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This Is Why Bridgewater Manages $138 Billion

Tyler Durden's picture





 

For those who want to imitate what is once again the world's largest hedge fund (reclaiming the spot from Apple's own prop trading vehicle, Braeburn, first exposed here), Ray Dalio's Bridgewater, which at last check had $138 billion in AUM ($76 billion Pure Alpha, $63 billion All Weather), the path is simple: just recreate the performance shown on the chart below over a period of two decades. (Oh and stop "trading" on Twitter and do some real trading).

 


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Thu, 11/08/2012 - 11:08 | Link to Comment Middle_Finger_Market
Middle_Finger_Market's picture

Can I hear music still playing in the background?

Thu, 11/08/2012 - 11:13 | Link to Comment CPL
CPL's picture

In a couple of weeks they'll only be managing a buck.

 

240 enter.

Nobody leaves alive

Thu, 11/08/2012 - 11:17 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

...the path is simple: just recreate the performance shown on the chart below over a period of two decades.

Close enough?

 

http://www.the-privateer.com/g-bottom/gold98-l.html

Thu, 11/08/2012 - 11:21 | Link to Comment CPL
CPL's picture

Holy shit...good catch.

 

They aren't investing into anything but physical PM's.  Good boys.

 

You can beat it up ,

Slap it around.

All gold prices crush fiat down.

Thu, 11/08/2012 - 11:27 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

If I was smarter, and even more egotistical, I would create a chart for the dollar-cost-average strategy of buying gold the day before option expiration every month for 20 years.

Thu, 11/08/2012 - 11:28 | Link to Comment economics9698
economics9698's picture

After reading that my brain hurts.

Thu, 11/08/2012 - 12:03 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

Why?  It isn't hard.  Each month, the day before op-ex, buy the same dollar amount of gold, say $1,000.  When it is cheap you end up buying more ounces, when it is expensive you buy less for the same $1,000.  On average, your price per ounce is less, so your return is greater...much greater.

Everytime the paper-gold folks hammer the gold price before opex you can be thankful.

Expenses are low, as you don't need a Bloomberg terminal, phone, or even a desk. 

You don't need to waste your life sitting in compliance meetings, and you can sleep at night because gold has never gone to zero.

 

 

Thu, 11/08/2012 - 12:36 | Link to Comment onebir
onebir's picture

But why that particular day?

Thu, 11/08/2012 - 12:42 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Because there is manipulation in them thar markets.  And the big boys don't like any one making money 'betting/speculating/gambling' on gold price increases by buying options, so almost without fail they try to hammer the price of gold down in the week and day prior to Options Expiry.

Thu, 11/08/2012 - 12:02 | Link to Comment Jake88
Jake88's picture

Too bad you're not smarter.

Thu, 11/08/2012 - 12:39 | Link to Comment Overflow-admin
Overflow-admin's picture

Try putting a HFT bot for selling before COMEX opens and buying between 9-11AM if/when the strange daily pattern emerges...

I don't remember precisely the performance that would have had such a mechanism in the last 10 years, but I think returns would have been in thousands percent.

Thu, 11/08/2012 - 11:15 | Link to Comment idea_hamster
idea_hamster's picture

Note that the vertical axis is a log scale -- so that nice linear slope is, in fact, nominally curving up.

That's some kind of marketing piece.

Thu, 11/08/2012 - 11:31 | Link to Comment Mercury
Mercury's picture

So what? The list of managers who can market an annualized return (1991-2012) number like that is pretty short.

Thu, 11/08/2012 - 11:53 | Link to Comment idea_hamster
idea_hamster's picture

My point was simply that if they had used a standard axis rather than a log-scale axis, the growth would appear much more substantial.

When your marketing materials down-play your success, that's when you know you've hit the big time.

Thu, 11/08/2012 - 11:56 | Link to Comment jekyll island
jekyll island's picture

Didn't Bernie Madoff advertise that kind of return?  

Thu, 11/08/2012 - 12:02 | Link to Comment slaughterer
slaughterer's picture

Dalio: you can learn alot from him.  A true titan.  

Thu, 11/08/2012 - 11:10 | Link to Comment otto skorzeny
otto skorzeny's picture

nice. now that 2/20 is worth the price of admission.

Thu, 11/08/2012 - 12:13 | Link to Comment Urban Redneck
Urban Redneck's picture

but that chart isn't net of fees... (a 2/20 on 16.1% would be about 10.8% NET)

 

$1000 invested in 1991 would be about $10,000 now versus

$1000 in gold coins in 1991 would be about $4400 now versus

$1000 in the S&P500 (assuming 0 fees) in 1991 would be about $4200 now

Thu, 11/08/2012 - 12:40 | Link to Comment Thisson
Thisson's picture

Yes but you haven't risk-adjusted those returns. So it's apples and oranges.

