Book Review: The Fund

In his revelatory new book “The Fund,” Rob Copeland of The New York Times pulls back the curtain on the controversial management techniques of billionaire Ray Dalio, founder of hedge fund behemoth Bridgewater Associates. Copeland documents how Dalio’s rigid, authoritarian methods engendered a workplace culture defined by invasive surveillance, demanded ideological conformity, and endemic fear. This meticulously reported page-turner uncovers the perils of Dalio’s radical corporate experiment. I became so engrossed in this expose that I eagerly devoured it on a long flight.

Dalio built an elaborate system of principles, ratings, tests, and surveillance aimed at creating a transparent, accountable environment. According to the book, these methods enabled an authoritarian, cult-like culture focused on unquestioning alignment with Dalio rather than truth or effectiveness.

Central to Bridgewater’s management model is Dalio’s ever-expanding manifesto, “The Principles.” This rulebook covers everything from investment strategy to personal values, and employees are required to memorize and rigorously follow it. While “The Principles” ostensibly aim to improve management and culture through radical transparency, critics contend they stifle dissent and force alignment with Dalio’s views. Violations can result in public shaming or dismissal.

Dalio also implemented a proprietary “Believability Rating” to evaluate employees. According to the book, he rigged the system so he consistently ranked highest, effectively ensuring deference to his opinions. Employees were also ranked on “Baseball Cards” that recorded personal attributes, and negative ratings could be used by managers to punish staffers. Surveillance was ubiquitous, with recorded meetings, tracked keystrokes, and constant monitoring.

Daily video lessons called ‘Management Principles Training’ quizzed staff on their adherence to Dalio’s Believability Ratings and Principles. Employees were required to pass exhaustive ‘Principles Tests’ assessing their grasp of Dalio’s views. All of this pressured staff to fall in line with Dalio’s worldview rather than apply independent critical thinking.

Daily video lessons called “Management Principles Training” quizzed staff on their adherence to Dalio’s Believability Ratings and Principles. Employees were required to pass exhaustive “Principles Tests,” assessing their grasp of Dalio’s views. All of this pressured staff to fall in line with Dalio’s worldview rather than apply independent critical thinking.

While aspects of Dalio’s model aimed to develop employees and promote accountability, the book describes a system that enabled authoritarian control. By centering the organization around obedience to Dalio and surveillance of staff, Bridgewater curtailed open disagreement and constructive dialogue. Mistakes were punished harshly. Dalio’s presence loomed large even after stepping back, ensuring the firm continued to revolve around him.

Not Much AI Involved

The Fund also tries to unpack Bridgewater’s investment methodologies and strategies. The book reveals that an unusually high percentage of employees at the hedge fund work on projects unrelated to investing or trading. Copeland estimates that only about ten Bridgewater employees actually possess tangible knowledge of the fund’s tightly guarded investment strategies. Consequently, in contrast to other investment groups, a smaller number of former employees ventured to establish their own hedge funds; this phenomenon was influenced by factors beyond just Bridgewater’s assertive legal approach.

A cornerstone of Bridgewater’s approach is proprietary research and models. Early innovations like the ‘slack measure process’ to gauge countries’ economic capacity provided an informational edge. Teams produce copious research on global economics and history, though the book asserts that this serves public relations more than investment decisions. Bridgewater also generates unique datasets such as surveys on consumer expectations.

The research informs the development of trading rules and algorithms. Mr. Dalio’s rules have been described as timeless and universal, though the book makes a solid case for why the lack of evolution led to obsolescence. All new rules require unanimous approval from Mr. Dalio, Greg Jensen and Bob Prince. The rules dictate trades based on indicators and correlations, following an if-X-then-Y format.

Trend following techniques to trade along market momentum are another key feature. As someone who worked at a hedge fund years ago, I can attest that while trend following may have offered Bridgewater an early edge, the emergence of dedicated trend trading firms has steadily eroded this advantage over time. 

