Ray Dalio Describes Early Investing Loss at Bridgewater Associates

Ray Dalio said a mistaken market forecast in the early 1980s caused substantial losses at Bridgewater Associates and prompted him to borrow $4,000 from his father. Dalio made the comments during a commencement address at Long Island University last week. He recalled predicting a severe stock market decline after Mexico defaulted on its debt in 1982.

Dalio stated that he correctly anticipated the debt crisis but wrongly expected share prices to fall sharply. Markets instead rose, leaving the firm in financial distress. He said the setback forced him to seek a personal loan and taught him humility in decision-making. "I thought the stock market was going to fall a lot, but I was very wrong," Dalio said.

Associates later grew into the world's largest hedge fund. Dalio attributed part of that growth to lessons learned from the early loss.