
How Ray Dalio built the world’s richest and strangest hedge fund (2011) - jimsojim
http://www.newyorker.com/magazine/2011/07/25/mastering-the-machine
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kenshaw
It seems to me that the continued debate over whether or not the market is
random (or whether it is not), is very similar to the debate of nature vs
nurture.

My instincts, and my conclusion is that there is an element of both randomness
and non-randomness in the market. I would expect then that there would be both
successful and non-successful actors who succeed/fail due to random and non-
random factors. My gut further leads me to believe that having insight or
knowledge of the market coupled with a very large bankroll would allow you to
ride the random events/waves with prudent mitigation strategies. A hedge, if
you would. My expectation also would be then you could measure almost any fund
on some arbitrary timeline and argue that the traders either knew or didn't
know what they were doing, and that because of random event XYZ they either
failed to correctly predict market movement ABC over period IJK. Let's not
even get into the MNO or DEF parts!

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Wonnk13
Whatever "culture" of radical honesty they have does not translate at all to
other workplaces. My first experience with an ex-BW manager left me crying at
the coffee machine all afternoon. just my n=1 anecdote.

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adnzzzzZ
I think they understand this. See the first minute of this video
[https://www.youtube.com/watch?v=ABB1pfi3ZpE](https://www.youtube.com/watch?v=ABB1pfi3ZpE)

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melling
Ray Dalio has a 30 minute YouTube video:

[https://www.youtube.com/watch?v=PHe0bXAIuk0](https://www.youtube.com/watch?v=PHe0bXAIuk0)

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cheez
Great place to work.

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ImTalking
All investment funds are a charade. The probability that a firm like
Bridgewater exists with higher than average returns is not zero. Nothing about
Bridgewater would indicate that they somehow 'get it' whilst the other funds
don't. It's strictly probability, or more accurately, it's strictly a bell-
curve.

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Xcelerate
I'm not sure why you got downvoted. Survivorship bias is a well-known
phenomenon. I would be interested in distinguishing between hedge funds that
do well because some "necessarily must" and those that actually have some kind
of advantage with their algorithms. But how can you actually tell which is the
case?

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ImTalking
I don't think you can. If on every trade you flip a coin, but intelligently
limit your losses and ride your wins, you will beat every fund-manager on the
planet. Nothing to do with smarts or algorithms. And even if you have good
risk management, if you trade long enough, there will always be the perfect-
storm 'meltdown' scenario. However, as I originally said, it's all probability
and there will be a small group of managers who will never experience the
meltdown (or the meltdown is waiting in their future).

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mason55
> _If on every trade you flip a coin, but intelligently limit your losses and
> ride your wins_

What does this mean? Sounds like gambler's fallacy combined with a Martingale
system

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ImTalking
Flip a coin... heads you go long, tails you go short. Limit your losses and
ride the wins. You'll kill the market (until a perfect-storm meltdown event,
of course). Nothing to do with Martingale.

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shitgoose
Could you elaborate on "Limit your losses and ride the wins"? Do you assume
that market is trending upwards (until meltdown)? Do you suppose to make money
this way in flat market?

