• Bridgewater Associates founder Ray Dalio believes that all organizations can benefit from automated management systems.
• Bridgewater is developing a "coach" that acts like a personal GPS for decision-making.
• The automated management processes parallel the automated investment systems the fund already uses.

"Whether you like it or not, radical transparency and algorithmic decision-making is coming at you fast, and it's going to change your life."

That's how Bridgewater Associates founder Ray Dalio opened his TED Talk in April, and the belief has guided his hedge fund for the past few decades. It's why Bridgewater's 1,500 employees are working with an artificial-intelligence management "coach" that is scheduled to reach a new level of capability and integration within the company in the next two or three years, according to Dalio.

Dalio explained to Business Insider in general terms how this will work:

"Let's say you're dealing with somebody who isn't doing a good job or is somebody who has a personal problem, maybe an illness, or whatever the person's circumstances are. What it does now is if you type into a 'coach' ...  it then gathers information about the person and the circumstances, so they're there. It analyzes what they're like and provides guidance for what to do."

Employees can give daily updates about how they're feeling, and if, for example, one is feeling a 5 on a 1-5 scale of being overworked, the coach will notify that employee's supervisor and recommend that they reach out for a discussion.

Dalio said it's a direct parallel to the investment system that long been in place, which he likens to driving with a GPS. Since the 1980s, Dalio and his team have been creating investing algorithms based on tested theories. As Dalio explains in his book, human investors work alongside the automated investor, considering its suggestions and either acting on them or determining what the algorithms are missing. New algorithms can be adjusted when flaws are revealed.

While he chose to remain co-CIO, Dalio completed a seven-year transition phase away from management this year, and marked the occasion with a book tour around "Principles: Life and Work," the first of two he will write. In "Principles," Dalio shares the collection of insights that every Bridgewater employee reads, and explains that before he left the role of co-CEO, he ensured that the management principles would be automated as much as possible, in the same way that his investment principles already had been.

The management coach is in beta testing and is "providing a lot of help now" but "is not nearly there" in terms of reaching its potential, according to Dalio. He said that, like the automated investment system, it will always be evolving, but a "thorough version" should be available to Bridgewater employees within three years.

The idea is that it will have access to more information than any one person could have about the employees within the company.

This coach is linked to the existing management software at Bridgewater, including the "Dots" iPad app that Dalio publicly demonstrated for the first time in his TED Talk. In Dots, employees rate each others' performance in real time during meetings according to traits like assertiveness and open-mindedness, leaving contextual comments as necessary.

Dots ratings come into play with "believability-weighted decision making" process at Bridgewater. When a question is posed to a group, the averages of each employee's Dots ratings are considered.

For example, an investment decision may receive 13 "yes" votes and four "no" votes and still be denied because the four people who voted in the negative significantly outweighed those for the decision in relevant areas, like their experience level and capability for high-level strategy.

Dalio's ideal version of Bridgewater, then, takes its existing automated management programs and gives each employee a fully functioning coach that will help them interact with each other.

And, as he said in his TED talk, he thinks that Bridgewater is ahead of the curve on a global trend, and it's why he plans on making Bridgewater's proprietary management software available to the public in the near future.

"It's a little bit like playing chess and then also being able to have, when you're playing the chess, a computer chess system next to you making the moves," Dalio told us.

"So you make the move, it makes the move," he said. "You compare your moves and you think about them and then you refine them. Well, that's what we're doing in management."

SEE ALSO: Bridgewater's Ray Dalio shares the piece of advice he wants to be his legacy

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NOW WATCH: THE RAY DALIO INTERVIEW: The billionaire investor on Bridgewater’s 'radically transparent' culture and how to bet on the future

Bridgewater Associates founder Ray Dalio sat down with Business Insider CEO Henry Blodget to discuss his book "Principles: Life and Work." Here Dalio explains the importance of learning from his mistakes.

"Principles: Life and Work" is the first of two planned books, and includes a short autobiography along with an expanded version of the "Principles" that all Bridgewater employees read when joining the company. Following is a transcript of the video. 

Henry Blodget: And one of the other principles that you stress is this idea that you should teach your team to fish rather than giving them fish, but you gotta give 'em room to make mistakes. This is something that Jeff Bezos and many other incredibly innovate entrepreneurs have stressed again and again. We have to get over the fear of mistakes. This seems to be a key part.

Dalio: Well, you learn from mistakes and learn from pain. Like I say, you can scratch the car, but you can't total the car. Okay. Mistakes is one of the best sources of learning, right. Successes mean you do the same thing over again, and okay, that's fine, but mistakes that are painful stick. When I look back on my career, I think that the mistakes were the best thing that happened to me.

I remember my mistakes better than I remember my successes. Somehow there must be more of the successes to get me where I am, but I remember all the mistakes, and I remember the lessons. So that's what I mean by pain plus reflection equals progress. So yeah, it's okay for you to make mistakes. It's not okay for you to not learn from those mistakes. That's a principle in there, right. And so you have a culture that operates this way.

If you don't have a culture that operates this way, it's not gonna be self-reinforcing. And so the reason I'm talking about these types of principles rather than my economic and investment principles, which'll come out in the next book is because these are the most fundamental principles, which are the basis of success. And they're not just in investment, investment firms principles. It's not just a hedge funds principles. It's like life principles and how we're gonna deal effectively with each other.

