February 15, 2024

Episode 292 - Rob Copeland: Ray Dalio and Bridgewater

February 15, 2024

Rob Copeland is a finance reporter for the New York Times. He was previously the longtime hedge-fund beat reporter at the Wall Street Journal, and has also covered Silicon Valley and the hidden worlds of the wealthy and powerful. His front-page investigations into Bridgewater Associates won a New York Press Club award; he was also awarded an honorable mention twice by the Society of American Business Writers (SABEW) and was named a News Media Alliance "Rising Star" (formerly Top 30 Under 30). He has appeared on ABC’s "Good Morning America," NPR and other major news networks.

In this episode, we welcome Rob Copeland, author of the recently released book The Fund: Ray Dalio, Bridgewater Associates, and the Unraveling of a Wall Street Legend. Rob, a finance reporter for The New York Times, provides a gripping account of the rise and unravelling of Ray Dalio and Bridgewater Associates. Bridgewater Associates, one of the prominent hedge funds on the planet, is synonymous with the legendary investor Ray Dalio. In our conversation, we delve into the intricacies of the company's investment portfolio, shedding light on the details that contribute to its success, and dissect Ray's supposedly revolutionary model of economic cycles. Discover the unconventional principles that shape Bridgewater's culture, from believability to radical transparency, and get a sneak peek into the bizarre Dot Collector app that fuels the company's operations. Gain insights into employee experiences at the company, the secret sauce to Ray’s success, the company’s track record in predicting market crashes, undisclosed aspects of Ray’s success story, and much more! Tune in now!

Key Points From This Episode:

(0:06:38) Details about the company’s investment management portfolio.

(0:09:13) Dalio's model of economic cycles’ influence on the company’s investment approach.

(0:10:13) Exploring the criticism toward Dalio's model of economic cycles.

(0:12:21) How successful Dalio has been at predicting market crashes.

(0:14:40) Bridgewater’s investment success track record.

(0:16:16) Unpacking Dalio's principles and how he developed them.

(0:18:56) Uncovering how Dalio's principles are perceived within Bridgewater and how they made the company successful.

(0:20:58) Learn how believability and radical transparency work within Bridgewater.

(0:24:57) The bizarre Dot Collector app and how the company leverages it.

(0:28:02) Employees’ experiences of working at Bridgewater.

(0:29:38) Rob’s opinion about Ray and how he compares to other hedge fund managers.

(0:34:52) Hear about undisclosed aspects of Ray's success story.

(0:37:17) Dalio and readers’ reactions since publishing the book.

(0:40:18) Delving into the nuance factors explaining Bridgewater's success as a business.

(0:43:06) How the company will continue to function post-Ray Dalio.

(0:44:55) What Rob hopes readers will take away after reading the book.

Read The Transcript:

Ben Felix: This is the Rational Reminder Podcast, a weekly reality check on sensible investing and financial decision-making from two Canadians. We're hosted by me, Benjamin Felix, and Cameron Passmore. Portfolio Managers at PWL Capital.

Cameron Passmore: Welcome to episode 292. And, Ben, if I say the words Bridgewater Associates and Ray Dalio, I would guess that many listeners are aware of the firm and the man. This week, we welcome Rob Copeland, who's the author of the recently released book The Fund: Ray Dalio, Bridgewater Associates, and the Unraveling of a Wall Street Legend. And, yes, that's a catchy title. And this is a very catchy book.

You and I both rip through it. It reads like a thriller. It is so interesting even if you're not in the financial services industry. But if you are, or even mildly interested in this business, it's a fascinating read. Rob is a finance reporter for the New York Times and was previously the longtime hedge fund reporter at the Wall Street Journal.

This book is an incredible story about Dalio, who is a billionaire founder of Bridgewater Associates, which is I believe the largest or one of the largest hedge funds on the planet. Clocking in at around 100 billion USD of assets. Down significantly. And Rob talks about that.

We thought this would be an interesting story. We love the books. We invited Rob on. What did you think?

Ben Felix: I've been aware of Dalio, of course, as many people have, for a long time. But I've always had some hesitation with his wisdom. He comes up with these YouTube videos about how the economic machine works and about how the world order is changing. And he had his book Principles, of course, which was wildly successful and a lot of people read. But there's always been a question in the back of my mind about to what extent we should really be listening to Ray Dalio?

Now, there's this difficulty here. Because who am I to question Ray Delio? This wildly successful hedge fund manager? And I think that's part of his perception. And he is. You can't argue with that. He has been wildly successful. And he positions himself as having this deeper understanding of history and economics than most people do, which has allowed him to be as successful as he's been. I always had this kind of doubt in the back of my mind. To what extent should we really be listening to Dalio?

And then I read Niall Ferguson's book, Doom: The Politics of Catastrophe or whatever. The book is relatively unrelated. But it has this one section that addresses Dalio's economic model. Dalio has this theory, I guess, or he calls it a model, of how the economic machine works. I won't read Niall Ferguson's whole passage on this because it is reasonably long. But the punch line is – Niall says that the difficulty with Dalio's approach is that it cannot explain the non-events that the model, had it existed in the past, would have wrongly predicted.