Thu, 11/08/2012 - 15:03 | Link to Comment Urban Redneck
Urban Redneck's picture

Being able to sleep soundly on top of an Au or Ag stack is PRICELESS.

But to break even with S&P while paying 2/20, one would need to invest in fund with an 11% gross return, if someone either by luck or wisdom had invested in a fund with a 16.1% gross, they would have doubled the S&P perfromance (and the fund manager would have pocketed fees matching the S&P - $4200 per 1k)

Thu, 11/08/2012 - 11:09 | Link to Comment jcaz
jcaz's picture

Yeah that works....

Thu, 11/08/2012 - 11:10 | Link to Comment Let them all fail
Let them all fail's picture

That is quite impressive...

Thu, 11/08/2012 - 11:13 | Link to Comment resurger
resurger's picture

yup excellent chart! That's smart money

Thu, 11/08/2012 - 12:05 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

I need to get me one of those hedge fund things.

Fri, 11/09/2012 - 03:54 | Link to Comment Weyland_Yutani
Weyland_Yutani's picture

+1 for your profile name!

Thu, 11/08/2012 - 11:11 | Link to Comment fonzannoon
fonzannoon's picture

aapl is falling apart. where are the apple bulls that were yelling gold is a bubble....

Thu, 11/08/2012 - 11:14 | Link to Comment EvlTheCat
EvlTheCat's picture

RoboTrader is being treated for multiple personality disorder.

Thu, 11/08/2012 - 11:23 | Link to Comment fuu
fuu's picture

I admit, I was dead wrong about AAPL, no bounce in sight, Petey could have retired if he held all those puts he bought RobotTrader - Thu, Nov 8, 2012 - 10:12 AM (Views: 8)

Thu, 11/08/2012 - 11:29 | Link to Comment MillionDollarBogus_
MillionDollarBogus_'s picture

Robo is in my group therapy session.

He also went long on AAPL.

 

Thu, 11/08/2012 - 12:05 | Link to Comment Nothing To See Here
Nothing To See Here's picture

Wonder what's ahead after group therapy with your long US dollar position...

Thu, 11/08/2012 - 11:12 | Link to Comment Hedgetard55
Hedgetard55's picture

CrAAPLfall going on, down almost 2% now. Hope Ray is short.

Thu, 11/08/2012 - 11:34 | Link to Comment edb5s
edb5s's picture

Classic Matterhorn formation going on

 

http://elite.finviz.com/publish/110812/AAPLc0dl1034.png

Thu, 11/08/2012 - 11:13 | Link to Comment scattergun
scattergun's picture

Can you do an overlay graph, net of all fees and expenses?

Thu, 11/08/2012 - 11:18 | Link to Comment ATM
ATM's picture

Very Madoff-esque.

Thu, 11/08/2012 - 12:25 | Link to Comment urbanelf
urbanelf's picture

Except this money is actually invested in something.

Thu, 11/08/2012 - 15:20 | Link to Comment indio007
indio007's picture

pics or it didn't happen.

Thu, 11/08/2012 - 15:22 | Link to Comment ATM
ATM's picture

Are you sure??

Thu, 11/08/2012 - 11:23 | Link to Comment billwilson
billwilson's picture

Dalio for Treasury Secretary!

Thu, 11/08/2012 - 11:24 | Link to Comment spekulatn
spekulatn's picture

Speaking of tweets,

 


The Strongest Argument For A 100% Estate Tax Is Actually "The Fourth Estate"

http://www.finemrespice.com/node/116

 

Thu, 11/08/2012 - 11:49 | Link to Comment Mercury
Mercury's picture

+1

 

 

update: She's not advocating a 100% estate tax people, relax. It's a post about what a bunch of lazy hacks MSM journalists are.

Thu, 11/08/2012 - 11:32 | Link to Comment Agent P
Agent P's picture

Oh yeah...but can they do this?

<performing disconnected thumb trick>

Who wants to pay me 2&20?

Thu, 11/08/2012 - 11:43 | Link to Comment Oh regional Indian
Oh regional Indian's picture

The Law of diminishing marginal utility/returns is almost as axiomatic as that of gravity. 

Thus, AAPLes will ultimately always fall, look out above AND below.

Such performance, even on a log scale, must meet it's maker.

CPL got it, turbulent weather aheady.

