• Ray Dalio’s Bridgewater Associates has upped its bet against European stocks to $22 billion.
• The world's largest hedge fund has short positions on some of the continent’s largest and most recognizable companies, including Adidas, Deutsche Bank and Daimler. 

Bridgewater Associates, the world’s largest hedge fund founded by billionaire Ray Dalio, has upped its bet against European stocks, according to regulatory documents filed Wednesday.

The Connecticut-based fund, which manages about $150 billion, has a total short bet of $22 billion against some of the largest companies in Europe, according to a 13F filed Thursday. The document is a required quarterly disclosure for large fund managers.

Here are the firm’s biggest short bets against European companies, from the filing:

• Unilever: $1.03 billion
• Total: $1.017 billion
• Siemens: $970 million
• SAP: $925.2 million
• Allianz: $878.2 million

Other popular brands the firm has short bets against include Adidas ($339.1 million) and Daimler ($780 million).

Because the filings cover the entire quarter, it’s not clear when exactly the fund made the short bets, or if it owns more short positions than long. However, an investor in Bridgewater’s Pure Alpha Major Markets strategy told Reuters earlier this month the firm was slightly long European stocks.

Short bets, or those that are profitable when a stock declines in price, could be a sign the firm is bearish on European equities or the European economy as a whole. Such positions are a mainstay of hedge fund investing.

"Recent spurts in stimulations, growth, and wage numbers signaled that the cycle is a bit ahead of where I thought it was," founder Ray Dalio wrote on LinkedIn this week.

"Frankly, it seems to be inappropriate oversight to not be talking about the chances of a recession and what that recession might look like prior to the next election."

SEE ALSO: Warren Buffett’s Berkshire Hathaway loads up on more Apple

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NOW WATCH: Microsoft President Brad Smith says the US shouldn't get 'too isolationist'

• Bridgewater Associates is the world's largest hedge fund.
• On his new podcast, Wharton professor Adam Grant spoke to some Bridgewater employees about their culture of "radical transparency."
• One manager remembered finding out in front of 200 coworkers that he'd been ranked the worst performer. He said it "energized" him by motivating him to either improve or leave.
• Bridgewater founder Ray Dalio told Grant that if you care about results, you'll want this kind of candid feedback.

Kiran Rao is a smart guy. Before joining Bridgewater Associates, the world's largest hedge fund, he'd been a medical doctor who worked with the World Health Organization and a principal at a consulting firm.

One day after joining Bridgewater, he was sitting in a meeting with 200 other employees when an announcement was made. Everyone was would be shown a list that ranked the people in the room according to their performance.

"Some of the people in this room probably shouldn't be here," the person presenting the list said.

Sure enough, there was Rao's name — the worst performer on the list.

Rao recounted this story — in fact, he shared the recording from the meeting — on the first episode of "WorkLife with Adam Grant," a new podcast hosted by the Wharton professor Adam Grant.

Rao was able to share the recording because almost all meetings are recorded at Bridgewater, a company that's by now well known for its culture of "radical transparency."

As Business Insider's Richard Feloni has reported, Bridgewater employees constantly rate and critique each other's performance. (The meeting footage is available to all employees.)

On the podcast episode, Grant spoke to Bridgewater founder Ray Dalio, who built the culture of radical transparency. Dalio said that if your objective is to be as good as possible — if you care about results more than your image — you'll want criticism of your performance.

It's unclear that public rankings motivate everyone at every company

On the podcast episode, Grant mentioned that research suggests ranking employees can be demotivating. It could depend on the specific work environment.

In one 2016 study from New York University and Columbia Business School (not mentioned on the podcast), researchers looked at the effect of performance ranking among truck drivers. Results showed that drivers who were told to emphasize teamwork performed worse after the rankings were posted, while drivers who had not been told to emphasize teamwork performed better.

Rao told Grant that learning he was the worst manager was like "dressing for the beach one day in flip flops and your swimwear and you swing your door open and you're in a full-force winter storm." But, he added, "I felt great."

On the recording, you can hear Rao introduce himself to the group and say that he agrees he should be in this spot. "This leaves me more energized versus not," he says. The feedback motivated him to either improve — or leave.

Rao is still a manager at Bridgewater.

Rao more or less echoed what Dalio said. He told Grant: "It's just data, objective data about what I'm like. I would rather know how bad the bad is and how good the good is so I can do something with it."

SEE ALSO: Ray Dalio, head of the world's largest hedge fund, explains his succession plan for Bridgewater and how its 'radically transparent' culture is misunderstood

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NOW WATCH: THE RAY DALIO INTERVIEW: The billionaire investor on Bridgewater’s 'radically transparent' culture and how to bet on the future

• TED has launched the $250 million Audacious Project, an annual initiative to back world-changing ideas.
• Funders include The Bill and Melinda Gates Foundation, the Dalio Foundation, the Skoll Foundation, and Virgin Unite.
• Dr. Raj Panjabi, CEO of Last Mile Health, is one of the first recipients.

