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.