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• Ray Dalio, the founder of Bridgewater, the world's largest hedge fund, just published a note on the state of the US economy.
• He noted that the bottom 60% of Americans are struggling, listing a litany of depressing statistics to make his case. 
• He said that if he were running Federal Reserve policy, he'd keep an eye on the bottom 60%. 

Brutal.

There's no other word for Ray Dalio's latest note on the US economy, and the situation it describes. The founder of Bridgewater, the world's largest hedge fund with about $160 billion in management, posted the note on LinkedIn on Monday, and sets about splitting the US economy in two: the top 40% and the bottom 60%.

The point of this exercise is to show that while the headline numbers show a growing, healthy economy, there's a lot more going on under the surface that needs to be paid attention to. 

The stats he cites for the bottom 60% are downright depressing. Here's a selection taken straight from the note (emphasis Dalio's):

• Real incomes have been flat to down slightly for the average household in the bottom 60% since 1980 (while they have been up for the top 40%). 
• Those in the top 40% now have on average 10 times as much wealth as those in the bottom 60%. That is up from six times as much in 1980.
• Only about a third of the bottom 60% saves any of its income (in cash or financial assets).
• Only about a third of families in the bottom 60% have retirement savings accounts—e.g., pensions, 401(k)s—which average less than $20,000. 
• For those in the bottom 60%, premature deaths are up by about 20% since 2000. The biggest contributors to that change are an increase in deaths by drugs/poisoning (up two times since 2000) and an increase in suicides (up over 50% since 2000).
• The top 40% spend four times more on education than the bottom 60%. 
• The average household income for main income earners without a college degree is half that of the average college graduate.
• Since 1980, divorce rates have more than doubled among middle-aged whites without college degrees, from 11% to 23%.
• The number of prime-age white men without college degrees not in the labor force has increased from 7% to 15% since 1980.

In other words, the economy isn't as healthy as might appear at first look. And note includes a warning: the "stress between the two economies" will "intensify over the next 5 to 1o years" because of demographic and technological change. 

How does this relate to markets? Well, Business Insider reported back in September that Bridgewater had told clients that the Fed was making a mistake by raising rates. And there is a hint of that view in Dalio's latest note, where he said that the "average statistics could lead the Federal Reserve to judge the economy for the average man to be healthier than it really is."

He warned that that could lead the Fed to run "an inappropriate monetary policy."

Dalio said: 

"Because the economic, social, and political consequences of an economic downturn would likely be severe, if I were running Fed policy, I would want to take this into consideration and keep an eye on the economy of the bottom 60%."

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• Bridgewater Associates executive Bruce Steinberg and his family were among 12 dead in a Costa Rica plane crash on Sunday.
• Steinberg was a senior researcher at the firm, the world's largest hedge fund.
• Costa Rican authorities say strong winds or mechanical failure are likely causes.

Bridgewater Associates senior researcher Bruce Steinberg and his family were among 12 who died in a plane crash in Costa Rica on Sunday.

Bridgewater founder Ray Dalio noted the loss on his Facebook page, calling Steinberg a "wonderful man."

"Right now, we are each processing this devastating tragedy in our own ways," Dalio wrote. "At this time I will be devoting my attentions to doing this and helping others."

Steinberg, his wife, Irene, their sons Matthew (14), William (19), and Zachary (20), along with another American family of four, an American tour guide, and two local pilots all died in the crash, leaving no survivors.

The families had taken a charter flight on a Cessna 208B Grand Caravan that crashed in a wooded area off the beach town of Punta Islita just minutes after takeoff, Costa Rican authorities told Reuters. The Journal News reported the flight was en route to Costa Rica's capital, San Jose, where the Steinbergs had planned to celebrate the new year.

The US State Department and Costa Rican authorities are investigating the crash.

Costa Rica's Judicial Investigation agency deputy director Michael Soto told the Associated Press that "No possibility can be left out for certain," but that the two most likely causes are inclement weather or mechanical failure. Costa Rican authorities told the AP that there were strong winds during the time of the crash.

The Steinberg family lived in Scarsdale, New York, and were philanthropists and prominent members of their local Jewish community.

"They were wonderful people. We need a whole world of people like them," Steinberg's mother Diane told the New York Daily News.

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• Ray Dalio, the founder and chairman of Bridgewater Associates — the world's largest hedge fund — says investors must keep an eye on what a Jeremy Corbyn premiership would look like for the markets.
• Speaking to the Financial Times, Dalio said investors must now look beyond traditional market events like central bank meetings.

LONDON – Ray Dalio, the founder and chairman of Bridgewater Associates — the world's largest hedge fund — said investors must keep an eye on what a Jeremy Corbyn premiership would look like for the markets in a new interview with the Financial Times.

Dalio said that the world's investment landscape must change to reflect growing political unrest and uncertainty sweeping major economies, singling out Jeremy Corbyn in the UK as a particular point of interest.

"[These days] there’s not the same volatility of inflation, growth and interest rates. So political issues are more important than macro [economic] issues," he told the FT's Gillian Tett, adding that investors must look beyond traditional points of interest like central bank meetings and statements, and look instead to events like "the next election in France or in the UK, or how hospitable will Jeremy Corbyn be to capital?"

