A disastrously wrong macro call in the early 1980s wiped out Bridgewater's clients' money and Dalio's own finances, forcing layoffs and leaving him broke enough to borrow $4,000 from his father.
Dalio recounts calling a Depression-level economic collapse that never happened, which cost him and his clients money, forced him to lay off his whole staff, and left him needing to borrow money from his dad. ✦ AI generated
Ray Dalio · My First Million · 2026-07-17 · original ↗
starts at this moment · 1:36
“Can you like close your eyes and like remember that conversation?”
I thought the economy was going to be a disaster. I couldn't have been more wrong. Okay? So, I lost money for me. I lost money for my clients and I had to lay off everybody. I was so broke I had to borrow $4,000 for my dad.
verbatim transcript · starts at 1:36
1:36testify to Congress about what this is all about and and what might happen to the economy. I thought the economy was going to be a disaster. I couldn't have been more wrong. Okay? So, I lost money for me. I lost money for my clients and I had to lay off everybody. I was so broke I had to borrow $4,000 for my dad. So then my choice was am I going to, you
2:00know, put on a suit and tie, go in, commute, and work for somebody in that capacity. And I knew that I wasn't very good at working for people. Now, that was painful. That changed everything in my life. That created the bottom at Bridgewater. And then it just kept going up because of what I learned. I learned two things. First of all, I I learned humility to balance my audacity. Okay, I
2:28didn't have much humility. I'd say I'm right. I'm going to be right and all that. And then I learned how to diversify my bets and substantially reduce my risk without reducing my returns because I didn't want to have reduce the upside. I I knew that I had to reduce the downside. And so um I really learned and taught myself really my mantra. Okay, here's the mantra for
2:55investing. You want to be successful th this will um this is the uh holy grail of investing. Find 15 good uncorrelated return streams. >> How did you come up with 15? >> Well, I just looked at the math of it. Okay. So in other words, what are the marginal benefits of diversification given the different levels of correlation? And I I have that on a chart that keeps reminding me. Okay, if
3:27you can get out to 15, you can get down to about reduce about 80% of your risk without reducing your return. That means that you increase your return to risk ratio by something like a factor of five. Okay? In other words, wow. So that means you can get the upside without having the downside. Okay? And then humility, you know, I wanted people to kick the [ __ ] out of whatever I thought,