There has been no Pure Alpha in 2019.

Ray Dalio was wrong about stuff all the time in 2018, and it didn’t matter: Bridgewater Pure Alpha still returned 14.6%, enough to earn him a cool $2 billion and the right not to have to be in Joe Kernan’s presence anymore. Well, Dalio is still racking up the wrongness in 2019, but now it’s not working out quite as well.

The $150bn hedge fund group founded by Ray Dalio saw its Pure Alpha fund, which tries to surf macroeconomic trends, lose 4.9 per cent in the six months to June as global equity and bond markets bounced on hopes of looser monetary policy.

How, you are surely asking, can that be, given all of hyperrealism and radical transparency and pain and reflection and progress and synthesizing of the situation at hand and through time and expected value calculations and simplifying! and believability-weighting and loving of mistakes and getting in sync and jazz-playing and efficient disagreeing and the remembering the force behind the thing and constant feedback and building of machines and checklists and bell-ringing and checks-and-balances? Well, it seems that the paradigm shift Dalio just let all of the rest of us in on has been a bit late in coming.

Bridgewater declined to comment on why its performance has fizzled this year, but the particularly poor performance in January — when Pure Alpha declined by 4.5 per cent — suggests that it went into the new year expecting further turbulence and instead suffered as the market recovered.

But fear not! This sort of thing has happened before, and the problem appears already diagnosed, a plan already designed and pushed through to completion, and levels effectively navigated.

One person close to Bridgewater said the fund had now pared some of its earlier losses, and is now down 1.45 per cent in the year to mid-July.

Bridgewater fund caught off-guard by market bounce [FT]

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