When Jerks Get Rich

"The Fund" proves that wealth has nothing to do with being a good person, even if, like Ray Dalio, you think you've developed "The Principles" of living a good life.

This week, I read The Fund by New York Times investigative journalist Rob Copeland — it’s an in-depth tell-all about Ray Dalio, founder of Bridgewater, the world’s largest and among the longest-living hedge funds. One thing that The Fund is not, is a book about investing but that’s on Dalio and Bridgwater, not the author.

Unlike great investors like Seth Klarman, Marty Whitman, Joel Greenblatt or Bill Ackman, Dalio offers us no formula for investment success. What he has instead chosen to popularize in his business and his life, are a list of “Principles” about how to live, work and think that he believes make people better. One of the revelations in Copeland’s book is that out of thousands of employees, only a handful at Bridgewater worked on the investment team — everybody else spent their time rating each other according to their ability to live by a code of “radical transparency,” where colleagues gave each other constant and public feedback that would sometimes result in Lord of the Flies style tribunals where employees were abused and humiliated by their superiors? Why did people put up with this? Well, for the money.

Dalio’s investment strategy is pretty vanilla “global macro,” goosed by his cozying up to dictators, strongmen and global pariahs like Vladimir Putin, Lee Kuan Yew, Mohammed bin Salman and Xi Jinping for insights into how they’ll be running their economies, which supposedly creates a trading edge as Bridgewater takes long and short positions in currencies, government debt, commodities and other tradable assets. When Dalio started trading in 1975, these markets were far less efficient and a clever trader could outperform and gain a following. Over the decades, these markets have evolved, become indexed and more liquid, making them more efficient and harder to beat. The “global macro” investment style, which includes funds run by George Soros and Paul Tudor Jones, among many other “trend following” CTA strategies, has become tougher and Bridgewater’s performance, once eye-popping, is now middling.

But, inertia reigns in investment management. Whitman, who I mentioned earlier, once described running other people’s money as a “toll booth” business, where people reliably drive by and toss coins at you. While money will flow out during periods of underperformance, assets raised by institutions like pensions funds, foundations and family offices are often called “sticky” because they flow out slowly — in these cases professionals have made a decision to invest, based on a lot of analytic work. They are not likely to change those decisions (or admit mistakes) quickly. Besides, Bridgewater very commonly underperforms other investments, but it generally doesn’t outright lose money (even if, as Copeland points out, it has sometimes made less than it charges in fees, which was a sticky point for a teachers’ pension fund in Pennsylvania).

As Copeland’s story emerges, investing becomes less and less important to Dalio and to Bridgewater. Money is managed, sure, but the focus is on people management. Bridgewater employees are under constant taped and video surveillance. Meetings where executives are brutally upbraided for their failures are then shared with the wider firm as lessons. It isn’t until surprisingly late that a compliance attorney tells Dalio that saving every instance of him labeling one of his top lieutenants with words like “slimy weasel,” might actually be a liability. Somebody suing Bridgewater, or a regulator, could subpoena all of these records and how would Dalio explain to a jury that he had staffed his firm with people he had described as idiots and incompetents?

Meanwhile, Dalio was obsessed with his public image. Why did Americans view Warren Buffett as a wise old nice guy investment geniuses and not him? Why was Steve Jobs the symbol of innovation when it was Dalio who had developed a radical system for managing people? Dalio hired PR firms and wrote a book where he sanitized his Principles for public consumption (and counted on non-disclosure agreements with former employees to prevent too much of the emotionally, physical and sexually abusive truth of his corporate culture to get out). He delivered TED Talks and even appeared on Gwyneth Paltrow’s “Goop” podcast. He posted frequently on X (nee Twitter), he tried to befriend admiring strangers online — he just wanted to be liked or, maybe that isn’t it — he wanted to be admired.

But who could admire Dalio, who betrayed almost everyone closest to him, even has he made them wealthy? He insulted people, he threatened people, he fired people without cause or drove them to leave his firm after he’d recruited them. Back in the 1970s, Dalio was taken in, cared for and given his first job by the old money Leib family of Park Avenue. This was Ray’s big break. Decades later, a member of the family, one who spent a lot of time with Dalio and had been in touch with him since, reached out about a job at Bridgewater and asked for a good word. Dalio refused to help, saying that he would never interfere with his own Human Resources processes for a personal friend or even, oddly, on behalf of his own dog. The billionaire values algorithmic (rules-based) decision making over virtues like honor, loyalty and friendship.

He justifies all of this with the strange, circular logic that growth could only come from pain and that he had a responsibility to do the best for Bridgewater by culling its ranks, to make sure he only employed the best people. This is, of course, the language of the tyrant husband or father who hands out beatings “out of love” and expects them to be appreciated. Every time somebody confronts Dalio about his abuse, and these confrontations happen with alarming infrequency, Dalio excuses himself as having done what was necessary not only for his company and investors but for his victims.

One, driven by Bridgewater’s harassment to the verge of self-harm and suicide laments, “won’t Ray’s wealth just go away?” and a wife of another former Bridgewater executive worries that her husband had suffered permanent damage by his proximity to Dalio, a condition she referred to as “Ray-diation” poisoning.

There is no way to read The Fund without concluding that Dalio is a very bad person, made dangerous by his conviction that he is actually better than anybody else. More than once in The Fund he declares that his wealth is proof that he is smarter and more effective than others. More than once, he demands loyalty rather than offers it. More than once, applies his principles to others, but exempts himself.

Dalio’s reward for all of this is the life of Croesus without a Cyrus the Great to bring him down. Dalio laments a few times that the United States has “no heroes,” because our society has become atomized by all the people who gang up to discredit the folks who do great things. Unsaid here, but surely implied, is that Dalio believes he should be one of those exceptional sorts that we all look up to.

So far, Dalio hasn’t been able to buy that. But he has come closer than any healthy society would ever allow.