Basically, just saying that it's not a good perspective on history. The models overfit to the history that we actually had happen. But it doesn't necessarily make it a good predictive model of the future because the world is too complex and too uncertain.

Actually, here's another gist from Niall's book, "The reality as we shall see is that history is a process too complex to be modelled even in the informal ways favoured by Dalio. Moreover, the more systematic modelling is done of historical phenomena, notably pandemics, but also climate change or environmental degradation, the easier it becomes to go from being roughly right towards being precisely wrong."

That cast further doubt in my mind about how believable – and you'll learn about believability during this episode. How believable Dalio should be. It's always an interesting thing to think about because Dalio has been so successful. And a lot of successful people believe that Dalio has this knowledge and wisdom because he's been so successful.

This has come up in the Rational Reminder community, for example. There have been discussions about things Dalio has said. When Rob came out with his book, I was super excited. Because, usually – and as Rob talks about during the episode, usually, the insight you get about Dalio comes from Dalio. Like, in his book Principles.

To get, I guess, the other side of the story or a different perspective on the whole Bridgewater story and the success of the firm and of Dalio, I was excited to have that.

Cameron Passmore: And as Rob says, much of the success at Bridgewater came before Dalio was Dalio.

Ben Felix: Before he was the Dalio that we know now.

Cameron Passmore: The character we all know now.

Ben Felix: Rob really nails it at the end when you asked him about what he hopes people will take away from the book. And he just basically talks about attributing wisdom to success. People can be successful. But that doesn't mean that we need to hear what they think about how we should live our lives.

Cameron Passmore: Exactly.

Ben Felix: I'm, I don't know what I'd call it, conscious of the fact that this is an episode about a person. We talk a lot about Ray Dalio and basically his credibility. And I'm not a big fan of talking about people. Usually, this is a podcast about ideas, which I think is generally more valuable. But because there are so many people who view Dalio as credible based on his success, I think that this is a worthwhile perspective for us to share on the podcast. Hopefully, listeners agree. But I am conscious of the fact that this is basically a whole episode. We talk about it more than just Ray. But we talk a lot about Ray. That's a different type of topic relative to our usual. I do think it's worth listening to.

Cameron Passmore: Perfect setup. With that, Ben, let's go to our conversation with, from The New York Times, author, Rob Copeland.

***

Cameron Passmore: Rob Copeland, welcome to the Rational Reminder Podcast.

Rob Copeland: Thank you for having me.

Cameron Passmore: Great to see you. And congratulations on your book. Ben and I both loved it. Fantastic read.

Rob Copeland: It's just great to hear.

Cameron Passmore: Off the top, how much of the Bridgewater organization is dedicated to investment management?

Rob Copeland: This is the big, most fun question of the book for me, which is that Bridgewater Associates is world-famous as the world's largest hedge fund. And they're known as a macro trader. So, they try to predict global economic trends. But as a reporter – and I was a reporter for the Wall Street Journal and now for the New York Times, when I was reporting on Bridgewater, very few people ever told me anything about the investing. There's just this complete obsession with the culture and what Ray Dalio calls the principles. For the past better part of a decade, I've really been looking into this idea of the principles and of the culture of the firm. And it's really nothing like the stories that Ray Dalio tells.

Ben Felix: Do you have a sense of – of the employees at Bridgewater, what proportion of them are actually doing investment management?

Rob Copeland: At peak, Bridgewater had about 2,000 full-time employees. And God only knows how many consultants. And not only did they have only a few hundred people working on investing but they only had about 10 who actually were allowed to see the "secret sauce." It's virtually no one working on investing. And to skip to the end of the story, it might not shock you that they haven't been very good at investing for about 15 years now.

Ben Felix: Do you have a sense of – in the investment management function, what are they actually doing? Are they doing quant stuff? You mentioned macro. Do you know how systematized it is?

Rob Copeland: This is a big question. When Ray Dalio, the founder of Bridgewater, talks about it, he talks endlessly about this systematized set of rules. He says that he, starting in the 1980s, began to write down his discoveries on economic history. And he back-tested them.

And then he says something very, very suspicious. He says that these rules are "timeless and universal." And that they work till today. And you know and I know that people all over the world who are trading are working every day to find just the smallest new edge in the markets. The idea that there's these rules he made up in the 80s that are timeless and universal that work today. It's risible.

And so, what I discovered in the end was that there's a group at Bridgewater that's literally called the circle of trust. And it's just about 10 people. And they're the only people who are allowed to express an investment idea to put on a trade. And it's really not very quantitative at all. It really boils down to, if they think something's going to happen, they get to call that a rule. I don't think of it as quantitative or systematic at all.

Cameron Passmore: And what about Dalio's model of economic cycles? Does that affect their investment approach?

Rob Copeland: Dalio has become quite famous with these YouTube videos about what he calls the economic machine. He thinks that everything can be modelled. Everything can be systematized. There's a fair amount of agreement and disagreement about that. But what I found in the end is that that's all just window dressing.

