rss

Bridgewater warns of a lost decade ahead for stocks

Bridgewater Associates is a Ray Dalio founded US investment firm. Via an analysts’ note:

Analysts at the firm are warning of a lost decade ahead for equity investors.
Citing:
  • U.S. corporate profit margins could reverse the strong growth seen in recent years.
  • these margins have provided a substantial portion of the excess return of equities over cash
  • reversal is more than merely the current cyclical downturn in earnings
  • “Globalization, perhaps the largest driver of developed world profitability over the past few decades, has already peaked”
  • “U.S.-China conflict and global pandemic are further accelerating moves by multinationals to reshore and duplicate supply chains, with a focus on reliability as opposed to just cost optimization.”
Also warn on rising corporate debt due to the efforts made on the coronavirus pandemic.

Ray Dalio debunks WSJ story about his bearish position

Ray Dalio from Bridgewater Associates responsed to WSJ article

It was reported by the Wall Street Journal earlier today that Ray Dalio from Bridgewater Associates had a 1.5 billion bearish option position on the S&P and Eurostoxx 600 index.
Dalio is out with a tweet debunking the story. He tweets:
 Ray Dalio from Bridgewater Associates responsed to WSJ article
Even if he did, or does,  have a 1.5 billion option position (it is not clear), it would dwarf the money under management (and likely long position).

The Alpha Masters-Maneet Ahuja :Book Review

Maneet Ahuja’s 2012 book The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Fundsis now available in paperback. Somehow I missed the book when it first appeared, so in the spirit of “better late than never” I decided to write a few words about it here.

Most of the characters in this book are familiar: Ray Dalio of Bridgewater Associates, Tim Wong and Pierre Lagrange of Man Group/AHL, John Paulson of Paulson & Co., Marc Lasry and Sonia Gardner of Avenue Capital Group, David Tepper of Appaloosa Management, William A. Ackman of Pershing Square Capital Management, Daniel Loeb of Third Point, James Chanos of Kynikos Associates, and Boaz Weinstein of Saba Capital Management. Adding to the luminaries, Mohammed El-Erian wrote the foreword and Myron Scholes the afterword.

Many of their stories are familiar as well. So why does this book remain a compelling read?

It introduces us to a very bright, hardworking, resilient group of people. We see how their research leads them to formulate hypotheses, how they translate these hypotheses into market positions, how they push their advantage, and how they bounce back when their hypotheses don’t pan out.

(more…)

You don't even need to beat the market to make a billion

Forbes on 2016 hedge fund performance


The average hedge fund returned 5.6% last year compared to 12% for the S&P 500 but that doesn’t mean the managers of the SPY ETF earned the most.
Forbes put together a list of the hedge fund managers who earned the most in 2016 and the results probably won’t surprise you. The familiar names are there and the paychecks are out-of-sight.

  1. James Simons – Renaissance Technologies $1.5 billion
  2. Michael Platt – BlueCrest $1.5 billion
  3. Ray Dalio – Bridgewater $1.4 billion
  4. David Tepper – Appaloosa $750 million
  5. Ken Griffith – Citadel $500 million
  6. Dan Loeb – Third Point $400 million
  7. Paul Singer – Elliott $400 million
  8. David Shaw – DE Shaw $400 million
  9. John Overdeck – Two Sigman $375 million
  10. David Sieger – Two Sigman $375 million
  11. Michael Hintze CQS $325 million
  12. San Druckenmillier – Duquesne $300 million
  13. Brett Ichan – Ichan Capital $280 million

(more…)

Ray Dalio Principles

Afew gems taken from Ray Dalio’s Principles. Here’s the link to the ‘Principles’ Ray Dalio founder of Bridgewater Associates published:

  • I remained wary about being overconfident, and I figured out how to effectively deal with my not knowing. I dealt with my not knowing by either continuing to gather information until I reached the point that I could be confident or by eliminating my exposure to the risks of not knowing.
  • While most others seem to believe that learning what we are taught is the path to success, I believe that figuring out for yourself what you want and how to get it is a better path.
  • How much do you let what you wish to be true stand in the way of seeing what is really true?
  • How much do you worry about looking good relative to actually being good?
  • The most important qualities for successfully diagnosing problems are logic, the ability to see multiple possibilities, and the willingness to touch people’s nerves to overcome the ego barriers that stand in the way of truth.
  • Know what you want and stick to it if you believe it’s right, even if others want to take you in another direction.
  • In a nutshell, this is the whole approach that I believe will work best for you—the best summary of what I want the people who are working with me to do in order to accomplish great things. I want you to work for yourself, to come up with independent opinions, to stress-test them, to be wary about being overconfident, and to reflect on the consequences of your decisions and constantly improve.

Hedge Fund Legends with Their Humble Beginnings

While the hedge fund industry may be mostly comprised of professionals from privileged upbringings, some of the world’s most successful hedge fund managers actually come from more humble beginnings. 
Hedge fund legends such as George Soros, Ray Dalio, and sibling duo Marc Lasry and Sonia Gardner are just some of the recognizable names in the industry from middle-class backgrounds who worked their way up the corporate ladder to become some of the most successful leaders in the financial world.
According to Soros’ official biography, the Hungary native and founder of New York-based Soros Fund Management, immigrated to England when he was 17 to attend the London School of Economics. His uncle paid his living expenses while he attended the business school. 
Nowdays, Soros, also known to many in the industry as “The Man Who Broke the Bank of England” for his $1 billion investment profit for his bet during the 1992 currency crisis that struck the United Kingdom, is one of the richest people in the world. He came in at No. 15 in this year Forbes’ 400 List of Richest Americans with a net worth of about $19 billion.
Bridgewater Associates founder Dalio runs one of the largest and most successful hedge funds in the world, but the Queens native grew up in the middle-class neighborhood of Jackson Heights. He also spent part of his childhood years catering to the needs of rich businessmen. 
According to Maneet Ahuja’s The Alpha Masters, Dalio, the son of a jazz musician and a homemaker, began caddying at the age of 12 at a Long Island golf club to make extra money.  (more…)