They say that in order to make it in this life, you need to start out young. If Ray Dalio – now America’s 44th richest man according to Forbes Magazine – was ever given this advice, he must have taken it to heart.
Dalio’s adventure in the investment jungle started at the tender age of twelve, when he worked a weekend job as a golf caddy for a few dollars pocket money.
It is a well worn cliché that golf is a rich man’s game, but it was overhearing the stock market conversations of golf players whilst caddying that inspired the young Dalio to dabble himself. This was the 1960s, and the world stock market was undergoing a boom, centred on New York. Wall St was the beating heart of this revolution; a young and exciting place to be – and Ray was fired up to earn his own slice of the pie.
When investors are looking for a hedge fund to invest their money with, they usually look at returns. Of course, the larger the positive return, the better, but what about during major market selloffs? It may be easy to discount a hedge fund's negative return when everyone else lost a lot of money. However, hedge Read More
Ray’s first investment, whilst still at school, was no more than a couple of shares in a newly founded domestic airline company. It turned out to be a wise choice; within a few months Ray’s pocket money shares had tripled in value. This gave him pause for thought – what if he had been in a position to invest $10,000, rather than $10? He was now confident that the business of earning millions of dollars was simply a matter of numbers, combined with a sharp eye and a keen business sense. He became used to trusting his gut instincts, and they rarely let him down.
Ray finished his education and went to Harvard Business School for post-grad studies after finishing university. It was here that he took on a summer internship as assistant to the Director of Commodities at Merril Lynch, and had his first taste of “The Street”. Within two years of finishing Harvard Ray set up his own Hedge Fund – Bridgewater, in 1975.
Breaking the Mould
Nearly forty years later, Ray’s venture oversees some $130 billion of assets, and Dalio himself enjoys a personal fortune of over $10 billion, making him one of the world’s richest men.
Today, Ray Dalio is something of a quiet billionaire. He doesn’t seek the limelight and isn’t as well known as the likes of George Soros or Warren Buffett. However, his story yields a number of worthwhile morals for the would-be investor.
Principle among these lessons is that Ray Dalio is a clear example of why specialisation is not always the key to success, no matter what the so-called experts might say.
Financial orthodoxy tells us that the road to long term success is to play with your strongest hands. For example, if you have a good intuition for plotting stock market trends, then you need to be focusing on stock price charts. If your passion is investing in small companies when they are obscure and cheap, it is more worthwhile trawling through annual reports to find your diamond in the rough – and leaving stock trends to other people. For most investors this focused approach is enough.
Ray Dalio never cared to be put in a box and has always been something of a maverick. In his time in the business he has developed his own unique approach to economic forecasting and an idiosyncratic management style that is loved by some, loathed by others.
One thing is true; Ray was never afraid to trust his instinct and to apply his own experience to the problems at hand – and then to make bold decisions with confidence, even if those decisions appeared eccentric to others or broke the conventional mould.
At the end of the day the critics can say what they wish, as the last laugh is on Ray; the man who came from nothing to be “the world’s most successful hedge-fund boss”, in the words of The Economist.