In the spring of 2010, a Web site called Dealbreaker obtained a notable PDF. Dealbreaker was a gossip-and-news blog in the mold of Gawker, focussed specifically on the cartoonish personalities and plotlines that emerged from the world of Wall Street and high finance. This PDF was of particular interest, as it concerned one of the more colorful, idiosyncratic, and egomaniacal figures which that province had yet produced: Ray Dalio, the founder of Bridgewater Associates, one of the largest hedge funds in the world. The document laid out what Dealbreaker called the “Tao of Dalio,” and what Dalio called his “Principles,” a novella-length manifesto that the blog claimed Bridgewater employees were encouraged to read, deploy in their daily lives, and quote from regularly at work. “If you didn’t know anything about the Bridgewater’s Tao of Dalio,” Dealbreaker observed, “you might find yourself asking ‘WTF is this shit?’ ”
This was the public début of “the hedge fund’s unofficial handbook.” One version outlined more than two hundred general rules that ranged from short axioms (“Don’t act before thinking”) to long-winded anecdotes about Darwinian competition, all compiled in a chaotically designed document that made liberal use of ellipses, highlights, underlines, bolded text, charts, and equations like “Reality + Dreams + Determination = A Successful Life.” An early chapter described a favorite allegory of Dalio’s, in which a pack of hyenas attacks and devours a wildebeest. Some might see the hyenas as “evil,” Dalio offered, because “the poor wildebeest suffers and dies.” But, in reality, the outcome is good for both parties. The hyenas are acting in self-interest, playing their part in the food chain. And, in a roundabout way, wildebeests would profit, too, as part of the greater ecosystem. “Killing and eating the wildebeest fosters evolution,” Dalio wrote, “(i.e., the natural process of improvement).”
The story was meant to capture the founder’s philosophy of leadership. In the interest of facilitating that “natural process of improvement,” Dalio imposed on Bridgewater staff a system of “radical transparency”: criticism was supposedly welcomed, encouraged even, so long as it was addressed directly at its subjects, rather than behind their backs. “I believe that radical truth and radical openness are essential for this rapid evolutionary process to occur,” Dalio wrote, “because it prevents the secretiveness that breeds hidden agendas and stands in the way of open debate.”
Thirteen years after the Principles became public, the New York Times reporter Rob Copeland has published “The Fund,” a book that blends Dalio’s biography and Bridgewater’s history into a closely observed investigation of how the Principles worked in practice. Copeland covered business at the Wall Street Journal for nearly a decade before moving to the Times, and has spent much of his career writing about hedge funds like Bridgewater. His history of the firm benefits from deep sourcing, drawing on new on-the-record interviews, internal documents, and multiple leaked e-mails, some of which are imported straight into the text.
But Dalio has apparently not received Copeland’s investigation with the kind of ego-annihilating humility his management philosophy recommends. (“At Bridgewater,” an early version of the Principles read, “people have to value getting at truth so badly that they are willing to humiliate themselves to get it.”) Copeland alleges that, after he notified Bridgewater of “The Fund,” several former staff members received additional payments so that they would not speak to the press. (Bridgewater called this “unequivocally untrue”; a representative for Dalio said it was “categorically false.”) Dalio did not coöperate with reporting for the book, and he and Bridgewater also hired, per Copeland, attorneys from “not one or two but three white-shoe law firms,” which have threatened Copeland’s publisher, St. Martin’s Press, with a lawsuit for billions in damages. Both Dalio and Bridgewater maintain that the book provides an inaccurate portrayal of the company, including the way that Dalio’s Principles were used.
Copeland seems to relish Dalio’s reaction. As he writes in an author’s note, “Ray Dalio does not want you to read this book.” But the portrait he paints of Dalio does not depart dramatically from what the hedge-funder has readily revealed about himself. In addition to meticulously refining his axioms, Dalio has spent decades publicly opining on his fund, his philosophy, and important existential questions (per one piece he wrote, “What is a Jeweler?”) in just about any outlet that will have him. After reading articles that he disliked, Dalio would frequently call Copeland to “ream” him out. (Dalio, through a representative, said their conversations were respectful.) But these alleged tirades also made the executive “the ultimate source for a journalist,” Copeland writes—in the calls, Dalio would inevitably reveal some new fact, tipping him off to another lead.
