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Ray Dalio's Principle #11

Leo Kolivakis's picture




 

Via Pension Pulse.

Laura Lorber of Bull/Bear Report recently wrote on A Billionaire Hedge-Fund Manager's Rules to Live By:

Outspoken hedge-fund manager Ray Dalio isn't shy about sharing his opinions with employees and clients. Now he's sharing them in the form of an 85-page document called "Principles" with the world via the Dealbreaker blog.

 

The 60-year-old founder of Bridgewater Associates outlines 295 rules to live by -- with 67 footnotes and yellow highlighting. Bridgewater, based in Westport, Conn., with nearly 1,000 employees, is one of the largest hedge funds in the U.S. and has made no secret of its culture of continuous improvement.

 

Dalio's "Principles" document is must-reading for anyone interviewing at the firm. Or most anyone interested in pursuing or advancing in a financial-services career. As the WSJ.com DealJournal blog put it: it's a chance to read the collected thoughts of "a multi-billionaire who founded the nation's second-largest hedge fund."

 

Principle No. 1: "Think and act in a principled way and expect others to do as well."

The list gets more interesting from there. Our favorite:

 

No. 11: "Never say anything about a person you wouldn't say to him directly. If you do, you're a slimy weasel."

Mr. Dalio explained his updated Principles in detail further with Bess Levin of Dealbreaker (click on image below to enlarge):

I met Ray Dalio back in 2004 and was impressed with the man and the organization. Bridgewater isn't perfect (he will be the first to tell you that), but they have made important strides in achieving a work environment which fosters open communication among all their employees, not just a few at the top.

At the meeting, I told Ray that longer-term I was more concerned with debt deflation than inflation. Ray is an agnostic when it comes to where markets are heading which is why his money is invested in Bridewater's All Weather portfolio. He looked at me and asked, "Son, what's your track record?" (Interestingly, more recently, Ray has been talking up the D-process).

That was a classic Ray Dalio response, one which I will never forget. The person that accompanied me got a hoot out of that response. Too bad that same person broke his many promises to me and violated Dalio's Principle #11, placing me in a terrible position, irrevocably altering my life. Till this day, he never apologized to me even though I was loyal to him and warned him about the looming credit crisis and what needed to be done to bolster the organization and protect pension assets.

In any organization, there are destructive office politics. People more concerned with managing their careers than managing in the best interests of the organization. I never kissed any president's ass. My job is to prepare them by informing them on the risks that lurk ahead. Ideally, that is how every employee should think, but few have the backbone to do this.

Ray Dalio's Principles are a must read for any organization. And please, have the guts to follow Principle #11. If you don't, you're just another slimy weasel.

 

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Sun, 05/16/2010 - 22:52 | 355679 Apostate
Apostate's picture

Yes. His firm will absolutely blow up. Everyone who works at Bridgewater is... a clone of this guy.

It seems impressive on the surface, but their approach is all black magic. They're ill-positioned to handle an "unpredictable" panic. 

Mon, 05/17/2010 - 09:55 | 356162 Leo Kolivakis
Leo Kolivakis's picture

You don't have a clue of what you're talking about...none whatsoever.

Mon, 05/17/2010 - 22:01 | 357462 AccreditedEYE
AccreditedEYE's picture

I'd put a fair amount of money down that Bridgewater will be around a lot longer then Apostate is... lol. There is a lot more to corporate culture then many people understand... Look at The Squid as a prime example for God's sake. Again, thanks for the post Leo.

Sun, 05/16/2010 - 22:24 | 355614 geoffb
geoffb's picture

This guy needs a giant dose of Malcolm Gladwell, Nassim Taleb, Geoff Colvin et al.  If this is how he thinks the world operates, I would bet a fair stake that this firm blows up in the not too distant future.

Sun, 05/16/2010 - 21:44 | 355527 Fazzie
Fazzie's picture

 One thing I detest are the spoiled rich kids who manage to make some money, and think they did so not from having it made from birth, but from being inately superior to the unwashed masses.

 

  Invariably these douchebags think their sucess must be due to them having adhered to a set of lofty inate "principles","rules to live by" or some sort of ten-commandments-ish terminology. 

 

 Naturally, not having to work for a living, and having a lot of time to sit around on their ass and ascribe noble motivations to their "work",(which as a hedgie is manipulating markets and screwing clients out of money) they then realize they must share these heretofore abstract extremely noble and clever "rules" with the presuably unprincipled masses who are only a nice written guidebook away from realizing just how amoral they are and how great some rich bastard is.

   So their ego will not permit these "rules" to remain unwritten, and of course they arent common sense, poor folks are amoral. So here comes a laundry list in some form or another, that they title with their own name,of course, "Dick Mongers 13 keys to success" or some such crap.

 They leave out the real keys, of course, like being born into wealth, sent to the best schools, having the right connections to get those criminal charges fixed (while the principle list is in development), Having a nice rigged sandbox to play in just in case your towering and highly principled intellect needs a helping hand, and of course an SEC that looks the other way when one or more of these rules has to take a back seat.

 Usually its a mercifully short list, inoffensive, motivational bullet points culled from the common sense file under the "no shit" category.

  But it takes a billion dollar ego and a quintessential douchebag the size of a hot air balloon to actually sit around and come up with 295 of em, with annotations to boot!

He should call the list "295 reasons why im such a douche".

 

  BTW, Talking behind someones back is something everyones does and everyone denies. Guys gossip just as bad as females. It probably serves some socialogical purpose, but just seems unfair.