The most important rule at Bridgewater is, what Ray Dalio wants, Ray Dalio gets. The great theme of the book for me is that, for all the idea that talk of rules, and principles, and Ray is this great emotionless mind, really, Ray just gets to make it up as he goes along. And when you're king of the castle, you make the rules. For me, the fun of the book is just watching everyone else bend over backwards to justify why Ray is always right.

Ben Felix: Can you talk about what people with actual expertise and economic history think about Dalio's model of economic cycles? I think you tell a story in the book of Niall Ferguson being at Bridgewater and having a pretty interesting interaction with Ray.

Cameron Passmore: To say the least.

Rob Copeland: This was a great nugget for me to crack. I had heard for years there's this Harvard historian, Niall Ferguson. He's a famous figure in the sense that he gets on TV a lot. But he's a controversial guy. And he likes to make bold announcements. And so is Ray Dalio.

Ray invites him to Bridgewater to sort of do a debate. And Niall prepares and Niall watches all of Ray's videos. Which, again, say that, essentially, we can plot everything about the economy. And that everything comes in cycles. And Niall has a very different view. His view is that actually humans are endlessly complicated. And that you can't plot, for instance, what president or prime minister is going to be elected. You can't plot the impact of technology. You can't plot climate change. You can plot things like worker productivity or the birth rate. But that there are sort of endless variables here and you can't actually fully quantify it.

And rather than debate him, Ray just sort of loses it and he starts screaming at Niall in front of the whole firm. He starts screaming at him and he says, "Where's your model?" He adds a profanity there. But this is a Canadian podcast, folks. And then afterward, of course, Ray asks the whole firm. He says, "Who do you think was right? Me or Niall." And it will shock no one that everyone voted for Ray.

Ben Felix: The story is crazy. Ray invites Niall to debate him about his model. Niall debates him briefly and then Ray loses it on him. And then Rey asks everyone in the audience, who are Bridgewater employees, who has won the debate.

Rob Copeland: Correct. And this is sort of the paradigm of the Ray Dalio debate, is to set it up to rig it and then to make sure that everyone else proves that he was right all along.

By the way, that anecdote there, which was not easy for me to get, but I did talk to a number of people. Niall didn't even know they had held that vote till afterward. They held that vote after Niall leaves the room. He's already in the car back to Boston. And then he hears from his former students who were in the room that there have been this vote. Needless to say, he hasn't been invited back.

Cameron Passmore: Just wild. How successful has Dalio been at predicting market crashes?

Rob Copeland: As someone in the book says, Ray has predicted 10 of the last zero recessions. This is I think one of the more important lessons that I've learned about Ray, which is that, since the mid-1970s when he starts his career, he has really been a doomsday prophet the whole time. And that's just factual. I did what I hope no one else does. I went back and I actually read all of the interviews he'd ever done. I had my research system pull up the TV clips and everything. And it seems like, just about every year, he has a reason why the world is going to collapse.

And, of course, we now know, with the benefit of hindsight, that there have been a few recessions. But the world, spoiler alert, knock on wood, has not collapsed. He's not very good at actually predicting recessions. But what he's excellent at is getting attention.

And so, when you're the kind of guy who's going to have a chicken little routine and go around literally every year and say, “The sky is falling," that actually helps you a lot get clients. No asset manager is going to make a lot of money saying, "Hey, guys. Everything's sort of okay. You can just buy some ETFs and you'll probably do pretty well. You won't even have to pay me a fee." Ray has constantly, for decades, over and over again, said, "Calamity is coming. You need my help. Give me your money." And it's been spectacularly successful. I would say he's been pretty terrible at actually predicting recessions. But he's been incredible at profiting off of ones that never come.

Ben Felix: As people who tell our podcast listeners that they can just buy ETFs and probably don't have to pay us a fee, at least in a lot of cases, I can tell you that it is a terrible business.

Rob Copeland: What I love about asset management is asset management is a wonderful business to build wealth for the asset manager as an experiment for the end investor. If you just look at the numbers, most people on average can do a lot of this on their own with some research or with the help of a financial advisor who they might pay a relatively modest fee. But you usually don't need the most complicated "smartest guys in the room."

Ben Felix: You mentioned the last 15 years of investment results not being super compelling. What role throughout the history of the firm have investment results played in its success? One thing about Bridgewater is we can't argue with the fact that it is massive.

Rob Copeland: It's crazy, isn't it?

Ben Felix: It is.

Rob Copeland: Ray tells this story, and the story is that he has started Bridgewater in the late 1970s out of his two-bedroom Manhattan apartment. He's told this story thousands of times. And he grows it to be the world's largest hedge fund with $170 billion under management. That's an incredible success. And we should give him credit for that.

Now, he leaves out a few parts of that story. But what I think is really important is that, through about 2005, Bridgewater has incredible investment success. The performance is superlative. It really was early to this idea of a rules-based investment approach. Of saying, "Hey, I'm not just going to wake up one morning and say I've read the newspaper and I think that the dollar is going to appreciate." He really did study history and he was tremendous at it.