When Dalio founded Bridgewater, in 1975, he did not have much by way of assets. The only child of a jazz musician, he had grown up in what Copeland describes as a working-class Long Island suburb; his primary encounters with wealth were at a golf course where he caddied. A middling student but a good talker, Dalio had parlayed his C average into a probationary admission at a nearby college, taken up meditation, and improved his G.P.A. enough to help secure a seat at Harvard Business School. He had flopped on the postgrad job market, briefly overseeing a cratering commodities firm before getting fired from a brokerage for, among other things, allegedly punching his boss and bringing a stripper to a work event. But Dalio had some old-money connections from his caddying days, and happened to be dating one potential backer. His soon-to-be wife, Barbara, was a Vanderbilt.
Dalio started Bridgewater as a kind of consultancy for commodities, an asset class that had long been seen as unsexy. Dalio’s proximity to old wealth, Copeland writes, taught him that large institutional investors weren’t interested in maximizing growth so much as minimizing risk. His initial business was directed at managing that risk; if a company relied on a volatile commodity, he would help them stabilize costs by investing in assets likely to balance out losses. Over time, the firm evolved into managing investment portfolios that simultaneously took long positions (bets that a given asset will appreciate) and short positions (bets that a given asset will depreciate). “This was, in all but name, a hedge fund,” Copeland writes.
Hedge funds had fallen out of fashion after a couple of market crashes in the early nineteen-seventies, but they were returning to the fore by the next decade. Copeland argues that Dalio had both good timing and an advantage. In addition to his investing, Dalio had branded himself as a kind of macroeconomic thinker, publishing a newsletter on global trends and historical research for clients and industry peers. As a forecaster, Dalio frequently missed the mark; he tended to see doom and recessions at every turn. In one notable instance, he warned a congressional committee that the United States was heading into its next depression, giving a performance one congressman called “more grim than the ghost of Hamlet’s father.” The market was on the rebound mere weeks later.
Even when Dalio got it wrong, Bridgewater performed well, partly because the company’s investment strategies were more systematic than his predictions. As Copeland tells it, Dalio had developed a basic set of if-then guidelines for trading, built on extensive research of global currencies, trends, and historical data. In the early days of hedge funds, so much trading was based on whim, instinct, and vaguely divinatory practices like tape reading, so called after the ticker tape used to transmit trades via telegraph. Dalio’s systematized, research-based approach constituted, per Copeland, an “unquestionable edge.”
Like many denizens of high finance, Dalio developed a fondness for jargon, both of his own invention and of the general Wall Street dialect. Among the latter: “alpha” and “beta.” Beta, as Dalio used it, was the investment return that “any investor would expect to get simply from exposure to the markets.” Alpha, by contrast, was the “extra juice”—whatever the savvy investor could add on top of beta earnings. Dalio became focussed on generating “genuine alpha.” In the early nineties, he developed a stand-alone fund within Bridgewater called Pure Alpha, an investment vehicle that aimed to be effectively all juice, no breaks.
Though Dalio continued to mistakenly predict economic doom on an almost annual basis, Bridgewater grew rapidly in its inaugural years. In the nineties, Copeland writes, Pure Alpha’s assets were roughly doubling every fiscal year. And Dalio’s perennial Nostradamus act did not always play out poorly. When the dot-com bubble burst and sent the economy cratering, Dalio and Bridgewater emerged unscathed. By 2003, Dalio ranked among the world’s wealthiest hedge-fund managers, débuting on the Institutional Investor’s Rich List with an estimated earnings of a hundred and ten million dollars that year alone. But the book is less about how Dalio made his way to the top than the obsession with his legacy that consumed him once he got there. In the more than three-hundred-page book, Dalio first mulls his retirement on page fifty-nine.
In late 2005, when Dalio first announced his plans to retire, he was fifty-six—not yet retirement age, but old enough to think about how his business would run without him. Hedge funds are name-brand goods; when the name retires, the investments often follow. So it was then, in Copeland’s account, that Dalio first started to codify his approach, not just to investing, but to leadership in general. He began dictating memos on Bridgewater’s philosophy and “core values,” devising a collection of general precepts that, per Copeland, “boiled down to prizing the ability to argue with one another without fear of offense.”