Dalio believes that this shifting landscape has fundamentally altered the way he looks at investing, saying that Bridgewater has created algorithms to track and forecast these notoriously unpredictable political developments.

"You can convert whatever you are thinking into an algorithm," he said.

"We’ve created a conflict gauge looking at words [in the media] and things. We’ve done examinations of all political conflicts in the past and their impact on markets [for models]."

The potential for Prime Minister Corbyn has been the subject of much hand wringing in the UK's financial markets, with Morgan Stanley in December warning that for the markets "domestic politics may be perceived as a bigger risk than Brexit," highlighting the potential for a drastic shift in economic policy under a Labour government.

Should he get to power Corbyn is expected to carry out a major programme of nationalisations, as well as ramping up government spending on services and infrastructure, with the National Health Service a major focus.

Morgan Stanley's comments sparked an angry response from Corbyn, who criticised Morgan Stanley for its role in the 2008 financial crisis, labelling it as one of the "speculators and gamblers who crashed our economy."

"Their greed plunged the world into crisis and we're still paying the price," he said.

"Nurses, teachers, shopworkers, builders, just about everyone is finding it harder to get by, while Morgan Stanley’s CEO paid himself £21.5 million last year and UK banks paid out £15 billion in bonuses."

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NOW WATCH: The man that won the Nobel Prize in economics for contract theory shares his thoughts on smart contracts

• According to reports by Bloomberg, Vanessa Selbst, one of the best poker players in the world, has joined the largest hedge fund in the world. 
• Selbst made $11 million (£8 million) in her 12-year poker career. 
• Reports state she will be analysing information and trading strategies. 

Vanessa Selbst, who according to Bloomberg is the best poker player in the world, got a job at the largest hedge fund in the world — Bridgewater Associates, founded by billionaire Ray Dalio. Selbst is there to learn how to trade — reports Bloomberg.

Vanessa Selbst has won over $11 million playing poker over 12 years, making her the most successful woman in the business. Now in Bridgewater she is going to learn how to make money in a completely different way. Bloomberg has reported that her focus there will be on the analysis of information and trading strategies.

It is not yet known exactly what position Selbst would take because the information about her attachment to the fund is secret.

Bloomberg refers to an anonymous source from the fund and quotes Selbst's Facebook page where she announced the move. On December 31, Selbst revealed that she had begun her career four months earlier in an unspecified hedge fund.

Selbst stressed in her post that the trading environment is a lot like the poker scene, "a group of nerdy kids working together to beat opponents in the game." She also added that "it is very difficult."

Both Selbst and Bridgewater refused to comment on the matter.

The decision to take on Vanessa Selbst, however, should not be surprising, because Bridgewater is known for taking unusual initiatives and an innovative approach to investing.

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• Global markets dived during a rocky week for trading last week.
• Bridgewater Associates' co-CIO: "We don’t think this shakeout will be over in a matter of days."
• Fears over tightening central bank policy are expected to drive more volatility.

LONDON — One of the most senior figures at the world's biggest hedge fund is predicting more volatility in global markets after a turbulent few weeks for global markets.

Bob Prince, the co-chief investment water of Bridgewater, told the Financial Times in an interview published on Monday:"There had been a lot of complacency built up in markets over a long time, so we don’t think this shakeout will be over in a matter of days. We’ll probably have a much bigger shakeout coming."

The comments come after a choppy week for global markets. The Dow Jones Industrial Average suffered its biggest points drop in history on Monday before rebounding strongly. However, the slump resumed on Thursday as the Dow entered correction territory.

The sell-off in the US, which spread to Asian markets and Europe, was sparked by fears that the Federal Reserve could be about to raise interest rates again, suggesting an end to the easy money central banking policy that has propped up businesses and growth in the post-crisis era.

Prince told the FT:"Last year equity markets had a free run. But this year we are going from central banks contemplating tightening policy to actually doing it. We will have more volatility as we are entering a new macroeconomic environment."

US-based Bridgewater is the world's largest hedge fund, with $160 billion under management. Prince oversees the investment of this pot alongside the firm's founder Ray Dalio.

Michael Hewson, the chief market analyst at CMC Markets, said in an email on Monday morning: "US, as well as global equities, have undergone their worst fortnight this decade.

"For a market that has enjoyed steady gains and fairly low volatility over the course of the past two years, the steepness of the falls speaks to a complacency that has been prevalent for a while now and which appears to have been shattered in the wake of a surge in volatility.

"How this plays out over the coming days depends on whether the rebound we saw on Friday can translate into some form of a base for a continuation of the uptrend that has been in place for the last nine years. This may well depend on whether we see further increases in bond yields or a rise in interest rate expectations from other central banks around the world."

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• Bridgewater Associates is the world's largest hedge fund.
• On his new podcast, Wharton professor Adam Grant spoke to some Bridgewater employees about their culture of "radical transparency."
• One manager remembered finding out in front of 200 coworkers that he'd been ranked the worst performer. He said it "energized" him by motivating him to either improve or leave.
• Bridgewater founder Ray Dalio told Grant that if you care about results, you'll want this kind of candid feedback.