The problem, and the real sadness and the fun of Bridgewater is that, around 2005, he starts to make up these things called the principles. And remember, he's already a billionaire by that point. Bridgewater at that point is one of the world's five biggest hedge funds. But he starts to search for this greater meaning.

And so, what my book is really more about is about this guy who's close to being on top of the world. And that isn't enough. And he starts to sort of lose it. And as he becomes more and more obsessed with these so-called principles, he takes his eye off the ball and investing. And, literally, to this day, just earlier this month, it was reported that Bridgewater funds had collapsed again at the end of last year. It's a little sad, to be honest.

Cameron Passmore: You raised it there. What are Dalio's principles?

Rob Copeland: Ray is famous for these principles. And they start with just about 10 of them. And they're essentially that we should conquer our own emotions. We should be able to speak hard truths to one another. And it's really important to remember that this makes some sense.

Right now, Cameron, if you cut me off and you said, "Rob, you're rambling a little bit. You could do better job at X, Y, Z." Maybe it would be better if I could take that and not feel stunned. Not have my feelings hurt. And then that probably is better than you saying, "Hey, Rob, you're doing such a great job. You have great haircut. Hey, if you wouldn't just consider just maybe rambling a little less. But, otherwise, you're doing fantastic." That's Ray's first principle, is essentially let's cut through all the bull and just be honest with one another.

The problem is, is that he starts to come up with dozens of principles. And then hundreds of principles. And it turns into a rule book with everything from rating one another in real-time about our personality and our conversations. And it just goes totally off the rails.

But the principles at the start, there are a fairly vanilla self-help idea of, if you can conquer your own emotions, you can make better decisions. And as Ray says, “We can literally live a more meaningful life with more meaningful relationships.”

Ben Felix: How did Dalio develop the principles?

Rob Copeland: Poorly is my short answer there. He develops them at the start by just writing down what's working and what's not. It's sort of a running Microsoft Word document. Again, it's not crazy. And it's just inside Bridgewater.

At the beginning, everyone's just basically saying, "Okay, this is the boss. These are his new rules. It's no big deal. It's no different than you go into an office and your supervisor says, "Meetings are now going to be 30 minutes at max." Maybe you think that that's good or bad. But, okay. He's the boss. The problem is that Ray keeps expanding that. And even more than that, he starts to talk about them publicly. And it begins to make him famous.

People really like the idea of this billionaire, multi-billionaire who has these lessons to teach. And he starts to do a ton of media and expand them, and expand them and expand them. And then it becomes this whole personality. And the problem is that the principles start to overtake everything else that's going on at the firm. It's really quite fun. It's darkly funny in its own way. It's a comic. And, honestly, if it weren't all true, you'd think I was making it all up.

Ben Felix: How are the principles perceived within Bridgewater? Does everyone take it as gospel within the firm?

Rob Copeland: Remember that when you're hired at Bridgewater, they're going to tell you about the principles right from the start. Unless you're one of those original employees of which there's obviously very few, because the firm's been around a long time, they tell you at the start, "We have these principles and it's going to be a transition period."

They're attracting people who want to sort of give up their own value system and adopt Bridgewater's value system. Already, it's a self-selecting group of people who sort of want to enter this personality experiment.

And there's another really gray factor here, which is they're paying a ton. They were for so long the world's largest hedge fund. You might be willing to put up with things that you wouldn't otherwise be willing to put up with because it's your boss. It's the money. It works in concert with one another.

And remember over and over and over again, Ray can always remind you, these are my principles. And I say that this is how I became so rich. Who are you to say that you disagree with them? And that's been a powerful argument for decades.

Cameron Passmore: Amazing. How big a role do you think these principles played in Bridgewater's success?

Rob Copeland: None. Sorry. I keep giving you one-word answers. If this were Bridgewater, you would now be cutting me off and saying, "Rob, could you restate the question and your answer?"

The great irony of this all is that Bridgewater's best years came before Ray ever made up the term principles. And it's a basically straight plot line from post-2008, 2009 when he really starts giving immediate interviews about it. Begins writing his book, which is called, of course, spoiler alert, Principles. And the performance of Bridgewater just starting to take a dive.

It's really a lesson, I think, for all of us, which is you really can't retrofit reasons for everything. It goes back to what Niall Ferguson would have said. Not everything is a machine. For all of Bridgewater's great success, its best years happened when nobody was really paying attention.

Ben Felix: Can you talk about how believability works within Bridgewater?

Rob Copeland: This is one of the core inventions and really figments of Bridgewater. Ray and many other people, probably even the three of us probably agree, that not everyone's opinion is equal. However, what Ray doesn't see as a principle for that in which it literally says not everyone's opinion is equal and don't treat them equally.

And he begins to develop a rating system so that we can determine, for instance, which of us is more, in his words, believable at various tasks. For instance, I might be considered believable at writing a book about Ray Dalio. You might be considered believable at investing or hosting a podcast, or men's fitness. Who knows? Whatever you're good at.

