00:00 Lincoln Bridgewater is a $200 billion investment fund, like one of the largest of all times. And you know, he took a really interesting path to get there. Welcome to Funds That Won, where we dive into some of the world's most renowned investment funds. We'll interview investment managers across the alternative landscape and learn how they built their million and even billion dollar asset management empires. We'll explore teams, structures, strategies, and best practices in launching and running alternative investment funds. All right, what's up guys? Today we're gonna be talking about one of the greats, one of the goats of all time, Ray Dalio with Bridgewater Associates. Kinda giving you guys a highlight on his firm, how he started, you know, some cool lessons that he learned along the way and that I think are relevant to you guys. So let's jump into it. So Bridgewater Associates, Ray Dalio's fund is one of the most exclusive hedge funds in the world. You have to have a $7.5 billion net worth to even be considered in investing. His minimum check size is hundreds of millions of dollars. And it's because he's built this awesome hedge fund that has consistently performed above market. And over time, you can do the same. So Ray Dalio, interesting story. He didn't actually start off by wanting to be a fund manager, right? He was a researcher. So he went to business school and he joined a commodities group where he was a research analyst. Honestly didn't last very long. He was there like two years. And then he parted ways and he just started essentially a consulting company. And what I like about it is he essentially became a content creator, even back in his day. I mean, this is like the 1970s, right? And then in the 1980s, where he started publishing his insights. So he really loved research. He started essentially a blog called Bridgewater Daily Observations, where he essentially just wrote about his take on the markets. And he started advising, he started getting a lot of big clients that wanted his advice. And so like, one of his first big firms was actually McDonald's. They were having problems with how to price their chicken. There was a lot of volatility in chicken prices. They asked him to help McDonald's build a hedging strategy so that the price of chicken was more stable and predictable for him. And he did. And so he started consulting these like big firms. And then eventually all these big firms just started asking him to take their money and to manage it for him. So in case you guys didn't know, so ultimately, just the high quality, he was essentially a content creator. He was an influencer, right? And he started building this brand and he understood the benefits of marketing early on and getting his voice out there where he started getting invited onto shows and to share his opinion. And if you follow Ray today, he's actually still very, quite public. He's on TikTok, he's on Instagrams, he's on YouTube. He does a number of events and conferences. And he's a pretty active vocal member of the investments world, which I admire greatly. Okay, so how did this guy who started a consulting firm out of his two bedroom apartment in New York become one of the largest hedge fund managers of all time? So like I said, he started consulting these clients, giving advice and they started basically saying, hey, will you take our money and manage it for us, right? He was really good at hedging and research. And so he finally opened up a fund in 1991. Here's the thing, I know some of you who are starting funds like are a little more sensitive around timeframes and schedules. I mean, look, this guy consulted and basically managed funds through SMAs separately managed accounts for 15 years, right? He didn't really start like the core of Bridgewater as we know it today, really didn't start until his pure alpha fund in 1991. So he really just consulted, separately managed accounts for more than a decade, just building up essentially his track record. And I think it's important to understand Ray's personality before we get into it. Hey guys, thanks for listening. As you know, we don't run ads on this channel. So if you could really help me out, this podcast has added any value to you or your business. Please subscribe, rate and review. I would appreciate that greatly, thank you. Ray is a very principle driven person, right? He's very methodical, he's extremely calculated. You know, he just, he doesn't like to lose money. So there was actually a time when he had to borrow in his consulting firm where he had made some missteps in his one of these accounts and he had to lay off some people at Bridgewater and he had to borrow like $4,000 from his dad. And then he says it's like one of the most humiliating times of his life and he's really glad he learned that really early on that he didn't wanna lose people's money. And so he's just, you know, as he scaled Bridgewater, he actually essentially opened up, he started getting all these employees and he opened up a code of conduct at what he called like daily principles. And for those of you that have read some of Ray's books and writings, he has a, you know, book on principles, which is basically principles on life. And he took to his fund a very similar approach. And I just wanna share with you, like, just to give you an example, a taste of some of these principles. So on his website, a couple of his favorites principles are as follows, reality works like a machine with everything we encounter being the result of cause effect relationships. Because most everything happens repeatedly in slightly varied versions, by studying many cases of something, you can understand the cause effect relationships behind how it works and come up with principles for dealing with it well. Being explicit about your principles and stress testing them improves your decision making and likelihood of success. Right, so those are some of his principles about making principles, right? But it's, he really has just like documented everything and steps and procedures, you know, in his life. And, you know, he says there, as he starts to start in patterns, your ability to, you know, increase the probability of predicting the future and understand the probabilities, then you're more likely to be successful. And he's taken his approach to investing in a very similar fashion. So when he just started off, he would just document everything, trends, and he would put them into algorithms, right? And basically not only were humans had to follow this decision making rubric, but then basically technology could. And, you know, he's known for systematizing his organization very well and having, you know, very decision or research driven