Bridgewater Layoffs - Sign of Troubled Times for HFs?
With the biggest hedge fund laying off research analysts and 15 year vets, people think this is a harbinger for bad things to come regarding HF industry, in general?
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could be, could also just be them taking the opportunity to cut some costs when it's more "excusable" than normal to do so. You can justify any decision with covid rationale from a PR perspective.
They were down 20 percent at some point this year. It would be surprising if there were no layoffs
Cash is trash baby
Yeah, I heard they’re currently down 14 percent... Wonder how hard it is to get another job if you’re laid off, but you’re coming from a supposedly top place… Whose performance is recently subpar.
Their investing style doesn't translate to most other places. Not an easy transition from there.
I used to work there... curious what people think their investing style is? They keep things pretty low-key. I'm hoping outsiders didn't read Ray's textbook thing and take that as what they do
other MMs have already done a round of layoffs too
Which ones?
Yawn. MMs fire and hire every single year. It's their business model, it's not really news.
China is one of the markets where risk parity may still work, but otherwise that business model is dead for developed markets.
I think it is bwat specific to the extent they had a nice 40 year run where being long assets worked well, but that won't be the case going forward over a longer period of time.
Do you really expect bonds to hedge equities on a go forward basis ? It's all about discount rates now, so you will see a lot more bonds down stocks down in what used to be a var shock type event.
So do you see some other pattern coming up to replace the bond equity anticorrelation? Like some replacement for risk parity?
No, the issue is largely that central banks are determining the prices of risk and their put has forced the market into a spectrum of risk positions. That is why gold has become so attractive as the only thing to offset that via ccy depreciation.
The model has broken because central banks are going to crowd out the private sector on fixed income, and risk parity fails under that model.
There are no real hedges anymore that are investable assets unless you want to play the fx game.
So basically one should try to predict central bank action and frontrun it?
Your title says VP in macro HF and you're asking this?
No, you didn't read my point on crowding out... That's structural.
You are talking about all weather, that is a piece of their aum, but the other (and slightly larger portion) is pure alpha, which is not a risk parity strategy. When people quote Bridgewater performance they are almost always talking about the alpha strategy, not risk parity.
They are in trouble there too. They historically made their money calling rates and FX, but rate vol is dead. Their sharpe was okay last decade but returns were poor, and are probably going to see more of that forward looking.
There are better indicators of how the industry is doing than this. Just look at the capital outflow, number of new funds and their size. Situation have been on the decline for at least the past 2 years, perhaps longer.
I think your missing the point. Capital doesn't disappear. It moves from one pocket to another. If it flows out of active, it moves into passive or maybe another fund. We see our clients move assets from equities funds to other funds.
Doesn't have to stay in HFs though.
I think "you're" missing the point. (Had to before some needs points it out)
Money supply changes, capital does disappear...it's called fiat for a reason. Wtf are you talking about?
Seems a bit ironic to me Ray wrote a book on “Navigating Big Debt Crises” not too long ago, and now he appears to be having a more difficult time than most in navigating this one. No doubt a tough game we play
If I were a Bridgewater LP I'd be pissed off to see the head of BW preaching Oriental philosophy and "Principles" while his fund incinerates my money. Kind of unbecoming and makes you wonder what his priorities are.
Unless i’m wrong, ray doesn’t make any discretionary trades or even discretionary predictions about economies that feed the trades. So whether you think the books are a great use of time or not, it’s not like if you see your discretionary manager’s handicap improving and worry he’s not in front of the screens enough anymore.
my priorities if I was a decabillionaire would probably be omnipotence and a 15" willy, not adding alpha.
glad others are finally realizing dalio is not all knowing, BW is not perfect, and while they're a good place to work, everybody gets their licking at some point
.
No, dalios public opinions on the market have been wrong for the last couple of years. Not surprised this correlated to his funds performance. Unfortunate that staff had to be cut but its just the cost of doing business.
After the last recession, HFs using insider information was prevented via government crackdowns. Dalio was infamous for using sensitive government info, like the housing bubble, to profit via BA. Now that he can't, of course he's not abnormally exceeding the market. The best way to "win" the market is to hold on for the long run.
No one has to like it, but I know some of you know what I'm talking about. It was normal, and Ray Dalio wasn't an exception.
lmao ok zoomer
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