In an early version of the Principles, there were two hundred and seventy-seven of them. Dalio continued to adjust and add to the list over the years, even after he published a heavily revised version in his 2017 memoir, “Principles: Life and Work.” They were riddled with terminology of Dalio’s design. Finding your “box” meant figuring out your role within the company, while losing your box was what it sounds like; at that point, staff could either find a new one (“getting through to the other side”) or get “sorted” (fired). There were “chirpers,” people who only rehashed stale ideas instead of inventing their own; a person was a “slimy weasel,” if she talked behind others’ backs; and then there were “shapers”—visionary leaders whose exact attributes were somewhat vague, but who tended to be public figures and whom, per Copeland, Dalio seemed to anoint primarily “after they had spent a long time speaking with him.”
“The Fund” portrays a Bridgewater in which adherence to the Principles created an atmosphere of near-constant complaint, with little distinction between actual problems and petty rivalry. Staffers were required to scout for any imperfection and report it in company-wide “issue logs.” Because Dalio mandated weekly issue quotas, these entries ranged from normal concerns to quibbles over “wilted peas at the cafeteria salad bar.” Dalio enforced his commitment to total transparency by recording almost everything in the building. When a staff member was accused of a misdeed, Dalio would hold public trials, often in front of other staffers, and almost always on tape. He had the footage uploaded to a central “Transparency Library,” some edited into brief training videos. Staff were required to watch them almost daily and complete short quizzes, whose answers seemed to supply themselves. A representative yes-or-no question: “Should we have truth at all costs so that if a person lies they should always be fired?”
Dalio’s inquisitions, in Copeland’s telling, could get overtly cruel. He once berated a top deputy—a woman so impassive and glacial she was nicknamed the Ice Queen—until she broke down into what Copeland describes as “animalistic sobbing.” (The woman did not respond to The New Yorker’s request for comment.) The subsequent training video, titled “Pain + Reflection = Progress,” became required viewing for job candidates. The trials could also get quite elaborate. At one point, Dalio’s heir apparent, Greg Jensen, teamed up with future F.B.I. director James Comey, then working as Bridgewater’s general counsel, to investigate one of Jensen’s rivals, an executive named Eileen Murray. The alleged offenses were that Murray had omitted details about a new employee’s background and lied about co-writing an e-mail with her assistant. (Comey did not respond to a request for comment; a spokesperson for Murray said that “there are several factual errors and misrepresentations” about her in the book, and that she did not knowingly omit details about the employee.) But Comey and Jensen turned it into a nine-month interrogation of Murray’s entire tenure, which Dalio had edited into serialized “episodes,” released weekly for company-wide viewing. The series was, according to Copeland, a “combination of reality television, soap opera, and cinema verité.” Dalio called it “Eileen Lies.”
Dalio’s end goal with the Principles seemed to be to create not just general axioms but a kind of computational system, a series of if-then-type rules, that could codify every aspect of human behavior. Copeland writes that, in the two-thousands, he assigned a team to create “baseball cards” for staff—effectively, personalized report cards that publicly logged employees’ scores on his various metrics. The idea was to rank personnel based on seventy-seven different attributes of Dalio’s devising, crunching stats like a ball player’s R.B.I. These cards grew into complex “multiple-page printouts,” with increasingly arcane attributes that were impossible to quantify, such as “perseverance,” “personal disclosure,” and “living in truth.”
The incentive structure of the scoring system, in which Dalio’s opinion could send any stat plummeting, evidently gave staff little reason to be blunt with their own boss. As “The Fund” tells it, only on rare occasions did Dalio receive honest feedback himself. Copeland recounts one instance when Dalio invited the Harvard economist Niall Ferguson to a sit-down in Westport, home to Bridgewater’s headquarters. In an interview, Ferguson recalled that Dalio laid out his latest theory that the economy too could be codified—that history was necessarily cyclical, and that, by understanding its rhythms and rotations, one could accurately predict which countries would succeed or fail. Ferguson transparently disagreed. “There isn’t a way of modeling the historical process,” he said politely, “and there’s definitely not a way of modeling the choices that highly indebted countries make.” In Copeland’s telling, Dalio began to malfunction. His head shook. His legs trembled. He stood up and shrieked, “Where’s your fucking model, Niall?” The crowd went silent, as did the guest. “There was no model,” Copeland writes. “That was the whole point.”
