It is never easy to admit that you are wrong; especially when you have previously earned fame (and billions of dollars) by calling the future right.
However, Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, has done just that. After it emerged that his flagship fund was down about 20 per cent since the start of the year, Dalio admitted that he had been caught flat-footed by the recent coronavirus-driven market swings — in sharp contrast to the 2008 financial crisis, when he and his team predicted events with such prescience that they profited handsomely.
“We’re disappointed because we should have made money rather than lost money in this move, the way we did in 2008,” he told the FT. It seems that the systems that Bridgewater developed to analyse the flows of finance and economic activities — which have traditionally driven its bets on the direction of stocks, bonds and other securities — did not offer any guidance when looking at a rare event such as the current pandemic.