In “On bullshit,” an essay first published in 1986, the Princeton philosopher Harry G. Frankfurt offered a distinction between lies and B.S. He argued that while a liar clearly isn’t adhering to the truth, by choosing to lie he is at least acknowledging that some truth exists.
The bullshitter, on the other hand, “is neither on the side of the true nor on the side of the false,” Frankfurt wrote. “He does not care whether the things he says describe reality correctly. He just picks them out, or makes them up, to suit his purpose.”
Frankfurt’s essay was published before most people heard of Ray Dalio, the now-billionaire founder of the world’s largest hedge fund, Bridgewater Associates, but the philosopher might well have written it with Dalio in mind. And the CEO, who fashions himself an investment savant and has compared himself to both the Dalai Lama and Steve Jobs (Dalio even had his team pitch his life story to Walter Isaacson, Jobs’ biographer), might well have enjoyed the attention of such an Ivy League philosopher.
Dalio appears decidedly less enthusiastic about starring in the journalist Rob Copeland’s phenomenal new book The Fund: Ray Dalio, Bridgewater Associates, and the Unraveling of a Wall Street Legend. The book is a page-turning portrait of a bully and bullshit artist — and, more fundamentally, a damning indictment of the elite compulsion to conflate wealth with genius.
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“This Little Subprime Problem”
As Copeland details in his book, Dalio, an only child who grew up in a working-class family in Long Island, founded Bridgewater Associates in 1975. He’d found his way into finance through a summer job offer arranged by a wealthy family that had supported him over the years with meals, travel, and professional introductions.
Becoming an honorary member of the family was a lucky break for Dalio, though not one that he would factor into his own narrative. Forty years later, Copeland recounts, one of those family members applied for a job at Bridgewater and emailed Dalio to ask him to put in a good word. Dalio, who hired and fired employees seemingly on a whim, replied in part, “I would not even offer such favoritism to my own dog if my dog were applying.”
Like all hedge funds, Bridgewater’s fundamental business model was fairly simple: invest other people’s money for them — usually with the promise of special insights that will deliver above-average returns — and charge these investors a fee for the privilege. Over the years, Bridgewater’s powerful clients have included pension funds, global corporations, and foreign governments — from Saudi Aramco, Saudi Arabia’s state-run oil behemoth, to sovereign wealth funds in China and the United Arab Emirates.
In the firm’s early years, Dalio deployed some genuinely innovative strategies that helped Bridgewater investors take home impressive returns. That success kick-started the self-reinforcing cycle of financial capital that has minted Wall Street billionaires like Dalio, while contributing enormously to America’s wealth and income disparities: Investment profits generate hype, hype attracts more investment, and funds and their executives get paid — regardless of how well their investors, or the rest of society, do. Capital begets capital.
While Dalio’s net worth climbed, some of the company’s early advantages plateaued as Bridgewater’s “rivals quickly matched Dalio’s discoveries… then blew past them,” Copeland writes.
Dalio, who maintained de facto control over the firm’s investments, didn’t always improve things by betting relentlessly against the U.S. economy, predicting depression after depression that rarely happened.
“He’s called 15 of the last zero recessions,” one executive joked in 2006. (Despite the unremarkable performance of Bridgewater’s funds, Dalio took home $350 million that year.)
Before the 2008 financial crisis, which he would later take credit for anticipating, Dalio had in fact hedged his predictions: “He called it every which way,” Copeland writes.
In one August 2007 investor letter, Dalio warned that “this is the big one.” A few months earlier, however, asked by an interviewer if he “[saw] any risk of a U.S. recession,” Dalio had responded, “No, not now. There is plenty of money washing around. Everybody is flush with liquidity and it would be shocking to me if this little subprime problem essentially spread and sank the economy.”
A year later, of course, the “little” subprime mortgage crisis spread and sank the entire global economy. The year after that, thanks in part to Dalio’s dour predictions, Bridgewater became the biggest hedge fund in the world.