Ray begins to ask everyone to rate one another on a scale of one to 10 all day, every day, in any number of categories, so that those of us who receive higher ratings then have "higher believability". And we will be judged more reliable in certain categories.

This is classic Bridgewater. Because everything I've just described to you sounds okay. It does makes sense. Maybe the fittest one of us should be considered more believable at men's fitness. But what Ray never talks about is that he actually rigs the system from the very beginning. And he rigs it so that Ray Dalio's vote is going to count the most. He's going to be the most believable person at Bridgewater. And once you realize that, you realize that the whole meritocracy of at all, it's a farce.

Ben Felix: That part is so crazy. This idea of a meritocracy. And I agree. Conceptually, it sounds really cool. But that part of the book is just mind-blowing. How do you uncover that fact?

Rob Copeland: It's taken a number of years, to be honest. I've been writing about Bridgewater for close to a decade now. The great thing about Bridgewater is that there's another aspect to its culture that we haven't talked about yet. And it's called radical transparency. And it's part of the principles. And Ray says that everything should be adjudicated in the open. And that means that, for many, many years, everything at Bridgewater was taped. Every conversation. Large and small. And that meant that everyone could go back and replay the tapes and "learn" from one another.

I was able to talk to a number of people who had gone back and sort of tried to investigate for themselves internally what had happened inside this system. Over time, now, the taping system begins to get warped. Ray begins to create case studies. He begins to change history. So, that you pull up a tape and you would now only be able to see an edited version of something.

And once you realize that that's happening, you're off to the races. Then you realize that, of course, it was rigged from the beginning. And I did talk to a number of people involved in the technology who confirmed that for me. And, by the way, Bridgewater doesn't deny it.

Ben Felix: Just to make listeners understand it. I think the way Dalio describes it is that believability cascades. Believability cascades from people who are more believable to less. But Dalio had believability rigged so that all believability cascaded from him. He was always the most believable no matter what. Is that roughly right?

Rob Copeland: That's correct. And what I would say also is we're not spoiling anything here. In the book, I did this very intentionally. I actually spoil that for you in the introduction to the book. I want you to know from the very beginning that it's rigged. And I don't tell you again that it is.

Then I can tell you the whole story of Bridgewater and you have to remember that it's rigged. Or when you see things working in a certain way, you can almost forget. That was an intentional choice. Because at Bridgewater, although I'm telling you it's rigged, and although it's true that it's rigged, he doesn't ever fully admit it. You have to see the whole ecosystem and realize that that's really what's going on in the background.

Cameron Passmore: Wow. What does the Dot Collector app at Bridgewater do?

Rob Copeland: The Dot Collector is really an amalgam of a lot of what we've spoken about. At Bridgewater, they have their own language. They have a lexicon. And the dots are ratings. Right now, if we were at Bridgewater, we would be rating each other in this conversation. We might be saying, for instance, Ben should get a six in listening because he's been pretty good. But maybe I can only get a four at, say, touching the nerve is another Bridgewater category. Essentially, leaning into discomfort. And we would be rating each other at every moment. We'd be inputting them into an iPad app called the Dot Collector. And those ratings would be not averaged, by the way. But they would be a weighted average based on our believability. And then everyone could see how we would rate it. This all feeds into something called a baseball card. It's just like a baseball player has their stats. And Bridgewater employee has their statistics.

Now I can already hear listeners in the car pulling over and screaming out their window and saying this just sounds so complicated. This sounds like such a mess. Or what's the Canadian – they're going out and they're screaming at a moose. Is that like a bad stereotype there?

But the thing is this all happens slowly over time, over years at Bridgewater. First, we're rating one another for a little bit. And then we have a Dot Collector. And then we have our baseball cards out. Then, all of a sudden, we've got a hundred different ratings categories.

And then, by the way, Cameron, we could be down-dotting you for not giving me enough negative feedback. Maybe you're too nice a guy. And that literally starts to happen. Then you have to start investigating me to find the worst aspects of my personality. Otherwise, I'll down-dot you for not being willing to do what is right.

Cameron Passmore: Wow. Can you imagine? And all in real-time.

Rob Copeland: All in real-time, all in real life and all with real people. That's a really important factor here, is that these are real people with real lives. And to hear Ray talk about it, he says, literally, “It's a joy for all of us.” But I can tell you, it's really just a joy for Ray Dalio.

Ben Felix: Because they developed this into a full-blown app. Have other organizations started using it?

Rob Copeland: This is Ray's great white hope. He spoke for years, spent hundreds of millions of dollars on this technology. And he's desperately tried to get other companies to use it. But though a few companies tried, they did little trial test runs of it, I can tell you that none of them have adopted it at scale. And even Bridgewater has dumped out a lot of it at the end now.

You really couldn't script it. It's like it's operatic in a way. But it doesn't work. It's never worked. But I'll tell you what it does work at, it gets them a lot of attention. Millions of people watch TED Talks and such. In the end, does it even matter that it doesn't work? Because he gets to keep talking about it like he does.

Cameron Passmore: Interesting. Rob, you've talked to many employees both current and former. How would you describe the experience of working at Bridgewater?

Rob Copeland: There's really two versions of this. So much of Bridgewater, it's a yin and yang. There's the Bridgewater that people think that they're joining. And it's largely new college graduates. It's largely 22, 23-year-olds with not a lot of sense of what a regular workplace would be. Or they tend to hire very experienced employees who don't have a lot of other options and who've flunked out of a number of places in their career.

You've got these two groups of people who are unlikely to want to leave. They have to be there. They join and they know it's going to be difficult. They put up with it for a certain amount of time. And they rate one another. And they criticize one another. And they cry. And ambulances are called to Bridgewater's office to take people away who are having seizures who can't handle this culture.

But Ray just keeps telling you over and over again, this is the secret to my success. And you need to literally push through to the other side so that you can have a meaningful life with meaningful relationships. A lot of people leave. Some people stay. They get paid a ton of money. In the end, virtually, no one stays and is a true believer except for Ray in the end. But people are willing to put up a lot for a fat paycheck.

Ben Felix: Not for this book specifically, because he wouldn't talk to you, as I understand it. But you've spoken to Dalio prior to writing this book.

Rob Copeland: Oh, absolutely. Many times.

Ben Felix: What, if anything, stands out to you about interacting with Dalio relative to maybe other hedge fund managers that you've spend time speaking with?

Rob Copeland: Ray is quite charming. He really does have two sides to his personality. I've spoken to him several times as a newspaper reporter writing articles about Bridgewater. And he's almost always willing to get on the phone and explain himself to you. And that can be quite intoxicating, to be honest. To have someone that successful. He's worth, at peak, $22 billion. Have someone who's willing to get on the phone and listen to you and explain himself to you. I honestly could myself be someone who would be attracted to Bridgewater.

The longer you spend talking to him though, you realize that it's not really a two-way conversation. He is so used to being able to dictate the terms to literally rig the whole thing to make himself the most believable. That he has a version of reality that he wants to tell you about. And he cannot engage with the other side with the experience of what it's like for everyone else.

And in a way, I really can't blame him. Why would you want to? It's a whole lot more fun to live in your own world. And so, whenever I've spoken to him, it's been perfectly pleasant. But every single time, he's been disappointed in what I've written. And that's because it's my job to talk to everyone to have everyone's perspective in my work. And Ray's really only interested in his own.

Cameron Passmore: Further to that, what actions has Dalio taken to create his public-facing image?

Rob Copeland: We should start at the end there, which is he's been staggeringly successful at everything he's done. He, first of all, hires this huge PR team to put him out there and to talk about the principles constantly. He's still doing it to this day.

And he sits for magazine articles. He appears on 60 Minutes. He becomes friends with Charlie Rose. And he actually starts to talk to Charlie Rose about starting his own TV show. He films not just one but two TED Talks in which he talks about the concept of believability and the Dot Collector as we spoke about.

What he does is he creates this show of this benevolent billionaire who has achieved everything he wants in the world. And now all he wants to do is pass his lessons on. And there's a huge audience for that. He even gets booked on Gwyneth Paltrow's podcast. And Gwyneth Paltrow suggests that he should run for president. And he didn't run for president. But you can see how this just turns him into this mega-celebrity.

Now I actually once went to a conference where he was speaking, and I've done so much work on Bridgewater at this point I could write his remarks for him. But what I was shocked about was that there were hundreds of people waiting in line afterward just to speak to him. Just to get a picture with him. To get him to sign their book. He was like a sports figure. It was crazy. That's a real experience. People are desperate for a hero.

Ben Felix: that point really stuck out to me in reading the book, is that he's really put forth an effort to create this image that people now have of him. That wasn't an accident. It wasn't accidental that he became somewhat of a household name.

Rob Copeland: Oh, definitely. And what really amuses me about Ray and what I love so much about his story, and it's quite relatable, is that he loves to say that he doesn't like attention. He doesn't like wealth. He just happens to be so wealthy. He says, "Yuck. Why flash diamonds?" in one interview. Then he buys the most expensive home in Connecticut. He has a yacht with not one but two submarines. I don't know what you need the second one for. I guess, it can come rescue you if you're down in the first.

But I am a business reporter for the New York Times and I can tell you that this is a throughline to my coverage, is that hyper-successful people love to say that they just happen to become wealthy. And you, too, could. And actually, the wealth doesn't make them happy. Et cetera. Et cetera.

Now, I would tend to agree with that. Actually, everyone knows someone who's got more money than them. And I don't think that that necessarily makes that other person more happy. But Ray's entire public image is based on the fact that he's all about the principles. Not about the money. But it's just not true at all. There's something he leaves out of his story, which is that Ray Delio marries into the Vanderbilt-Whitney family. He marries a hyper-wealthy woman. And she's, by all accounts, by the way, a lovely person. But he never ever once gives credit for the fact that he didn't just start this firm at his apartment and grow it organically. He started out of his apartment and then he married into one of the wealthiest families and moved into a full New York City Brownstone, which is where he built Bridgewater from. People are endlessly complicated. It goes back to what Niall Ferguson, I guess, would say. And no one is more complicated I would say than Ray Dalio himself.