It seemed that the irrational stuff of history and the human mind were, in fact, resistant to Dalio’s codification, but this did not dissuade him from trying. His approach, according to Copeland, merely got more advanced. He devised multiple apps—Dot Collector, for Bridgewater’s endless staff evaluations, and Dispute Resolver, for mediating conflict according to the Principles—all to be uploaded onto company-issued iPads. These various apps were ultimately to be collected into one Daliofied software program, an endeavor that changed in form as often as it did in name. Among its many aliases were Prince (for “Principles”), PriOS (for “Principles Operating System”), and Vassal (for a feudal class above serf). Perhaps the most apt of the names was the Book of the Future, which spelled out both the hubristic ambitions of the project and Dalio’s quaint sense of its feasibility. “Once the Book of the Future was live,” Copeland writes, “it would solve the most pressing problems left at Bridgewater.” But “The Book of the Future” has been relegated to the past: in 2021, after more than ten years and at least a hundred million dollars, Bridgewater quietly “laid off most of the remaining staff dedicated to building the Principles software.”
In one of Copeland’s early articles about the project, a Bridgewater staffer described it as an attempt “to make Ray’s brain into a computer”—a reference point for his decision-making that would outlast him after he retired. In a sense, Copeland’s book comes closer to realizing this aim than the founder’s own efforts ever did. “The Fund” does not provide a perfect model of the founder’s mind, but it does offer a vivid snapshot of Dalio’s psyche: the same obsession with systems and rules that helped him conquer the hedge-fund world ultimately distracted him from it.
According to Copeland, Dalio’s devotion to the Principles seemed to grow in inverse proportion to the success of his funds. Dalio’s rules and the impossible task of their codification started to take up much of the hedge fund’s time. Copeland claims that at its peak, fewer than twenty per cent of Bridgewater’s two thousand-odd employees were “assigned to research or to the investment engine.” (A spokesperson for Dalio disputed this.) Such a use of resources would not have been in the firm’s favor: in the time that Dalio was fixated on PriOS and Dot Collector, Copeland argues, the rest of the finance world had caught up on his method of research-based investing. Bridgewater was no longer performing well above its peers: in some years, Pure Alpha barely performed better than the other hedge funds; in others, it did worse.
And, despite Dalio’s announcement of his eventual retirement as early as 2005, he spends the bulk of the book refusing to cede any ground. Copeland recounts a revolving door of would-be executives gunning, and failing, to get the top spot. Dalio spent years grooming his protégé Jensen, but even that prospect collapsed, when Dalio caught Jensen talking behind his back, culminating in another elaborate public trial. It wasn’t until after the pandemic that Dalio officially stepped aside, in exchange for an exit package that Copeland reports was worth a billion dollars a year.
“The Fund” is not the book that Dalio imagined would cement his legacy. It is not the mammoth compendium of universal management metrics that could answer all future problems. It is not even the biography he supposedly spent years trying to commission. In 2011, Dalio allegedly tried to woo the author Walter Isaacson into writing his life story. It’s easy to see why Dalio perhaps hoped to add his own name to Isaacson’s list of subjects, which includes Henry Kissinger, Albert Einstein, and Steve Jobs. But Isaacson evidently did not see Dalio as his type; several Bridgewater employees said he declined. (Dalio denies asking Isaacson to write his biography; Isaacson, who spoke to Copeland for the book, says he “does not recall the request making it to him.”)
Dalio does share the average Isaacson subject’s obsession with image. But he likewise has an unusual, almost anti-corporate affinity for self-disclosure, an obsession with creating an archive. That compulsion to leave a paper trail has left him wide open to a less sympathetic appraiser like Copeland. The Transparency Library alone comprises “tens of thousands of hours” of audio and video footage depicting the inner workings of the fund. The average executive might see such a repository as an immense liability, but it took Dalio years to curtail his archiving. (In 2019, a legal consultant advised that maintaining such a trove was “on the opposite end of best legal practices.”) It’s hard to imagine a record more damning than the one Dalio has created himself.
In the book’s afterword, Copeland recounts how, shortly after graduating college during the 2009 recession, he had applied for a position at Bridgewater and was rejected for the role. This decade-old experience seems to loom large in Dalio’s understanding of his adversary, whom he has characterized more than once, by the latter’s description, as “an aggrieved job applicant who couldn’t make it at Bridgewater, hell-bent on some sort of revenge.” In a bid, perhaps, to ward off the book, Dalio warned he could be radically honest about Copeland’s Bridgewater application from more than a dozen years ago. “We still have the notes that were gathered at that time,” Dalio wrote, “which, if we get into it, we’d be happy to make public.” Even from retirement, he can’t resist reaching for his receipts. ♦