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“Crossing From Adventureland To Fantasyland”
Dalio’s ability to portray himself as an innovative investor grew steadily. He seemed to figure out earlier than most that even if his firm didn’t always generate remarkable returns, he could keep the profitable cycle going by supplying the hype himself. Dalio personally took home $1.1 billion in 2014.
In the narrative the CEO put forward, his wealth and fame, as well as Bridgewater’s success, stemmed not from the combination of a good initial idea, a lot of luck, and the self-perpetuating nature of American capitalism. Instead, the world’s biggest hedge fund owed its profits and prominence to Dalio’s secret formula: reams of economic and geopolitical research, an enthusiasm for unorthodox thinking, and strict adherence to a manifesto for Bridgewater’s corporate culture and investment strategy that demanded “radical transparency” of everyone and yielded an “idea meritocracy.”
Dalio called this manifesto “The Principles.” The name implied permanence; one might have presumed these principles contained insights and guidelines that were timeless and unwavering. Yet The Principles, which at one point reached 208 printed pages, were often contradictory, and changed regularly depending on what happened to cross Dalio’s mind. (One early principle: “Never say anything about a person you wouldn’t say to him directly. If you do, you’re a slimy weasel.” Later, Dalio added a principle that said “white lies… were acceptable, in small quantities,” as Copeland phrases it.)
As Copeland points out, The Principles differed more than a little from Principles: Life and Work, Dalio’s 2017 book that the CEO used to cement his transformation from hedge-fund founder to professional thought leader and expert-on-all-things.
“Moving from The Principles of Bridgewater to the principles of Principles was like crossing from Adventureland to Fantasyland,” Copeland writes. Some feel-good principles were added (“Play jazz with lots of people”); less savory ones were scrubbed. One of the many words of wisdom that Bridgewater employees were forced to live by but that Dalio chose not to include in his bestselling book: “People have to value getting at truth so badly that they are willing to humiliate themselves to get it.”
A Family Of Bullies
Dalio, like many chief executives who prefer rhetoric suggesting that power disparities don’t exist within their companies, insisted his company was a “family.”
Yet The Fund is replete with vivid and disturbing accounts of the CEO and his protégés bullying and publicly humiliating Bridgwater employees (often for trivial matters, like using whiteboard markers that didn’t erase to Dalio’s satisfaction). Dalio and other Bridgewater executives buried reports of misogyny and sexual harassment and assault. They put employees on internal trials at Dalio’s whim. They even videotaped those trials for everyone at the firm to watch — an option available thanks to a multifaceted “surveillance ecosystem” in which many executives, including general counsel James Comey (yes, former FBI director James Comey), seemed to delight.
Meanwhile, with the help of enablers in the media and thought leaders who continued to give him a microphone, Dalio methodically constructed an illusion of expertise around himself and his firm, distributing regular missives to investors about world events and pontificating on any platform that would have him.
He became “omnipresent in the media,” Copeland writes, “quick with an opinion on virtually any investment topic,” even if some of his opinions were contradictory and occasionally nonsensical. (That effort continues: Together Dalio’s LinkedIn, YouTube, and Twitter followers number more than six million.)
For the most part, it didn’t seem to matter whether Dalio’s insights were accurate, or even insightful — because he ran a multi-billion-dollar hedge fund. His wealth and his ability to generate profits gave him an almost impenetrable shield of elite credibility. Like many CEOs, because Dalio ran a profitable company, he was simply presumed to be an expert in whatever other fields he happened to take an interest in.
“How Do You Deal With This War Criminal?”
While murmurings of Bridgewater as a cult had begun to circulate in the 2000s, there was a key difference between the cult of Bridgewater and a cult that might end up in a Netflix documentary: Bridgewater made a lot of money for a lot of people.
