Ray Dalio Expects This Debt Cycle to Continue

In 1975, Ray Dalio started Bridgewater Associates in his Manhattan apartment. Through shrewd macroeconomic trend analysis, he expanded it into a $150 billion hedge fund behemoth. Along the way, he formed a set of beliefs that he later expressed in speeches, tweets, and books. These beliefs helped to create Bridgewater’s “idea meritocracy” and “radical transparency” culture. Dalio recently transferred control of the Westport, Connecticut-based company to the next generation of executives, although he will continue to serve as an investor, a member of the operational board, and a mentor to senior executives.

The 73-year-old Dalio is leaving Bridgewater at a time when its flagship Pure Alpha fund is doing well—it gained more than 22% this year through October 31—but the general mood in the world is dismal. Many countries are struggling with raging inflation as a result of years of lax monetary and fiscal policies and debt-fueled growth, and central bankers are boosting interest rates to curb price increases. In response, higher rates have devastated the stock and bond markets and put major economies at risk of recession next year. Meanwhile, the U.S. population is deeply divided, and decades of relative calm are in danger of ending due to external disputes between superpowers.

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