Ben Felix: On that topic of Dalio's success, can you talk more about – because I think there were a couple of stories in addition to the one that you just mentioned with his wife about aspects to his success story that he previously left out that you uncovered through your work for this book.

Rob Copeland: There's one that, honestly, is spine-tingling to me when I found out. Ray loves to talk about how he is the son of a jazz musician. His mom was a homemaker. She passed away when he was a teenager. That's all true. He did not grow up wealthy. And what he says is that he first learned about the stock market as a caddy. Caddying for golf players on Long Island.

And I never really questioned this story. Kind of almost sounds like the all-American thing like you could write it in a screenplay, "Oh, I was on the golf course. And I got stock tips." Et cetera. And it wasn't for years until I learned that it wasn't the whole story. That, in fact, he ingratiated himself to one very wealthy New York family in particular when he was a teenager. And he was their caddy. But I could not find a single interview that he ever gave about them. And he really becomes their surrogate son.

And I interviewed their only surviving grandkid who knew Ray very well. And Ray would come to their Christmases. And he went on vacation with them. And they helped him get his first job in finance. And he went with them when he was trying to raise money to start Bridgewater.

I always thought it was just so fascinating that he leaves them totally out of the story. Because there's nothing wrong with having gotten a little help. There's no suggestion that he didn't do anything untoward. Be became friends with them. He was friends with multi-generations of them. But what he doesn't want to do is just admit that it wasn't just the principles. It wasn't just Ray. That he had a lot of help.

And I think that that is quite telling about his personality and about who we are really as people. That a lot of people just – they just can't quite admit that they were lucky or that someone else helped them a lot. He wants this to be a fully rags-to-riches story. And it's just not that simple.

Cameron Passmore: Just to put a fine point on that, how does he explain his success?

Rob Copeland: He says that he studied economic history and that he figured out these rules for how the economy works. And that he slowly built this firm with a little by little money, and attracted clients and built it into, organically, the world's largest hedge fund. That is part of the story. But it's not all.

Ben Felix: Have you heard from Dalio since publishing the book?

Rob Copeland: I've heard a lot from lawyers of Ray Dalio and for Bridgewater. Look, he's been aware of this book since I signed the contract to write it. He was actually the first person I told after I signed the contract. And I told him, I had an open mind that I wanted to hear his perspective and anyone else that he wanted me to speak to. And he argued with me a little bit. And then he hired three sets of lawyers to threaten me, to threaten my publisher. They sent hundreds of pages of letters. They tried to pressure my employer. They tried to get me fired. This is the paradigm of radical transparency, guys. This is what he did for years behind the scenes.

I haven't heard from them directly. Though they've certainly complained enough about the book. I think if I were speaking to him honestly, I would hope that he would read the book and actually see the real arc of it, the real tragedy. Which is that there's a ton of fun in this book. There's great success. He really did build the world's largest hedge fund. But then he just got way over his skis and he needed to be seen as more of a guru-type figure. Well, not to spoil the end, but I think you can tell from this interview I don't necessarily think of him as much of a guru.

Ben Felix: What's the response from readers been like?

Rob Copeland: Oh, it's been incredible. It's been honestly such a wild ride. When you write a book, it's such a solo pursuit. And I wrote a lot of this during the pandemic. And it took hundreds of interviews to piece these stories together. And when I released the book, I thought the worst thing that could happen would just be that no one would notice. Where they would say, "Well, there's another book about for the business section."

And what was wonderful was that Ray was so twitchy about the whole book is that he started attacking it before he'd ever read it. There were people who were excited about reading it. I've heard from so many people inside Bridgewater and outside Bridgewater, people have spouses, children who just – honestly, they've thanked me for making them realize that they weren't crazy. That this really was what was happening. This was a rigged system. And that they can show this book frankly to their friends and family to explain what happened to them.

But more than that, what I love about the response is that so many people have reached out to me and just said, "I really enjoyed the book. I thought it was entertaining. And that you learn from Ray Dalio's story. How so many finance figures portray themselves." Nobody anymore wants to say, "Hey, I can read the stock tape." Or, “I wake up and I just read a lot of research reports. And then I'm smarter than everyone else.” Everyone wants this greater story. This greater philosophy. I think Ray's been more successful than anyone selling that story.

Ben Felix: The book, other than being an incredible story, it doesn't paint a super positive picture of either Dalio or Bridgewater. But as we've mentioned a few times, we're still talking about this massive hedge fund. That even with middling returns for the last little while, it's still huge. What do you think explains the success of Bridgewater as a business?

Rob Copeland: How many hours do you have for that question? Yeah. I'll tell you a story about someone reached out to me after the book came out, which is one of their investors actually reached out to me. And he said to me, "I'm reading your book. I'm loving it. But can you explain to me a little more about their investing?" And I said, "Well, why the heck are you asking me? You're one of their investors. You have hundreds of millions of dollars with them. Why don't you just ask them?" And he said, "Oh. Well, Bridgewater is the world's biggest hedge fund. They're just sort of like the default. We trust them. I'm just like curious about learning a little more."

