Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Dalio: It’s a good environment, but...

Ray Dalio: Monetary policy effectiveness waning

Ray Dalio thinks the economy is good for now, but there could be trouble ahead as monetary policy becomes less effective in the developed world.

"It's a good environment," the founder of hedge fund firm Bridgewater Associates said Thursday at the DealBook Conference in New York.

He noted Bridgewater was still holding bets on the appreciation of U.S. stocks.

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But in a year or two, Dalio noted, the "effectiveness of monetary policy will be less" and that could lead to less buffer against an economic hit.

"Whenever there might be a need for easing of monetary policy, we're going to be in a situation in which the effective ability to ease is very limited. And that's at the same time that asset prices will be comparatively high."

For now, though, the economy is fine. "We're in the mid part of a cycle. This is the easy part, the good part of the cycle," Dalio said.

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Bridgewater is the largest hedge fund firm in the world with approximately $150 billion managed for institutional clients, including foreign governments and central banks, corporate and public pension funds, university endowments and charitable foundations. Approximately 1,400 people work at Bridgewater, which is based in Westport, Conn., according to its website.

The firm employs a unique culture of internal transparency dubbed "radical truth," where virtually every conversation is recorded and anyone can listen at any time.

"There's no spin. ... It's fantastic," Dalio said.

"Everything works like a machine," Dalio added. "To be able to look at what people are like ... it's a powerful thing."

Dalio did note that about 35 percent of employees don't get through first 18 months at Bridgewater, but those who make it long term can't imagine leaving.

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