Bridgewater Gains 35% Over the Year 2022 When Ray Dalio Decides to Retire.
The world's largest hedge fund is increasingly distancing itself from its competitors.
Bridgewater, dubbed the icebreaker of hedge funds for its size and power, has outpaced its competitors, traders, and funds alike. It has a 9-month gain of nearly 35% in 2022, a figure roughly similar to that of the first half of 2022. He has managed to hold it despite the tumult in the markets. His performance is three times the average return of his competitors on this strategy, the "global macro."
This strategy consists of investing in all major markets (stocks, bonds, currencies, commodities) or betting on their fall (short selling). It was his anticipation of market declines (bonds, stocks) that made his fortune. He also made money on the rise of commodities and the US dollar.
The year 2022 marks Bridgewater's comeback after two mediocre years (-12.6% in 2020 and +8.1% in 2021) in terms of investors' expectations of the world's largest hedge fund. Institutional investors, who make up the bulk of its clients, had begun to doubt its ability to perform given its excessive size (more than $150 billion) and the way it operates, which is considered too formalized and stifling.
Bridgewater could exceed its 2009 record of 40% performance this year. This is an opportune moment for Ray Dalio, Bridgewater's founder, to announce that he is stepping back after 47 years of loyal service in a very demanding and competitive industry.
Ray Dalio's retirement is not a shock, given the fund's highly collegial organization, nor is it a surprise. He had been preparing for his succession since 2010. He tested and exhausted many candidates, often in pairs, many of whom threw in the towel in the face of the challenges and demands of this "meritocracy of ideas."
“Accomplishing great things” even without Ray Dalio
This 1,300-person hedge fund is now co-managed by Nir Bar Dea and Mark Bertolini. Ray Dalio has resigned as co-investment manager. He has sold his shares to the other main partners of the hedge fund but remains a member of the board of directors. “Hopefully until I die, I will continue to be a mentor, an investor, and a board member at Bridgewater, because I and they love doing those things together. That's a dream come true,” he said on Twitter.
“Bridgewater can accomplish great things for generations and without me.” Even though he has taken a back seat, Ray Dalio will continue to be listened to, both internally, and by investors and traders around the world.
For the Bridgewater founder, the markets are by no means done with the global crisis. The economic situation in the United States “is expected to worsen in 2023 and 2024, which will have consequences for the elections.” For Ray Dalio, this would make it easier for Donald Trump to return to power.
Ray Dalio had slammed British Prime Minister Liz Truss' economic program and its impact on the markets. “The British government is behaving like an emerging country, wanting to issue too much debt in a currency (the pound sterling) that the world is not very keen on. That suggests incompetence.”
He then praised Liz Truss for her reversal regarding tax cuts. “Politicians are generally reluctant to admit their mistakes and change their minds when it's obviously wise to do so, which is stupid and dangerous.”
Some reading
“The Environmental Damage of Bitcoin Is Comparable to That of Beef” — Debunking the FUD. Beware of the globally organized propaganda against Bitcoin.
Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail by Ray Dalio.
We Are Entering a New World, and We Will Have a New Currency War. Central banks are faced with an impossible dilemma between recession and inflation.
Principles: Life and Work by Ray Dalio.
Should You Be Afraid of Rising Rates as an Investor? An attempt to answer a question that many are asking.