Warren Buffett and Ray Dalio are two of the world’s greatest professional money managers. They both have a huge global following and people hang on to their every word. Based on their accomplishments over the years, that following is well deserved.
During the making of their success both employed great foresight and innovation, particularly during their early years. Buffett, known as the “sage of Omaha”, took his mentor Benjamin Graham’s value-investing philosophy to the next level by identifying companies with undiscovered intrinsic value. Using these investment techniques, Buffett began buying companies like Coca-Cola and Microsoft before they became household names. Buffett’s investment company Berkshire Hathaway, the vehicle for investing in and acquiring companies, is today worth $520bn and Buffett himself has a net worth of around $80bn.
Ray Dalio founded his investment company Bridgewater Associates in 1975 and it has now grown into the world’s largest hedge fund with $130bn under management. Bridgewater employs macro strategies that combine equities, currency, fixed income and commodities to create absolute returns intended to perform well in both bull and bear markets. Before most professionals had even heard of the concept, Bridgewater was employing sophisticated Risk Parity techniques to generate positive returns with limited risk. Soon, major institutions from around the world were queuing up to let Bridgewater manage their capital. Such was the demand that in 2006, Bridgewater had to close the doors to new capital for its flagship Pure Alpha hedge fund. Today, Dalio is said to have a net worth of around $17bn.
With these success stories both Buffett and Dalio progressed from being highly respected individuals within their own industry to global investment superstars and household names. Their words are clung onto everywhere: Buffettisms are famous maxims of investment wisdom and Ray Dalio has a whole book of Principles made famous by his bestselling book with the same title. Anyone interested in economics should watch Ray Dalio’s 30-minute YouTube video “How the Economic Machine Works”. It is a very easy-to-watch masterclass and being an economics graduate, I’d say it’s possibly more insightful than an economics degree!
Ray Dalio’s fame and reputation really soared after releasing his book Principles in 2017. Not only is it a bestseller with worldwide sales of 2.5 million copies, it also serves as a highly effective marketing tool for the real money-spinners that are Bridgewater’s high margin funds.
