Risk Parity Resources: Dalio (2017)


You might think this book would be all about Risk Parity, written by its creator, and offering the secrets behind his All Weather portfolio at Bridgewater Associates. While there are a few pages about that, the bulk of the book is more of his philosophical musings about life, work, success, and ideas. The first part is more of an autobiography, but the second and third parts read a bit like a self-help book crossed with management aphorisms. Not exactly my cup of tea, but if you’re interested in Dalio and how he thinks, then it might be worth the read.

Read the original:

Amazon.com: Principles: Life and Work eBook : Dalio, Ray: Kindle Store
Principles: Life and Work - Kindle edition by Dalio, Ray. Download it once and read it on your Kindle device, PC, phones or tablets. Use features like bookmarks, note taking and highlighting while reading Principles: Life and Work.

Important Points for the RP Investor:

Not much, really, and much of the information in here about Risk Parity, the “Holy Grail,” and his thoughts on investing are already covered in the various white papers put out by Dalio and other Bridgewater leaders. But, if you insist, here goes:

Pages 24-5: tells the story of Dalio’s role in the development of Chicken McNuggets. Dalio was able to break down the risks that McDonald’s faced as it was trying to bring the “food” to market, and found a way that the chicken supplier could hedge their feed costs to stabilize the prices that McDonald’s would pay.

Pages 55-61: Elaboration on the “Holy Grail” - a portfolio composed of multiple, uncorrelated revenue streams.

Pages 69-70: Discovering “Risk Parity.” This story is told in much more detail in “The All Weather Story

The rest of his book is just assorted snippets of his life, philosophy, and approach to management. If you like these sorts of books - where a billionaire lets you in on their mindset - then you may enjoy the rest. To be frank, I found that stuff difficult to wade through. I would summarize it, and began to do so, but honestly, I didn't make it very long. You might want to read/watch one of the reviews below.

Other Related Resources:

Bridgewater has a bit of an interesting reputation. It has been highly, highly successful, and also pretty unconventional in terms of method. Some of its pros and cons are covered in this review of Principles by the New York Times:

Bridgewater’s Ray Dalio Spreads His Gospel of ‘Radical Transparency’ (Published 2017)
Mr. Dalio has created an unusual and confrontational workplace at Bridgewater Associates, the world’s largest hedge fund firm. With a new book, he hopes to inject his ideas into the mainstream.

Here is an animated review of the book:

Here is Dalio talking about the book at Google: