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🇹🇼 Taiwan /Economy & Trade

Once forced to borrow money, Ray Dalio built his fortune on two investment rules

From Liberty Times · () Chinese

Translated from Chinese and summarized by DistantNews. Read the original for the full story.

At a glance

In-depth From a news agency Context piece
  • Ray Dalio, founder of Bridgewater Associates, once borrowed $4,000 from his father after an incorrect prediction about a U.S. debt crisis caused heavy investment losses.
  • He said the experience taught him to question his judgments, test decision-making rules against data and diversify investments.
  • Dalio’s fortune is now reported at $15.4 billion, while his principles became central to Bridgewater’s investment approach.

Ray Dalio’s investment career began with a failure so severe that he had to borrow $4,000 from his father to cover his family’s expenses. The crisis nearly left the Bridgewater Associates founder broke, but he later treated it as the turning point that reshaped his approach to investing and life.

Dalio founded Bridgewater in 1975, initially running the firm from a two-bedroom apartment in New York. His net worth has since risen to $15.4 billion, according to the report. Around 1980 and 1981, he predicted that U.S. debt problems would trigger a major crisis. When Mexico’s debt crisis erupted in 1982, he believed his forecast was about to come true. Instead, stock markets rose and monetary policy shifted toward easing, inflicting heavy losses on his investments.

The mistake forced Dalio to reconsider how he decided whether a judgment was correct. His first lesson was to remain humble and challenge his own assumptions. He began recording the standards behind each decision, then testing them with data and backtesting. Over time, this method developed into what he called his “principles,” which became a central part of Bridgewater’s investment philosophy.

It was very painful.

· Ray DalioDalio described the financial crisis that forced him to borrow money from his father.

His second lesson concerned diversification. Dalio said appropriate diversification could reduce as much as 80% of risk without sacrificing a large share of returns. He gradually developed a strategy based on 15 uncorrelated sources of return, using different assets to reduce portfolio risk. The article says Bridgewater subsequently produced an average positive return of about 11.8% over more than 30 years, with limited annual losses.

Dalio now shares the investment mechanisms and cause-and-effect relationships he learned. He says his aim is not to frighten people, but to help them understand complex financial environments. His guiding idea is that worry can be useful because it helps prevent fear from taking hold.

Worry is beneficial, while not worrying is harmful.

· Ray DalioHe explained the principle behind his approach to anticipating risk.
About this summary

Originally published by Liberty Times in Chinese. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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