But a hunger for acclaim and adulation was only one of the personality traits Dalio seemed to share with leaders of actual cults. Among the others: an intolerance of dissent or criticism; a tendency toward haphazard cruelty; a willingness to flatter people who could be useful before discarding them when their usefulness ran out; and, above all, a desire for power. This track record went some way towards explaining one of the CEO’s most curious characteristics: his fondness for dictators.
While enjoying the perks of U.S. democracy — such as the freedom of speech that enabled him to indulge his pastime of forecasting American decline — Dalio passionately pursued relationships with autocrats.
“I’m scared of ‘one man, one vote’ because it suggests that everyone has an equal ability at making decisions, and I think that’s dangerous,” he said of Bridgewater’s decision-making process in 2017. Dalio spoke frequently of his admiration for Lee Kuan Yew, the longtime strongman ruler of Singapore, and Wang Qishan, one of the Chinese Communist Party’s most senior officials.
Copeland recounts how Dalio became fixated on meeting Vladimir Putin, which he allegedly finally achieved in 2018. After his sit-down with the Russian dictator became known inside Bridgewater, another executive summoned the courage to confront Dalio about it at an employee town hall — no small feat in an organization characterized by deference to the boss.
“How do you deal with this war criminal?” she asked, according to Copeland’s reporting.
Instead of addressing her question, Copeland indicates, Dalio responded in part with a question of his own: “If you’re so smart, why aren’t you rich?”
Dalio admired strongmen, solicited their investments, and “cultivat[ed] soft power” to gain information about their countries that he could use to guide Bridgewater’s bets. He also took inspiration from them, sometimes importing their methods into the firm. In 2015, for instance, Dalio set up an internal security team named the Politburo, a title “borrowed from the decision-making body of China’s Communist Party and first coined by Russian Bolsheviks,” Copeland writes, noting later that “an entire army of staffers was now at the firm dedicated to squelching would-be heretics.”
It was a far cry from the “radical transparency” and the culture of open debate and good-faith disagreement that Dalio portrayed to the outside world.
A Broken System
Dalio’s bullshit matters. The CEO continues to exercise cultural and economic influence; he has acolytes in governments and corporations around the world. Between a family foundation and a family fund, Dalio and his family control nonprofits with nearly $5 billion in combined assets, according to the latest available IRS filings. Last month he shared a stage with a number of other finance and private equity billionaires at Saudi Crown Prince Mohammed bin Salman’s annual gathering of elites. Bridgewater remains the world’s largest hedge fund.
But The Fund is even more important for what it reveals about the people and systems that enabled Dalio’s “legend,” as the book’s subtitle puts it.
It’s difficult to process just how much time and money Bridgewater spent on Dalio’s social experiments and pet projects — like turning The Principles into marketable decision-making software, an effort that Copeland says ate up at least $100 million and seems never to have come close to succeeding.
These side projects are especially concerning, considering the company was consistently generating unremarkable returns for its investors. In 2019, one county pension fund pulled its business from Bridgewater after earning less from the firm’s investments than it was handing over in fees.
Still, neither average investment performance nor alleged abusive management kept Dalio and Bridgewater from earning billions of dollars, year after year. That reflects not just a broken economic actor, but a broken economic system. It also reveals a broken media environment — one that continues to reward shameless self-promotion with the attention that shameless self-promoters are uniquely equipped to leverage into money and influence.
The Fund captures brilliantly the gulf between Dalio’s actions and his pronouncements, between the reality of Bridgewater and the narrative portrayed by the firm. It is a story enthusiastically bought by countless world leaders, reporters, investors, and influencers (and, for a time, even me).
Steadily, Copeland writes, “grew the chasm, wider by the day, between what Dalio told the world about life at Bridgewater and what was actually going on.” At a certain point, the story of Dalio and Bridgewater became so entrenched that it ceased to matter who the man actually was or what the firm actually did.
“The bullshitter,” Harry G. Frankfurt warned, “does not reject the authority of the truth, as the liar does, and oppose himself to it. He pays no attention to it at all. By virtue of this, bullshit is a greater enemy of the truth than lies are.”