 

Sun, 05/16/2010 - 20:15 | 355406 Carl Marks
Carl Marks's picture

My corollary to Rule No. 11: Never stab a man in the back. Gut him.

Sun, 05/16/2010 - 19:48 | 355367 anarkst
anarkst's picture

A billionaire with principles? I do believe that, generally speaking, there exists an inverse relationship between one's principles and their degree of wealth.

Sun, 05/16/2010 - 19:40 | 355352 BlackBeard
BlackBeard's picture

295 rules?!?! what a douchebag.

Sun, 05/16/2010 - 18:41 | 355252 deadparrot
deadparrot's picture

Reads like many of the ethics and standards that every company I ever worked for espouses publicly and breaks routinely. 

Sun, 05/16/2010 - 21:48 | 355534 Fazzie
Fazzie's picture

  Especially if the principle in question, might cost a buck or take actual effort, or impede a buck being made.

Sun, 05/16/2010 - 19:38 | 355350 Astute Investor
Astute Investor's picture

+1000

Sun, 05/16/2010 - 18:06 | 355198 AccreditedEYE
AccreditedEYE's picture

Thanks Leo, very cool stuff.

Sun, 05/16/2010 - 15:13 | 354918 PD Quig
PD Quig's picture

The world might be a better place--but it would certainly be a boring one if you couldn't talk discretely and frankly about your opinion of others with your friends and family. I haven't run across either too many saints or too many people who had the f*ck you money to tell the unvarnished truth to the face of people who desperately need telling.

In my experience, most folks who have achieved power--Dalio may be an exception--are not actually interested in much of anything their underlings have to say when it doesn't confirm what they already think. So am I a slimy weasel because I feel the need to vent on occasion about what an idiot my CEO is--but also to keep my job for the time being? I don't think so.

Are the rest of the rules are this lame?

 

Mon, 05/17/2010 - 15:28 | 356829 JW n FL
JW n FL's picture

You Sir, have never had the honor of managing idiots then... the Peter Principle? please, the sheepeople are all Peter in one form or another. Baby Sitting the ignorant masses, who would fling shit at each other all day and eat all the candy they could ingest minus real supervision?

 

Please, the mob of ignorant fucks that you speak about so romanticly would skull fuck you for a candy bar if the light went out... and the sheep dont keep the lights on.

 

Now you can choose to ignore the facts as presented or even hope for someone with less venom to explain what your reality truly is, but dont bother me with how the hoards can manage themselves.

Sun, 05/16/2010 - 15:44 | 354956 snowball777
snowball777's picture

Slight difference in ethicality based on the fact that your family is of little consequence to your CEO in the grand scheme. If you badmouthed the bastard to someone else in the industry, for example, you would indeed be 'slimy'. Staying employed with someone you don't respect merely makes you guilty on the 'weasel' charge.

 

Sorry to say this to your face, but it's one of my 'principles'. ;)

Sun, 05/16/2010 - 15:12 | 354909 Astute Investor
Astute Investor's picture

All fine and good, but talk is cheap.  Nobody ever became a billionaire by actually folllowing such lofty principles....

"You'll be better advised to watch what we do instead of what we say."

- John Mitchell -

Sun, 05/16/2010 - 13:18 | 354802 JW n FL
JW n FL's picture

I was raised to be polite, so I talk about people behind thier backs?

Just kidding? everyone knows that I LOVE to talk to peoples, front.

Leo, ready to make some moeny this week? did you send the French a Thank You Card? for the turmoil? how about the Germans? did you send them a Thank You Card? do you think you should? I know I whould send some Johny Blue over for last week, alone... and this is not ending any time soon! God Love the idiots!

Sun, 05/16/2010 - 12:59 | 354764 snowball777
snowball777's picture

No. 11: "Never say anything about a person you wouldn't say to him directly. If you do, you're a slimy weasel."

http://www.youtube.com/watch?v=CTceBCkoxw0

Now I know fools get their own when they chit chat
Haven't heard yet, but you can bet I'm not with that
With that talk, with the digi walk
I struck a bird, you heard, absurd, word to the fact
I'm a cat, nippin', sippin' on the flask
Passin' it, talkin' shit, but only if you're an ass
In front of me 'cuz you could run from me but
In the end, revenge send ends to the defendant

I can't get caught in the spiral
'Cuz every bit of energy, it goes to my survival
Out my way, I'm a flicka flacka blotter
Ya try to find a weakness, but the shit keeps gettin' harder

Sun, 05/16/2010 - 12:58 | 354763 Apostate
Apostate's picture

I've heard good and bad things about Bridgewater.

They have a philosophical culture. They have the quant disease, at least from my understanding - or they do Elliot Wave, or something... not really clear to me. I disbelieve in that stuff, but the traders can sometimes succeed despite the ideological blinders. 

I applaud the publication, though... should make for curious reading.

But, fuck, CONNECTICUT. Who wants to live in CONNECTICUT?

Sun, 05/16/2010 - 21:08 | 355474 Mercury
Mercury's picture

But you get to wear one of those bad-ass T-shirts that say:

DON'T MESS WITH CONNECTICUT

(which is also probably a rule)

Sun, 05/16/2010 - 12:39 | 354734 dumpster
dumpster's picture

anal retentives need to stick together  "son"

Sun, 05/16/2010 - 20:05 | 355399 Noah Vail
Noah Vail's picture

Yup, I can see it now with 295 rules to live by he spends most of his days with his nose in his rule book. Wonder how long it take to memorize 295 rules, IN ORDER.

 

People who make rules do it for others, never themselves. You might say they are charitable, but then maybe not.

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