Bridgewater Explains The Secret To Its Success

Bess Levin Dealbreaker October 18, 2010

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In the thirty-five years since its founding, Ray Dalio’s Bridgewater Associates has done quite well for itself, posting the sort of returns clients appreciate. To that end, the firm’s Pure Alpha Strategy was up 31% for the year through August and, according to a Bridgewater spokeswoman, has "outperformed the market over the last three years by more than 70 percent.”

How do they do it? Are they role-playing hyena and wildebeest again? Is the market the wildebeest in this scenario? As B-Water’s ability to make it rain does not appear to be covered in the firm’s handbook, co-chief investment officer helpfully broke it down today.

The short version: “Either we are of average intelligence and everyone else in the industry is an idiot or we are fucking geniuses and make people of marginally respectable intelligence (you) look like morons. Take your pick.”

The long version:

Prince has an apparently simple explanation [for Pure Alpha's success]. He said: "We try to have a better understanding than anyone else on the planet of the way fundamental economic conditions affect a market and vice versa." He conceded that some might find this difficult to believe, but he said: "It's not unlikely that we would know more about a lot of things than anyone else."

Also, FYI, Bridgewater says it isn’t a hedge fund.

Prince, told Financial News: "We don't think we are a hedge fund."

Instead, the Connecticut firm with 900 employees, which said it was running $88bn, prefers to say it is "unshackled by conventions". It runs money for its clients, all of whom are institutional investors, using computer-driven trading strategies dealing in fixed income, currencies, equities and commodities.

They’d get into it further but it’d probably be too difficult for you to understand. Best to leave it at that.

Bridgewater: The Hedge Fund That Thinks It Isn’t [eF via BI]

Tags: Bob Prince, Bridgewater Associates, hedge funds, hedge funds that say they're not hedge funds, hyenas, not just Connecticut-- THE PLANET, Ray Dalio, trade secrets Related Stories View Comments 1 Posted by PasteSpecialFormats | October 18, 2010 at 3:02 PM

I think if you clients want to sit on my shoulders and make barge-loads full of money, we might give you the opportunity, but there’s no requirement that I enjoy sitting here trying to explain myself to you. You have part of my attention – you have the minimum amount. The rest of my attention is back at the offices of Bridgewater, where my colleagues and I are doing things that no one in this room, including and especially you clients, are intellectually or creatively capable of doing or even comprehending. Did I adequately answer your condescending question?

2 Posted by fist in the v | October 18, 2010 at 3:05 PM

Unfortunately the Zoological Alpha sidecar is down 17% YTD as the fund’s Orangutan overweight was detrimental to performance in the Zebra carry trade unwind this summer.

3 Posted by Einstein Mandelbrot | October 18, 2010 at 3:14 PM

We used to talk like that. Used to.

-DE Shaw Genius Recruitment Department

4 Posted by Guest | October 18, 2010 at 3:18 PM

Too soon.

-NNT

5 Posted by Tom Andrews | October 18, 2010 at 3:21 PM

This is the fastest ocean going vessel in the world and it is unsinkable. We built it using information no one else had or could probably understand for that matter. Further, we are funded by J. P. Morgan, who is no slouch when it comes to knowing the “right” people and money.

-Tom Andrews, Designer “Titanic” White Star Line

6 Posted by Tom Andrews | October 18, 2010 at 3:21 PM

-Tom Andrews, Designer “Titanic” White Star Line

7 Posted by Mathman Prophecy | October 18, 2010 at 3:27 PM

Here’s how money managers grade themselves:

Outperformed Market = Geniuses Underperformed Market = Bad Luck

Here’s how I grade money managers:

Outperformed Market = Lucky Morons Underperformed Market = Morons

8 Posted by Guest | October 18, 2010 at 3:41 PM

Mmmmk, whatever you say Nassim Taleb.

9 Posted by cfa_CHARTERHOLDER | October 18, 2010 at 4:21 PM

“It's not unlikely that we would know more about a lot of things than anyone else.”

Doppler radar has detected a giant smug cloud forming over CT.

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Unfortunately the Zoological Alpha sidecar is down 17% YTD as the fund’s Orangutan overweight was detrimental to performance in the Zebra carry trade unwind this summer.

We used to talk like that. Used to.

-DE Shaw Genius Recruitment Department

Too soon.

-NNT

-Tom Andrews, Designer “Titanic” White Star Line

Here’s how money managers grade themselves:

Outperformed Market = Geniuses Underperformed Market = Bad Luck

Here’s how I grade money managers:

Outperformed Market = Lucky Morons Underperformed Market = Morons

Mmmmk, whatever you say Nassim Taleb.

“It's not unlikely that we would know more about a lot of things than anyone else.”

Bridgewater Explains The Secret To Its Success

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