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What to the bestperforming funds do ? In July 2007, more than a year before the bankruptcy of Lehman Brothers Holdings Inc. (LEHMQ), the newsletter cited “pervasive fragility” in the financial system. So Pure Alpha II piled into T

http://www.bloomberg.com/news/2011-09-07/dalio-returns-25-on-diversified-bets-as-markets-convulse-influential-50.html


The article below is for guidance only and I dont recommend investing exactly on the same lines as they may not be largely ethical and shariah tolerant. See http://www.ethicalinvesting.com


Dalio, 62, built Bridgewater into the world's largest macro hedge-fund firm, with $122 billion in total assets, by tacking against consensus. He's created a distinct workplace culture and a research-driven investing process that spreads risk across scores of markets, Bloomberg Markets magazine reports in its October special issue on the 50 Most Influential people in global finance.

"Making money is a zero-sum game, so to be successful you have to be willing to stand apart from the crowd," Dalio says. "And you have to be right."

The founder was right often enough during and after the worst financial crisis in decades starting in 2008, helping to cement his reputation as a leader in his industry. Three Bridgewater hedge funds placed among the 100 top-performing large funds in Bloomberg Markets' annual ranking in February, including its flagship, Pure Alpha II. The No. 3 fund posted a 38 percent return for the 10-month period through October 2010.

In July 2007, more than a year before the bankruptcy of Lehman Brothers Holdings Inc. (LEHMQ), the newsletter cited "pervasive fragility" in the financial system. It noted the 50 percent growth in the notional value of credit derivatives, to $29 trillion, during just the last half of 2006. So Pure Alpha II piled into Treasury bonds, shorted stocks and loaded up on gold. It finished 2008 with a gain of 9.4 percent, investors say.

Dalio expects emerging creditor nations to be tomorrow's economic leaders. Countries such asChina and India that have currencies and monetary policy linked to those in the U.S. are experiencing inflationary bubbles because their interest rates are too low, he says. They will have to unlink from the U.S. or face intolerable conditions. Emerging economies will account for 70 percent of global GDP in 15 to 20 years versus 47 percent now.

By the start of 2010, against a forecast of anemic growth in the U.S. and Europe, Pure Alpha II's wagers were spread more widely than usual. It made money on developed-market currencies, equities and emerging-market debts and currencies as well as commodities. Investors say the fund generated a 44.8 percent return last year. And amid the market turmoil of 2011, the fund is up 25.3 percent through Aug. 31. All told, Pure Alpha II has returned 15 percent annualized since its December 1, 1991 start.

Dalio views the August market turbulence as consistent with Bridgewater's expectations. "Emerging creditor countries are trading more like blue chips; the U.S. is trading more like a country in decline," the Daily Observations read on Aug. 8.

Dalio's insights at least provide some comfort in divining the commotion that lies ahead.

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