Inside the world’s biggest hedge fund Bridgewater founder Ray Dalio’s intense focus on principles helps him make money in good times and bad. Now he’s bracing for some very tough times indeed. |

Inside the world’s biggest hedge fund Bridgewater founder Ray Dalio’s intense focus on principles helps him make money in good times and bad. Now he’s bracing for some very tough times indeed.

(Fortune Magazine) — Is the current downturn merely a severe slump, or are we facing a second coming of the Great Depression? That’s the question everyone is asking these days. But Ray Dalio, founder of Bridgewater Associates and manager of what is now the world’s biggest hedge fund, has been preparing to answer it for eight years.

In 2001 he had his investment team build a “depression gauge” into the firm’s computer system, line by line in the code, to adjust the portfolio’s strategy and risk profile if the economy ever entered a massive deleveraging period – the kind of multiyear process that ricocheted through the world economy in the 1930s and that has eviscerated markets periodically through the ages.

http://money.cnn.com/2009/03/18/news/economy/okeefe_bridgewater.fortune/index.htm

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