It's a laughing/crying shame to see how the Indian market is goosed on a daily basis, where fundamentals are practically non-existant, or if they do exist are based on such things as crushign the rupee to keep IT majors alive. The concominant impact is very expensive Silver (mostly imported) and Gold. Out of step with the global markets.

Not to forget Hot foreign money, which manages the cycle of global indices marching in some weird tango, whose beat is only known to them, rush in and out of th emarket, creating convenient ripples on which they trade, coupled with their control of the Rupee/Dollar index makes for a current winning situation.

All this man-i-pulation is looking weaker everyday.

ori

Thu, 11/08/2012 - 11:56 | Link to Comment Honey Badger
Honey Badger's picture

I thought the Fed was the world's largest hedge fund.

Thu, 11/08/2012 - 12:22 | Link to Comment Grand Supercycle
Grand Supercycle's picture

WILE E.COYOTE sell off awaits...

SPX H+S on daily chart continues [very bearish pattern]

SPX also shows probable H+S on weekly chart.

This bearish impending price action will comprise the first installment of the very overdue Wile E. Coyote sell off.

As mentioned, the previous SPX meltup - devoid of healthy retracements - has caused this coming crash.

One can only stretch the bungee cord so far before it reacts...

http://trader618.com
http://www.zerohedge.com/news/2012-12-24/market-analysis

Thu, 11/08/2012 - 12:23 | Link to Comment disabledvet
disabledvet's picture

"levered 100 to 1" of course. No, the winners are the policy HOLDERS not the policy makers. Travellers has sent out 10,000 for Hurricane Monetization as per their contractual obligations. (with a big push by Sandy Weil i am sure.) As stated by me "they should offer generous terms." You only get an interest rate cram down and systematic slaughter of carry when the communists are in charge. Oh, well! Business interests obviously prefer to work with the TPTB...but i think they realized rather late in the game...we've gone from New Deal, to Fair Deal to No Deal now. I'll wait with bated breath for the credit creation that's coming of course since as Chairman Bernanke has said repeatedly "there is no connection to the creation of credit and the creation of a single job...IN HISTORY!"

Thu, 11/08/2012 - 12:44 | Link to Comment Thisson
Thisson's picture

I'm sure I'm not the only one who has no idea what you're talking about. 

Thu, 11/08/2012 - 13:23 | Link to Comment arsenal009
arsenal009's picture

Physical Silver has averaged 23.5% in the past 10 years.  Screw Bridgewater.

Thu, 11/08/2012 - 14:37 | Link to Comment Stud Duck
Stud Duck's picture

Screw that, I am moving to Colorado and grow pot!

Remember 250 lbs @ $3,000 lb is $750,000. FROM A WEED!!!!!!!!!!!!!

You don;t need a computer, telephone, just a small yard!

IT IS LEGAL!!!!!!!!!!!!!!!!!!!!!

Thu, 11/08/2012 - 15:58 | Link to Comment oldschool
oldschool's picture

You're probably not serious, but if you were, you'd be well-advised to remember that the per pound price you quote mostly represents the risk of doing illegal business, and it's stlll illegal under federal law in all 50 states.  Under state law it's still illegal for minors in 50 states and for adults in 48 of 50 states.  So even if the supremacy clause problem regarding federal illegality is overcome somehow, the legal market is still pretty small and would be generating dramatically lower prices, reflecting both the lack of risk and probably very high supply (given the low barrier to entry/production costs).  

In other words, this is just a pipe dream.

Thu, 11/08/2012 - 20:58 | Link to Comment StychoKiller
StychoKiller's picture

Briarwood, clay, hookah, bong... it's all good!

Thu, 11/08/2012 - 16:38 | Link to Comment ozzzo
ozzzo's picture

Growing plants is hard work. The marijuana plant is not a magical money tree. Growing pot is a labor of love. Good luck!

Thu, 11/08/2012 - 15:19 | Link to Comment billsykes
billsykes's picture

its not early quantum fund returns- and gross of fees, you are siphoning off 2% PA instead of compounding that fee..... makes a huge difference on adjusted return, but really what bridgewater is providing is slow and steady, with low Sharpe ratios and a return on and of capital.
Over the long run PE has returned better but sometime vintages can be are pretty hairy. 

 

 

Thu, 11/08/2012 - 15:38 | Link to Comment gjp
gjp's picture

Why are you celebrating a hedge fund manager with Madoff-like returns whose macro economic framework (beautiful deleveraging, self-sufficiency without real production) is pure bollocks?  Accident waiting to happen ...

Thu, 11/08/2012 - 16:54 | Link to Comment Catflappo
Catflappo's picture

They must have holding on to their seats back there in 1991 as they got off to a good start then 'gave it all back'.

But it had a happy ending....

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