Kiran Rao is a smart guy. Before joining Bridgewater Associates, the world's largest hedge fund, he'd been a medical doctor who worked with the World Health Organization and a principal at a consulting firm.

One day after joining Bridgewater, he was sitting in a meeting with 200 other employees when an announcement was made. Everyone was would be shown a list that ranked the people in the room according to their performance.

"Some of the people in this room probably shouldn't be here," the person presenting the list said.

Sure enough, there was Rao's name — the worst performer on the list.

Rao recounted this story — in fact, he shared the recording from the meeting — on the first episode of "WorkLife with Adam Grant," a new podcast hosted by the Wharton professor Adam Grant.

Rao was able to share the recording because almost all meetings are recorded at Bridgewater, a company that's by now well known for its culture of "radical transparency."

As Business Insider's Richard Feloni has reported, Bridgewater employees constantly rate and critique each other's performance. (The meeting footage is available to all employees.)

On the podcast episode, Grant spoke to Bridgewater founder Ray Dalio, who built the culture of radical transparency. Dalio said that if your objective is to be as good as possible — if you care about results more than your image — you'll want criticism of your performance.

It's unclear that public rankings motivate everyone at every company

On the podcast episode, Grant mentioned that research suggests ranking employees can be demotivating. It could depend on the specific work environment.

In one 2016 study from New York University and Columbia Business School (not mentioned on the podcast), researchers looked at the effect of performance ranking among truck drivers. Results showed that drivers who were told to emphasize teamwork performed worse after the rankings were posted, while drivers who had not been told to emphasize teamwork performed better.

Rao told Grant that learning he was the worst manager was like "dressing for the beach one day in flip flops and your swimwear and you swing your door open and you're in a full-force winter storm." But, he added, "I felt great."

On the recording, you can hear Rao introduce himself to the group and say that he agrees he should be in this spot. "This leaves me more energized versus not," he says. The feedback motivated him to either improve — or leave.

Rao is still a manager at Bridgewater.

Rao more or less echoed what Dalio said. He told Grant: "It's just data, objective data about what I'm like. I would rather know how bad the bad is and how good the good is so I can do something with it."

SEE ALSO: Ray Dalio, head of the world's largest hedge fund, explains his succession plan for Bridgewater and how its 'radically transparent' culture is misunderstood

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NOW WATCH: THE RAY DALIO INTERVIEW: The billionaire investor on Bridgewater’s 'radically transparent' culture and how to bet on the future

• Ray Dalio— founder of Bridgewater Associates, the world's largest hedge fund — has released a 30-minute animated version of his bestseller "Principles," in eight parts.
• The lessons are focused on recognizing and adapting to challenges and positively using "radical transparency."
• Dalio said he specifically wants new college graduates to see the series.

As the weight of the real world starts to settle in for new college graduates in May, Bridgewater Associates founder Ray Dalio wants to be there to offer guidance.

He's doing so with a new animated adaptation of his 2017 bestseller "Principles," which is itself the full text of Bridgewater's culture book with additional context.

"I'm now at a stage in my own life in which it is much more important to me to pass along what I've learned about how to be successful than to seek more success for myself," Dalio says in the first video in the animated series, which is 30 minutes long and broken into eight parts by theme.

Last year, Dalio completed a seven-year transition away from daily management of his Connecticut-based hedge fund, the largest in the world with roughly $150-160 billion in assets under management. Dalio founded Bridgewater in 1975 and began developing a culture of "radical transparency" in the '80s.

Over time, the firm became as well known for its success as its culture, where employees use proprietary iPad apps to rate each other's performance in real time and nearly every meeting is recorded. While Bridgewater's implementation of Dalio's principles create an intense environment that isn't for everyone, the foundational teachings are universal and focused primarily on individual development.

In a video Dalio released on his Twitter, he said that he oversaw the animated adaption of his book due to the success of his earlier animated feature on how capitalism works, and, "because these principles were responsible for whatever success I've had, and, I've been told, invaluable to millions of other people."

We've included the first episode below, marked by a featured lesson. The production team includes creative director Mark Del Lima and graphic design firm Thornberg & Forester. You can watch all eight episodes on Youtube.

"You need to think for yourself about what is true."

Watch all eight episodes on Youtube »

SEE ALSO: Bridgewater's Ray Dalio shares the piece of advice he wants to be his legacy

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NOW WATCH: How Ray Dalio responds to painful criticism from employees that he sometimes makes them feel 'incompetent, unnecessary, belittled'

• Bridgewater Associates, the world's largest hedge fund, is sounding the alarm on one crucial market driver, according to a note to clients reviewed by Business Insider.
• The hedge fund reportedly recently shifted to a net short position on US equities.

On the surface, Bridgewater Associates' performance last month looks unremarkable.

Sure, the $150 billion firm's flagship fund lost 1% in April, but it's still up about 4% over the first four months of the year, according to a Bloomberg report.

So what's the big deal? As is often the case, the devil is in the details.

While the benchmark S&P 500 limped to a gain of just 0.3% in April, Bridgewater was busy reducing its net long wagers on US stocks, according to Bloomberg. The firm now has just 10% of its portfolio allocated into net long bets, down from 120% earlier this year. Even more ominous, Bridgewater now has a net short position on US equities.

