want to be stuck with your opinion, or go above it all? It’s an out-of-body experience.”
This data is then made available to everyone and shapes the weight of your opinion in making company decisions. This data is also used to match you with the right teams and the right projects. As noted, this process at first can be very painful for some. It’s a hard, no nonsense look at who you are, backed by the numbers.
What some may remember as “golden rules” are also adopted into everyday business practices, but not in the way you might expect. We all know that it’s generally not a great idea to talk about someone behind their back. Well, why not take that idea to new heights as well?
One rule of radical transparency is that Bridgewater employees refrain from saying behind a person’s back anything that they wouldn’t say to his face.
To some, this can be seen as too blunt or as a power move. But to hear Ray explain it, this simply allows everyone to know where they stand with everyone else. Growth in any meaningful form is often painful. In the end, everyone grows through radical transparency, even if at time’s it can be quite awkward.
Once a tape recorder had been switched on, Jensen, McCormick, and Dalio discussed the possible promotion of an internal candidate to a senior-management role. McCormick, a soft-spoken forty-five-year-old who studied engineering at West Point, argued that the candidate’s prior experience at a big Wall Street firm indicated that he could probably do the job. Dalio disagreed. An investment bank is a “totally different world,” he said. But, rather than continue the discussion, he asked one of his assistants to call in the candidate. One rule of radical transparency is that Bridgewater employees refrain from saying behind a person’s back anything that they wouldn’t say to his face.
The man arrived and stood before Dalio’s desk. Dalio explained what the discussion was about and said, “I don’t imagine that you would be a good fit for the job.” The man took a seat, and Dalio and McCormick continued their discussion about his qualifications. The candidate explained his experience on Wall Street and said he thought he could do the job well. Dalio leaned back in his chair, looking skeptical. The employee didn’t get the promotion.
Ray is also quick to point out that the culture of radical transparency is not for everyone. Around 1/3 of Bridgewater’s new hires leave the company in less than 18 months. Although, for those who accept the model and buy in wholeheartedly, it becomes a way of life.
One of the most beneficial consequences of radical transparency is a hard, unforgiving, uncompromising drive towards self-awareness. When you embrace the process and are open to the objective feedback you receive, you are forced to see yourself for what you are. This can be scary with a fixed mindset, however, with a growth mindset this can be one of the most enlightening revelations of your lifetime.
I recommend checking out The Secret Weapon of the 21st Century for more on cultivating self-awareness.
And why not embrace these ideas? A culture of radical transparency may be shocking to some but it also lets everyone know where they stand. People will also be much more careful with their words and actions when they know they will be open to the public. I think we would see a lot of the more common issues in the workplace (and the world at large) disappear if we had more radical transparency.
If you had to sum Ray Dalio up in a few words I think most would agree “Radical Transparency” would be the right fit.
Not The Hero We Wanted, But Maybe The One We Needed?
On several occasions, Ray has attempted to warn the United States government of upcoming crashes and less than sustainable programs. Certainly (and justifiably) the government must be skeptical and wary of such warnings, especially coming from someone involved in markets, potentially with something to gain. However, Ray has been correct on several occasions including in 2007 before one of the largest market crashes in history…
Searching for historical precedents, Bridgewater put together detailed histories of previous credit crises, going back to Weimar Germany. The firm’s researchers also went through the public accounts of nearly all the major financial institutions in the world and constructed estimates of how much money they stood to lose from bad debts. The figure they came up with was eight hundred and thirty-nine billion dollars. Armed with this information, Dalio visited the Treasury Department in December, 2007, and met with some of Treasury Secretary Henry Paulson’s staff. Nobody took much notice of what he said, but he went on to the White House, where he presented his numbers to some senior economic staffers. “Ray laid out the argument that the losses he foresaw in the banking system were astronomical,” a former Bush Administration official who attended the White House meeting recalled. “Everybody else was talking about liquidity. Ray was talking about solvency.” His warnings ignored in Washington, Dalio issued more jeremiads to his clients. “If the economy goes down, it will not be a typical recession,” his newsletter said in January, 2008.
Pay attention to something here — in an effort to inform the appropriate powers Ray began with the Treasury Department, and didn’t stop. Despite the fact that he was largely ignored by the department, he continued his crusade to the White House.
Hedge fund managers weighing in on the inevitability of the ups and downs of the market is nothing new. It is however notable and commendable that such a continued effort was made to sound the alarm to those with the ability to attempt to change the circumstances.
He Gives it ALL Away
Perhaps one of the most incredible things about Ray Dalio and his principles is that he gives them away, largely for free. In recent months Ray has been on a mission to spread awareness not only of his book but of the culture and tools he has created in an effort to help others achieve their goals.
Below are a few of my favorite pieces of free content that will help you see things through the eyes of the world’s most successful hedge fund manager. These ideas, principles, and tools may even help you harness the Science of Success. God Speed.
Bridgewater’s Entire Research Library Is Open To The Public — Here you can look back at the various research and findings Ray and his team have made throughout the years. These are incredible resources for those interested in how the markets (and largely the world) work.
How The Economic Machine Works — This 30-minute video can provide you with more knowledge than most Econ. 101 classes could.
Want To Go Deeper On How The Economic Machine Works? — Ray provides these FREE tools and deeper explanations of every concept mentioned in the above video. Topics include long term and short term debt, leveraging, and much more!
Ray’s TED Talk — Gives you a real-time look at Ray’s past and present and how he goes about using the Dot Collector to make better decisions and weigh ideas.
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