And that really taught me a lot. Their own investors are just saying, "Okay, I want to put a little money into hedge funds. I'll put it into Bridgewater. It seems safe." We should say that Bridgewater has shrunk a ton. It's about 170 billion at peak. It's now under 100 billion. That's still an incredible business, by the way. But it is much, much smaller.

One of Ray's goals was to have a trillion-dollar firm. It doesn't seem like that's going to happen. But look, there are so many people who want to put their money with the most famous investor. They just want to be able to say, "Hey, I went and I visited Bridgewater. I talked an hour about the markets with Ray Dalio." And as someone who's done that myself, I can tell you, it's really appealing.

It's not that fun to sit in front of your computer and open your Fidelity page, buy a few Vanguard ETFs. It's a lot more fun to invest in Bridgewater and get to rub shoulders with "the greatest minds".

Ben Felix: I think that's very accurate. Just being Bridgewater makes Bridgewater able to continue to gather assets.

Rob Copeland: And where does the money come from, by the way? Increasingly, it's not from wealthy individuals, or pension funds, or even Western institutions. It increasingly comes from the Middle East. From China. From sovereign wealth funds. And all of these places are very susceptible to the celebrity factor of Ray Dalio. He was just in Davos this month talking endlessly about his latest thing that will ruin the world. Can you even guess what it is this time?

Ben Felix: Debt?

Rob Copeland: It's been debt for a while. Yes. But it's climate change now. It was Civil War two years ago. It was World War III last year. I honestly believe that he's going to start predicting World War IV and just skip the third one. He can't stop. Probably, we'll do this podcast again in six months and he'll have said that a tsunami is going to ruin us all. But, again, it works. It really does.

Ben Felix: What about succession at Bridgewater? Ray is not a young guy. And it's this big fund. How does Bridgewater carry on post Ray if that's even a thing?

Rob Copeland: This is a big theme of the book, in fact, which is that Ray, for about two decades, claims that he's just about ready to retire. And he's just looking for the right person to hand the keys over to. It will shock no one who's listening that, of course, Ray doesn't think that he can be replaced by just one person. Because he's too special. But that a group of people can take over.

A lot of the fun of the book is all of these people trying and failing to sort of take the ring from Ray and earn his approval. He always lets you get just a little bit close enough and then he snatches it from you and pushes you down to the bottom of the mountain again.

Now, Ray technically retired about a year and a half ago. And when that happened, I finished a draft of the book and I thought to myself, "Oh, shoot, this book is going to fall apart. Because now he's retired and now it's too neat. Now he's gone. Who cares?"

Let me just tell you, he retired. And basically, immediately, I started hearing stories from people at Bridgewater that he was back. It's like, "Oh, no. Ray never left. Ray took a one-week vacation, essentially. And then showed up again and sorted weighing in.”

He's technically retired. I have reported in the New York Times his retirement package, remember, this guy hates money, he says. He gets paid a billion dollars a year as essentially a royalty for allowing this next generation of Bridgewater leaders to take over. And he's still there in the background. He's still weighing in on everything. He's still the public face of the firm. I don't believe he'll ever really go away. Because he can't. It's such a huge part of his personality. And what does it say about Ray if someone else could replace him? Then maybe he really wasn't so special all along.

Cameron Passmore: Other than being a fun read, what do you hope people take away from the book?

Rob Copeland: Well, I honestly hope that people can see the patterns here. That we can see how we've elevated our business leaders in recent years, in recent decades even. I like to go back and just remember that we've always had sort of captains of industry.

John Rockefeller named a university after himself. Ego is nothing new. But what's new here is this idea that there's a higher purpose involved in the attainment of all of this wealth. And we see this with Elon. We saw this with Steve Jobs even. We, of course, saw this with all these tech figures like Elizabeth Holmes, Adam Neumann of WeWork. They're always selling us something. They're selling us this improvement to our personalities. And I really think there should be a little more skepticism of just because you're rich doesn't mean you have anything to offer me. You're just rich. It's just money, guys. It doesn't make you more interesting or more worthy.

I can tell you that, in my career, I have a really interesting job. I get to talk to successful people. And I'm conscious that they're speaking to me because I'm a reporter for the Times. But I get to talk to them. And oftentimes, I'll have an hour dinner, an hour and a half. Have a lovely time and I forgot about it immediately? Just because you're a billionaire doesn't mean you have anything particularly prescient to say.

This whole self-help mantra of all these guys, I wish we could just say, "Hey, congratulations. You're super successful. Hopefully, you're charitable at some point," and then go away. Go marry your third wife and buy an island. And that sounds fantastic.

Cameron Passmore: Well, the book is incredible. It's called The Fund: Ray Dalio, Bridgewater Associates, and the Unraveling of a Wall Street Legend. Great to have you on, Rob. Thanks for joining us.

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