In a recent note sent to a group of clients seen by Business Insider, the firm highlighted a fear of diminishing liquidity.

Bridgewater is referring specifically to the Federal Reserve's plan to tighten monetary conditions, and arguing some current market drivers are merely holdovers from a more accommodative regime.

The note, written by co-CIO Bob Prince and research head Karen Karniol-Tambour, is a part of Bridgewater's Daily Observations series, which is not meant for media consumption but is instead intended to give clients a view of Bridgewater's thinking on markets, the economy, and geopolitics. Bridgewater declined to comment.

"The monetary tightening has pushed interest rates up, but the production of credit by the financial system is supporting economic growth," the note read. "We represent this as about 10 o'clock on the dial."

Once the "dial" — represented visually in Bridgewater's note by an arrow within a feedback loop — reaches 12, liquidity will tighten in earnest. And that's when the going will get really tough.

The note said that the combination of monetary tightening with strong growth and credit availability had kept cash flows up, but raised the discount rate on those cash flows. As a result, returns have been flat.

Once the tightening produces a downturn, it will favor bonds and hurt most everything else.

"This favors commodities and other real assets in relation to stocks, and stocks in relation to bonds, and warrants a less than normal overall exposure to financial assets and risk premiums," it said. "Once the tightening produces a downturn, it will favor bonds and hurt most everything else."

Wide-reaching implications

Needless to say, this is all very troubling for stock bulls. Even if you believe Bridgewater is being overdramatic, it's difficult to avoid the psychological overhang of the world's biggest hedge fund holding a different view than you.

It's also worth noting that tighter lending conditions and the resulting liquidity squeeze have been cited repeatedly as a major fear by a chorus of Wall Street experts.

There are other reasons to be wary of US stock exposure, of course. They include but aren't limited to: the prospect of a global trade war, a slowing pace of corporate-earnings growth, escalating nuclear tensions in the Middle East, and lofty valuations.

Perhaps of some encouragement to those who have money in Bridgewater's fund is the strong performance in developed-market currencies and rates trading in April, per Bloomberg's report. It may not have been enough to salvage a gain for the month, but it kept the firm in good shape relative to its peers on a year-to-date basis.

In the meantime, as Bridgewater scales back its US equity holdings, it's showing increased interest in European stocks. Or rather, it's taking a cleaver to net short bets, cutting them by 80% since February, according to Bloomberg. The firm still has a $4 billion short position in European equities, but recent disclosures show it's been trimming select bearish wagers.

In the end, if you're the type to take investment cues from massive hedge funds like Bridgewater, perhaps it's time to consider weaning yourself off the US while giving Europe a chance.

And, above all else, keep a close eye on liquidity.

SEE ALSO: The stock market's recovery is one of the slowest on record — here's why that could be foreshadowing the next crash

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• Bridgewater Associates is bearish on nearly every financial asset, it said in a recent note to clients.
• "2019 is setting up to be a dangerous period for the economy," the giant hedge fund said.
• The firm said earlier this month that a major driver of the stock market is nearing its end.

Bridgewater Associates, the world's largest hedge fund, is sounding the alarm on nearly every financial asset.

"We are bearish on almost all financial assets," the firm said in a note to clients last week that was seen by Business Insider and first reported by ZeroHedge."Markets are still pricing in Goldilocks conditions, compounding the risks."

Extrapolating from current conditions, the hedge fund — which currently manages about $150 billion, according to its website — says the yield curve for Treasury bonds should remain flat, with oil hitting $62 and the dollar slumping 3.5% compared to other major currencies.

"2019 is setting up to be a dangerous period for the economy, as the fiscal stimulus rolls off while the impact of the Fed's tightening will be peaking," the firm continued. "And since asset markets lead the economy, for investors the danger is already here."

Earlier this month, Bridgewater said a crucial market driver is at 10 o'clock. Once the "dial"— represented visually in Bridgewater's note by an arrow within a feedback loop — reaches 12, liquidity will tighten in earnest. And that's when the going will get really tough.

SEE ALSO: Bridgewater, the world's biggest hedge fund, says a crucial market driver is at 10 o'clock — and forecasts widespread pain once it gets to 12

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• A YouTuber has combined the music of Goldman Sachs President David Solomon with a motivational video from Bridgewater Associates founder Ray Dalio.
• Solomon creates music under the name DJ D-Sol, and has over 425,000 monthly listeners on Spotify.
• Check out the video below.

Wall Street's song of the summer is almost certainly going to be a dance remix of Fleetwood Mac's 1977 hit "Don't Stop."

That's because it was produced by David Solomon, the president and future CEO of Goldman Sachs.

DJ D-Sol, as he is known, released the mix on streaming services like Spotify and Apple Music, and it has already become the talk of Wall Street.

YouTube user Thornton McEnery, the executive editor of Wall Street blog Dealbreaker, has taken things to a new level, however, by dubbing the mix over one of hedge fund titan Ray Dalio's now infamous cartoon videos explaining the principles of success.

Dalio, the founder of Bridgewater Associates, recently turned his best-selling book "Principles,"— which contains the full text of Bridgewater's famous culture book with additional context — into a series of cartoon videos aimed at recent college graduates.

