Page 57 - Ray Dalio - Principles

investment managers who were buying our research were
using it to make money. Second, we were successfully
managing companies’ interest-rate and currency exposures.

With those two things going as well as they were, I figured we
could become successful institutional investment managers
ourselves. So I made the pitch to the people who ran the World
Bank’s pension fund, most importantly Hilda Ochoa, who was
its chief investment officer at the time. Despite the fact that we
had no assets under management and no track record, she gave
us a $5 million U.S. bond account to manage.

That was a huge turning point for us, as it was the start of
Bridgewater as we know it today. The strategy we used for the
World Bank shifted between holding cash and holding twenty-
year U.S. Treasury bonds, because these positions would give
us leveraged bets on the direction of interest rates. When our
systems indicated that the pressures on interest rates would
cause them to fall, we would hold twenty-year Treasury bonds,

and when the system pointed to rates rising, we would stay in
cash. We did very well, and before long other large
institutional investors gave us money to manage as well.
Mobil Oil and Singer were our next two accounts and others
followed in rapid succession. We went on to become the top-
performing U.S. bond manager in the world.

VENTURING BEHIND THE “CLOSED

DOOR” OF CHINA

Part of what was great about consulting was that it gave me
opportunities to travel. The more unusual a place, the more
interesting I found it. This curiosity drew me to Beijing in
1984. The only images I’d seen of China when I was growing
up were of masses of people waving Mao’s Little Red Book,
so having an opportunity to go behind what was still a mostly
“closed door” was alluring. I got the invitation because I had a

small office in Hong Kong whose director was an advisor to
CITIC, the “window company” that was the only business in
China allowed to deal with the outside world. Beijing was
filled with wonderful and incredibly hospitable people who