The book describes how years of cultivating relationships with government officials provide valuable insider access to planned policy initiatives. The resulting information advantage, while legally obtained, is controversial among industry peers.

Despite the facade of a heavily rules-based system, the book suggests that up to 10% of assets are said to be traded purely on Mr. Dalio’s personal market views and instincts. There is no oversight on these trades, which have reportedly cut into returns as Mr. Dalio overrules staff. This highlights the firm’s dependence on its founder, in contrast to the image of an impersonal, algorithmic system. Though systematic trading was once a distinguishing factor, competitor firms now have far more advanced technological capabilities and actively utilize AI and data science in their investment systems and strategies.

Bridgewater’s returns have been stellar but in recent years its Pure Alpha fund has lagged major indices. The book describes a company where absolute deference to the founder was required. Fear permeated the organization, as even small infractions could end careers. Dalio succeeded in creating a machine – but apparently one predicated on conformity, not truth. For all the radical transparency touted, Bridgewater’s model may have suppressed more wisdom than it surfaced.

Cheat Sheet:  The Fund by Rob Copeland

Management Tools & Practices

The Principles

  • Ever-expanding manifesto and rule book written by Ray Dalio 
  • Employees required to memorize and follow, became company canon
  • Intended to improve management and culture, foster transparency 
  • Criticized for creating climate of fear, forcing alignment with Dalio’s views

Baseball Cards

  • Rating system to evaluate employees on attributes defined by Dalio
  • Recorded strengths, weaknesses, stats for each employee 
  • Aimed to identify fits for roles, but enabled criticism and punishment 

Believability Rating

  • Proprietary metric calculated from employee ratings 
  • According to the book, Dalio rigged it so he always ranked highest in believability
  • Determined whose opinions counted most
  • Seen as subjective, promoting conformity to Dalio

Management Principles Training (MPT)

  • Daily video lessons created from Dalio’s teachings 
  • Used as required learning, quizzed alignment with Dalio’s views
  • Intended to teach principles and foster accountability
  • Criticized as indoctrination tool to align with Dalio

Dot Collector App

  • iPad app to read out negative ratings from baseball cards
  • Enabled selective use of data to punish staffers

Issue Log

  • Online system for logging observed mistakes/problems
  • Created hyper-critical culture, even for minor issues 
  • Encouraged criticism between employees


  • Intense questioning sessions to diagnose mistakes
  • Public probes used to shame employees
  • Seen as authoritarian means of control


  • Extensive monitoring of employees through recordings, tracking
  • Justified by obsession with Principles 
  • Considered invasive and selective

Investment Strategies and Tools

The systematic rules-based approach provided early innovation but failed to evolve. Proprietary indicators were copied over time. Dalio’s unchecked personal discretion in trading hurt returns, suggesting his legendary acumen has diminished. Information advantage was legally obtained but controversial. Contrary to popular belief, the firm’s acclaimed trading systems rely on surprisingly minimal AI and machine learning technology.

Systematic Rules-Based Trading

  • Trading based on predefined rules and correlations
  • Early innovation provided edge, but became stale over time 
  • Rules required unanimous approval from Dalio, Jensen, Prince

Proprietary Economic Research

  • Massive internal research on global economics and history 
  • Provided content for “What’s Going on in the World” meetings
  • More for public relations than actual investment decisions

“Slack Measure” and Other Proprietary Indicators

  • Early proprietary metrics like slack measure gave informational advantage
  • But many were copied or surpassed by rivals over time

Trend Following

  • Trading designed to follow momentum in markets
  • Key element of Dalio’s approach
  • Edge faded as dedicated trend followers emerged 

Cultivating Information Advantage

  • Building relationships with government officials globally
  • Gaining insider access to central bank and government insights
  • Legal but controversial edge versus other investors

Dalio’s Personal Investment Discretion

  • Up to 10% of assets based solely on Dalio’s personal views
  • No oversight on these trades 
  • Cut returns as Dalio overruled investment staff

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