The videos were originally narrated by Dalio, but in McEnery's video, his voice is replaced by the strains of DJ D-Sol's EDM remix, creating a hybrid containing two of the most important figures in the financial industry.

You can see the video, which first caught our eye after a tweet by Bloomberg's Tracy Alloway, below (sound on for full effect):

SEE ALSO: Goldman's CEO-in-waiting just released his first electronic dance single, a remix of a popular Fleetwood Mac song, and it's already a hot song of the summer on Spotify

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• Bridgewater Associates, the world's largest hedge fund that oversees $150 billion in assets under management, bought $15.7 million worth of Alibaba shares during the second quarter, regulatory filings show.
• Alibaba is one of the stocks included in the "FAANG+BAT" basket.
• Watch Alibaba trade in real time here.

Bridgewater Associates, the $150 billion hedge fund founded by Ray Dalio, bought 84,629 shares of Alibaba in the second quarter, worth $15.7 million, according to regulatory documents filed Tuesday. A back of the envelope calculation shows the stake was established at an average price of $185.52. 

Alibaba is one of the market's most heavily traded tech stocks and part of the "FAANG+BAT" basket, which also includes Facebook, Amazon, Apple, Netflix, Google, and Chinese tech giants Baidu and Tencent. 

Bridgewater's buying of Alibaba shouldn't come as a surprise. Last September, the hedge fund launched a big investment fund in China as it was granted rare access to trade in local financial markets. 

In a LinkedIn post from March, Dalio wrote that an escalating tit-for-tat trade war would be a reason to "worry." But this investment is a way for Dalio to gain exposure to China without having to worry about the impact of a trade war with China. That's because the e-commerce giant is responsible for about 85% of e-commerce sales in China — which helps provide insulation from the trade spat.

Alibaba shares gained 4% in the second quarter despite Trump’s tariff trade spat with China. However they slumped 7% since July as investors have begun to rotate out of the "FAANG+BAT" group. 

Dalio’s other new investments disclosed in the filing include a $31.3 million stake in Cummins, a $14.4 million stake in Walmart, and a 76% decrease in its Facebook holdings — now worth $9.37 million.

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• Ray Dalio, the founder and co-chief investment officer of Bridgewater Associates — the world's largest hedge fund — recently spoke with Business Insider CEO Henry Blodget and relayed his thoughts on the next economic recession.
• Dalio outlined what he thought would be the next recessionary scenario to rock the global economy.
• He also drew ominous parallels between today's economic situation and that of the 1930s — the era of the Great Depression.

Ray Dalio literally wrote the book on financial crises. So when he has something to say on the future of the market, investors of all shapes and sizes should listen.

After all, it was Dalio who repeatedly cried foul on the mounting credit collapse more than a decade ago that triggered the worst economic meltdown in modern history — even if his cries fell mostly on deaf ears.

Dalio — the founder and co-chief investment officer of Bridgewater Associates — recently sat down with Business Insider CEO Henry Blodget to discuss his new book, which breaks down the anatomy of credit crises throughout history.

As part of the discussion, Dalio laid out his scenario for how the current economic cycle would end. In his mind, we've entered the uneasy part of the cycle in which central banks are tightening their purse strings, gradually putting an end to the accommodation that helped drive the economic recovery.

His forecast for the next recession stems from that simple fact: that monetary conditions are getting more restrictive.

"We're about in the seventh inning of a nine-inning game," he told Blodget. "We're in the later part of the cycle, the part of cycle in which monetary policy is tightening and there's not much capacity to squeeze out of the economy."

He continued: "As interest rates tend to rise, if they rise faster than is discounted in the curve, it can hurt asset prices. And asset prices are fairly fully priced at this level of interest rates. At some point, we're going to have a downturn because that's why we have recessions. Nobody ever gets it perfectly."

That last part raises an interesting point. Though an investor may know a downturn is coming, it can be perilous to try to accurately time such an event. Even esteemed market legends like Jeremy Grantham — the sage who called the two most recent bubbles — acknowledge that timing markets can be a fool's errand.

So while Dalio is sure an economic reckoning is in the cards, he's hesitant to give it an exact timetable. But he's still willing to venture a guess: "I think it's maybe in two years."

Troubling parallels to the 1930s

But Dalio didn't stop there. To him, the economic situation that's brewing has many close parallels to that of the 1930s — the era of the Great Depression.

Dalio notes that both now and in the 1930s, the lowering of interest rates to near zero has created a wealth divide. That's because the wealthier members of society are more exposed to financial assets, which have historically gotten the biggest boost from such easy monetary conditions.

"It's caused populism, because that process creates a gap between the rich and the poor," Dalio told Blodget. "Right now, the top one-tenth of 1% of the population's net worth is equal, about, to the bottom 90% combined. That's very similar to the late '30s when we had that stimulation."

That creates a toxic situation in which there's conflict between the rich and the poor, Dalio said. He noted that, in the end, the monetary actions of the Federal Reserve had majorly contributed to today's political climate.

"Populism around the world is the selection of strong-minded leaders who tend to be more nationalistic," he said. "And so, we're in that type of position."

