Tom MacWright

I read The Fund by Rob Copeland on


In 2018, I read Ray Dalio’s Principles, which I thought was silly and failed in its main goal. This book, about Dalio’s hedge fund, Bridgewater, confirmed that feeling. And back then, I thought that Dalio’s brief biography was humanizing and a nice read. This book changed my opinion about that: he didn’t mention, in Principles, the help he received from a rich family nor that his wife, Barabara, is a Vanderbilt.

The summary is that Bridgewater Associates is mostly devoted to interpersonal conflict, Dalio was fixated on a set of ‘principles’ that were never systematized and which he would constantly override on a whim. And it did a really bad job investing.

I’ve mentioned a few times that I think accredited investor rules are a good idea.

The expansion of that thought is that many of the investment options associated with the wealthy are bad actually. Part of it is that we confuse how the wealthy invest after they’ve become wealthy with how they became wealthy. Nick Maguilli has written convincingly about this

I raise this point because there seems to be an obsession with the wealthy and how they invest their money as if their allocation decisions are what created their wealth. Of course, for some wealthy individuals this is true. Warren Buffett got rich based on how he invested his money. But many other wealthy people didn’t. They got rich as business owners or doctors or lawyers (or something else) and have since allocated their wealth to private equity and hedge funds. Keep this in mind before making any changes to your portfolio.

But also: these hedge funds just aren’t that great! Everyone in The Fund is getting rich because they work at Bridgewater, and all of the Bridgewater investors are losing money because Bridgewater’s investments were underperforming the market and Bridgewater was taking a handsome fee for the service.

The fact that Bridgewater could do so little, and make such bad decisions based on such bad reasoning, and keep most of its billions in AUM is an indictment of the industry. There are surely counter-examples - Renaissance, for example, seems real. But look at the other examples, like Bill Ackman’s big payday for doing almost nothing.

I’m sure there is an edge, and some hedge funds succeed. But boy, am I happy that most people aren’t investing in hedge funds, and learning about the inner workings of Bridgewater makes me happier than ever with my boring market-indexed investments.


  • The Fund by
  • ISBN: 1250276934
  • ISBN13: 9781250276933
  • Look up with:
    • Published:
    • Publisher: St. Martin’s Press