Principles

Bridgewater grew to 42 employees by 1995, with $4.1 billion under management. The company continued to invest in technology and in skilled programmers. Bridgewater also developed additional products, such as global inflation-indexed bonds and an “All Weather Portfolio” that combined a mix of assets to increase risk parity (70).

Dalio notes that during this period he also increased his focus on management, including developing a list of his principles and distributing it to managers, insisting on policies like “Radical Transparency,” relying on psychometric testing like the Myers-Briggs Type Indicator, and creating “baseball cards” with “stats” for employees. He attributes his increased understanding of individual differences to the knowledge he gained from dealing with his son Paul’s bipolar disorder.

Despite Bridgewater’s growth, Dalio began making plans to step back from his role in 2008, just as a major financial crisis was emerging. Dalio had predicted the debt crisis, and he describes discussing the problem with White House staff and Tim Geithner, the president of the New York Federal Reserve. According to Dalio, Bridgewater made money in 2008 despite the crisis, and policymakers began to seek his advice. Dalio credits Federal Reserve chairman Ben Bernanke with making good decisions to stop the worst of the crisis’s effects.