Dalio argues that type of tension is contagious, and can be detrimental on a worldwide scale. And ultimately, these factors all combine to weaken economic prospects everywhere.

"There's a risk that both sides are at odds with each other, and there's also a greater international risk in tensions," he told Blodget. "Economic tensions produce global tensions."

He added that parallels to the 1930s were "quite similar."

"Doesn't mean that the same outcomes have to happen," he continued. "But it does mean that I think we have to be alerted to the fact that, going forward, in a downturn, monetary policy will not be able to be as effective as it was last time, so we have to be cautious."

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NOW WATCH: One bite from this tick could ruin red meat for the rest of your life

• Ray Dalio, the founder of Bridgewater Associates, shared on LinkedIn what he believes the two most important characteristics are for success.
• The first is curiosity, which can be nurtured by always asking "why"-based questions. 
• The second is character. Dalio defines that as being able to learn from your mistakes and accept setbacks as natural. 

Ray Dalio founded Bridgewater Associates when he was 26 years old. Now, 43 years later, it's the world's largest hedge fund.

The billionaire investor is known most for his perspectives on the economy, but he's also well-regarded for his management philosophy and the idea of "radical transparency." He shared many of those ideas in his 2017 book "Principles: Life and Work" and also shares ideas on his LinkedIn page. 

On LinkedIn, Dalio was recently asked about the two most important habits to build. Rather than insisting on an early bedtime or giving up carbs, he shared what he believes are the two most important characteristics to have to succeed: curiosity and character.

Of course, it's not quite clear how to build either of those traits into a habit. 

"I'm not sure how to best build curiosity in people, but I'd say the habit of asking a lot of questions like 'why' in order to make sense of things is good," Dalio wrote on LinkedIn.

When it comes to building character, Dalio had some insight into coping with the pain of failure, writing:

As for character, the most important habit is to go to the pain because it will strengthen you which will give you the power you need to be successful. Pain + Reflection = Progress. With practice the pain won't be as painful and you will begin to see the pleasures of the successes so that going to the pain will make you feel good rather than bad.

Dalio has spoken before on the importance of remembering one's mistakes. In an interview with Business Insider CEO Henry Blodget last year, he shared how mistakes are important for growth — so long as you learn from them.

"Successes mean you do the same thing over again, and okay, that's fine, but mistakes that are painful stick," Dalio said. "When I look back on my career, I think that the mistakes were the best thing that happened to me."

SEE ALSO: Bridgewater's Ray Dalio shares the piece of advice he wants to be his legacy

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Hedge-fund legend and best-selling author Ray Dalio, who predicted the financial crisis, is coming to IGNITION 2018.

The founder and cochief investment officer of Bridgewater Associates, the world's largest hedge fund, will share his candid outlook on the economy as global tensions rise and the wealth gap widens.

In a discussion earlier this year with Henry Blodget, Insider Inc.'s CEO, cofounder, and editorial director, Dalio drew parallels between the current economic climate and the Great Depression of the 1930s.

Dalio has predicted an economic downturn within the next two years, in part because of the pattern of debt and financial crises that, he says, repeat themselves again and again.

At IGNITION, you'll hear even more from Dalio and Blodget as they meet again to discuss the economy.

Plus, you'll get anecdotes and learnings from Dalio's best-selling book, "Principles." Released in 2017, the book details the unconventional principles that helped foster Dalio's success — and can be used by anyone to get ahead.

Leave IGNITION with relevant takeaways and insights that you can bring back to your office to drive success in 2019.

REGISTER now.

To keep up with IGNITION news, join our mailing list, and you'll be the first to get updates on our speakers and agenda.

SEE ALSO: Ray Dalio says the economy looks like 1937 and a downturn is coming in about two years

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What's the first thing that comes to mind when you think of financial innovation today?

Cryptocurrency might be at the top of the list. But the future of finance is about more than bitcoin and blockchain.

IGNITION will introduce you to established voices and rising stars in the world of finance. These innovators are transforming the financial landscape, from how we think about the economy to how we spend, manage, and invest our money.

Ray Dalio is the founder of Bridgewater Associates, the world's largest hedge fund. He predicted the 2008 financial crisis — and has predicted another economic downturn within the next few years. Hear him speak candidly about today's economy.

Sallie Krawcheck is on a professional mission to help women reach their financial and professional goals. After spending years rising through the ranks on Wall Street, she pivoted into the startup world and founded Ellevest, a digital-first investment platform designed to help women take control of their finances. Hear how she plans to close the gender investing gap as she reflects on her career shift from corporate America to entrepreneurship.

Brad Katsuyama left his high-powered role at RBC Capital Markets after uncovering that stock-exchange systems were being manipulated by predatory high-frequency-trading practices. Katsuyama cofounded the emerging stock exchange IEX in an effort to create a fairer market and level the playing field for investors. Hear more about how he's taking on the New York Stock Exchange and Nasdaq.

IGNITION is just two weeks away. And it's close to selling out — don't wait to register!

To keep up with IGNITION news, join our mailing list, and you'll be the first to get updates on our speakers and agenda.