decisions and analytical driven and investment approach in his funds. So he started the Pure Alpha Fund in 1991, which is, you know, one that he's probably second most well known for aside from his All Weather Fund, which he started in 1996. And for those of you that don't really know, so Pure Alpha, like there's these terms used in the markets a lot of times, Alpha and Beta. Alpha is really just, you know, essentially forced appreciation. It's the difference between market returns and excess returns is your Alpha. And it could, Alpha can come in a lot of different ways. It can come through, you know, information, right? Like if you have specific information about a company that's maybe not publicly stated that you have to land upon, that you like take some research to, you know, get to that decision, right? That could maybe be Alpha. It could be a bot. It could be an algorithm. There's a lot of things that can generate above market returns. But that's really, you know, where he's, you know, the majority of his career just revolved around, you know, giving investment advice and, you know, helping people with their hedging strategies and trading strategies. I mean, A, he had this awesome network of LPs, you know, that he could go to, to when he started his fund. And then B, he's just, he'd been following the markets for decades, right? And he can, he can see these trends. So he started the Pure Alpha Fund in 1991. That's, you know, performed really well. Revolves around, you know, more higher concentration in positions and then, you know, really tactical asset allocation, right? Alpha could come from being maybe more bullish on a certain sector more so than another sector. So there's a lot of different ways to, you know, generate alpha in your firm. Hey guys, so if you want to learn more about investment funds, how they work, how they're structured, if you want to become a fund manager, how I became a fund manager, visit our YouTube channel for more free value. The link is in the show notes. Thank you. And then again, like I said, he started the All Weather Fund in 1996. And his all weather product is really like a diversifying element, right? That he basically says, as long as you, you know, are exposed to this asset, then you can weather any sort of, you know, market downturn. And that was a really popular product, right? It's not going to be crazy. It's focused on diversification, risk parity, risk management, an inflation hedge, a really long-term focus, right? And I think this is an important concept for people to understand that, you know, so he had these two very different products. And I think this is largely one of the things that attributed to his success. You know, he's got, he focused on the beginning capturing alpha and then five years later, you know, as a result of listening to his investors and their needs and their wants, he launched this All Weather Fund. And he's really only ever launched a few products that people need. And he's just scaled iterations of those products. And it's ultimately led him to managing hundreds of billions of dollars. So he's launched like subset of those two products and combinations of those products. But those are really the driving two that have built, he's built his entire empire. And I think an important note for especially emerging managers out there, is he did not do it simultaneously, right? I think that's a big mistake. A lot of people have all these investment strategies and they try and do them all at the same time. And that typically results in neither of them getting off the ground. So he started with one, he refined one, he leaned on his prior experience and track record of consulting and separately managed accounts, right? Because he landed his first separately managed account in 1985. So he did SMAs for about six years before he even started his first fund. So, you know, I guess what I would say to you guys that are just starting is play this long term, right? This isn't a short term, get rich quick, you know, business, but this is like a get rich over time sort of play. And it's a really fascinating industry. And I think Ray was really good about just taking his time and being very methodical, principally driven in his approach to starting funds. You know, to kind of recap a little bit, you know, what made this Deca billionaire that we know today that is probably one of the most influential people in finance, you know, it's just, he did things step by step, right? He started his own business and he started consulting for year after year. He was essentially a content creator. He got his ideas out there. And by the way, he was often, you know, when you put your ideas out publicly, you'll get scrutinized for it. You know, it happens to me, it happens to my business partner, Bridger. And so I think that's what happened to Ray all the time. When you publicly push out your information, there's always gonna be haters, right? And it's a lot you have to deal with, but I think the benefits outweigh the cons. So I'd encourage you guys, you know, be public, you know, with your investment strategies, with your thought processes, you know, be a voice and have a voice. And, you know, that ultimately led him to landing some big accounts and launching his fund in 1991, which is now just a superpower today. In case you guys didn't know, they no longer take on outside investment, right? You have to have like a $7.5 billion net worth to even be considered in investing in one of his funds because his minimum check size is so high, right? Because he can demand it, right? He's posted good returns decade after decade. And, you know, when you do that, you can justify and require higher check sizes. And only then the elites of the world really want to or can invest with him. So just remember, as you guys are starting your funds, you know, he didn't become Ray Dalio overnight. It was a long-term process. And I'd encourage you, like I've done myself, to follow Ray's counsel and live a principally driven life. So try and add principles into your life in the way you make decisions. Write them down. And I think it'll help you guys a lot. It's helped me substantially. Thanks for listening. All information shared are the sole thoughts and opinions of the author. Do not take any information as legal or financial advice. You should seek a certified accountant and a professional legal team before taking any further action. We are not selling or soliciting a security in any way, shape, or form. This content is for educational purposes only and is not to be construed as financial or legal advice. Clients of FundLaunch or Black Card Capital Partners may maintain positions and securities discussed on this podcast.