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• Ray Dalio, the founder and cochief investment officer of Bridgewater Associates — the world's largest hedge fund — spoke with Henry Blodget at Business Insider's IGNITION conference on Monday.
• Dalio outlined why he thinks the next financial crisis will be different from the last, and placed great emphasis on a successful resolution to the trade war.
• The comments come two months after a separate interview in which Dalio walked Blodget through the next recessionary scenario he thought would rock the global economy.
• Watch a live stream of the IGNITION 2018 conference here.

When Ray Dalio talks about the future of the global financial landscape, everyone should listen.

That's because Dalio — the founder and cochief investment officer of Bridgewater Associates — has proved prescient in the past. This was never truer than when he repeatedly sounded the alarm on the credit collapse that tanked markets a decade ago, a proclamation many investors ignored at their own peril.

But those same market participants should soon have a chance to redeem themselves, at least if Dalio's latest warnings are valid.

In a discussion with CEO Henry Blodget at Business Insider's IGNITION conference in New York on Monday, Dalio was asked whether a reckoning was near.

The hedge-fund legend was initially cagey in his response, electing to lay out what he sees as ongoing debt cycles of differing lengths. He argued that both were getting old in age, but he wasn't ready to jump to a worst-case conclusion.

"We're in about the seventh inning of the short-term debt cycle," Dalio told Blodget in front of conference attendees. "They're tightening monetary policy. Asset prices are fully priced. And we're in the later stages of a long-term debt cycle, because the capacity of the ability of central banks to ease monetary policy is limited."

Dalio also described the global landscape as being in the middle of a so-called geopolitical cycle that's seeing the emerging nation of China challenge the unquestioned supremacy of the US. He said these developments are why Chinese relations had been so instrumental in driving markets lately.

When pressed by Blodget on the matter of an imminent collapse, Dalio was reluctant to compare the current situation to the one preceding the most recent financial crisis. He instead saw a much more gradual situation playing out — one that should still be viewed with caution.

"The nature of this dynamic is more of a squeeze," Dalio said. "This doesn't look like 2008. In 2007, we would look at the financial statements of entities and see that they weren't able to pay debt and that we were headed for a big debt crisis. Now it's not the same."

Dalio did say, however, that mounting leverage would come back to bite markets eventually. He warned that massive debt loads could pose major issues down the line.

"It looks more like it'll be a big squeeze because there's a certain amount of indebtedness," he said. "We also have a great deal of obligations, like pension and healthcare. Both companies and the government are borrowing a lot of money — particularly the government."

Also of great concern to Dalio is the ongoing trade conflict between the US and China. He's fearful that a further escalation of the situation could unleash negative side effects upon the market.

Ultimately, the path forward will be determined by how realistically investors are willing to look at these mounting headwinds. Not every negative factor is created equally, and Dalio said it's important for market participants to do their homework on what could actually have an impact — starting with the trade war.

"A lot depends on how we deal with each other," he said. "And a lot of that depends on us looking at what's true and how the machine works."

Now read:

• Investors are staring at the bleakest future since the Great Depression — here's why one market bear thinks a crash could wipe 60% from stocks
• 'It ends next year': What Wall Street's biggest firms are forecasting for the stock market in 2019, and where they say you should put your money
• An investment director at a $150 billion firm warns that US companies are engaging in a risky, unsustainable practice — and explains why traders should be looking overseas

SEE ALSO: Bank of America's $2.8 trillion wealth management CIO reveals his biggest market fear, which he warns could trigger the next recession if left unchecked

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NOW WATCH: Ray Dalio says the economy looks like 1937 and a downturn is coming in about two years

At IGNITION 2018, Ray Dalio of Bridgewater Associates talked about starting his own hedge fund, recovering from big mistakes, what the next financial crisis will look like, transparency at work, and more. Watch the full talk here.

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• The world's biggest hedge fund, Bridgewater Associates, posted a 14.6% return for its flagship fund in 2018.
• The fund was one of the few to post big gains in a year where hedge funds were on average down about 6.7%.

In a year where hedge funds saw bad performance and a surge in shutdowns, a few firms managed to avoid the carnage. The world's biggest hedge fund, $160 billion Bridgewater Associates, was one of them. 

Bridgewater's flagship fund, Pure Alpha, posted a 14.6% return net of fees in 2018, according to a person familiar with the firm's performance. 

The fund was one of the few to post big gains in a year where hedge funds were on average down about 6.7%, according to the HFRX Global Hedge Fund Index. 

Billionaire hedge fund manager David Einhorn posted his worst year ever, and Dan Loeb's Third Point also struggled. 

Bridgewater's founder, Ray Dalio, has said the economy is at "the seventh inning of the short-term debt cycle" and that the next financial crisis will play out more slowly than the last one in 2008.

Speaking to Business Insider's CEO Henry Blodget in December, he said: "They're tightening monetary policy. Asset prices are fully priced. And we're in the later stages of a long-term debt cycle, because the capacity of the ability of central banks to ease monetary policy is limited."

Also read:

• A surge in shutdowns, lagging performance, and slashed fees: Hedge funds have had a brutal 6 months
• Here are the hedge-fund managers to watch in 2019 as the industry battles poor performance
• A storm is brewing in the hedge-fund business. Here are 5 major changes coming to the industry in 2019.
• It's 'something you really can't model for': The sudden prospect of a Trump impeachment has hedge funds scrambling

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