Dr. Raj Panjabi is probably the last person to ever get the $1 million TED Prize — a sum of money given at the annual ideas conference to make someone's big, world-changing wish a reality. It's not that the prize given to Panjabi, a physician at Harvard Medical School and co-founder and CEO of Last Mile Health, a nonprofit that works with community health workers to expand healthcare access in remote areas, was somehow unsuccessful.

If anything, it was too successful. Panjabi's dreams were larger than a $1 million prize.

"To achieve the impact we wanted, we had to think collaboratively. The scale of the [healthcare access] problem is much bigger than one organization. I knew that firsthand as a doctor. I’d seen it," Panjabi said.

Starting this year, TED is scrapping the annual prize for something even bigger: a $250 million initiative known as The Audacious Project. Backed by funders including The Bill and Melinda Gates Foundation, the Dalio Foundation, the Skoll Foundation, and Virgin Unite, the project aims to deal with the fact that, as TED Curator Chris Anderson said, "Real change is expensive."

The $250 million is spread out among seven recipients, who each presented TED with a detailed budget for their project, ranging from $30 million to $100 million. The nominees were chosen by TED this year, but the organization will allow the public to submit ideas starting next year.

Panjabi is one of the first recipients. The other six will be revealed at TED on April 11.

A plan to serve 34 million people

After winning the TED Prize, Panjabi realized that his "world-changing wish" of growing a Community Health Academy — a global platform that offers online training courses to community health workers and leaders who support them — required more than $1 million. Last Mile Health teamed up with Living Goods, another nonprofit working with community health workers in Africa, to generate an even bigger plan.

Their goal in the next four years is to support six countries in West and East Africa (previously, Last Mile worked only in West Africa) by deploying nearly 50,000 health workers that can serve 34 million people.

Community health workers trained through the program will be equipped with smartphones loaded with an app to automate the diagnosis of deadly conditions. On top of that, the Academy platform will offer training videos to health workers so they can distinguish between life and death diseases (like severe and non-severe pneumonia).

"In reality, [Panjabi's] vision was much bigger than we could even support alone," said Anna Verghese, the executive director of the Audacious Project and former head of the TED Prize.

Under the auspices of the Audacious Project, Panjabi presented his plan to six undisclosed leaders in the business and philanthropy worlds, who will match up to $50 million, dollar for dollar, of whatever he can raise.

Creating an IPO model for the nonprofit world

Here's how the Audacious Project process works: TED winnows down a huge list of potential projects to those that the team sees the most potential in. They do the necessary due diligence to ensure there is a real opportunity to make change at scale, and then make sure the recipients have the capacity to absorb large amounts of funds.

After that, they present the projects to small groups of donors, who work with the ideas that speak to them most.

"Really what we're trying to create here is a platform that matches visionary ideas with donors," Anderson said.

In the future, TED will go through Audacious Project applications and pick a few dozen projects yearly to be part of a more detailed due-diligence process.

The bigger idea behind the initiative, according to Anderson, is to "think of it as an attempt to imagine what an IPO for the nonprofit world might look like."

"The way in which social entrepreneurs usually have to make money is really challenging. There's no equivalent to venture capitalists, to an IPO. You have to raise money one meeting at a time, and many get burned out in the process," Anderson said. "That's a little heartbreaking when the world needs bold thinking and a big response to what's going on out there. The key we hope to offer is greater resources and the encouragement to dream big."

Once the project officially launches on April 11, anyone will be able to provide additional funds to the first five recipients — or submit their own ideas.

SEE ALSO: 11 mind-expanding TED Talks to watch if you have 20 minutes to spare

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NOW WATCH: This incredible animation shows how humans evolved from early life

• McDonald's launched its Chicken McNuggets in 1983. 
• Ray Dalio, the founder of the world's largest hedge fund, played a key behind-the-scenes role in the McNuggets' creation. 
• Dalio cracked the code that allows McNuggets to maintain a consistent, low price despite a volatile chicken market.

Before investor Ray Dalio's Bridgewater became the world's largest hedge fund, Dalio made history in another way: helping McDonald's mastermind the McNugget launch. 

In the early '80s, after founding Bridgewater in 1975, Dalio was providing risk consulting to corporate clients. Two of these clients were McDonald's and a chicken producer — a match made in McNugget heaven. 

"McDonald’s wanted to come out with the McNuggets," Dalio said in a recent interview with the podcast Freakonomics.

"But there was a lot of volatility in the chicken market at that time," Dalio continued, "and they were worried that if they set a menu price and the price of chicken then went through the roof that they would get squeezed or they’d have to raise the prices and it would be unstable."

Without an adequate chicken market, there was no way for chicken suppliers to ensure that chicken prices wouldn't skyrocket or drop dramatically. McDonald's needed a fixed price so that the fast-food chain didn't risk losing billions of dollars on McNuggets or being forced to raise prices outside of fast-food customers' price range. 

Dalio managed to solve the conundrum by essentially breaking the chicken itself into the sum of its parts: a chick, plus the corn and soymeal required to grow the baby bird into a grown chicken. 

"A chicken is mostly a little chick, and then it has a lot of grain that's added," Dalio said.

By buying or selling corn and soybean futures, the chicken supplier could hedge his costs and provide a fixed cost to McDonald's for the price of chicken McNuggets.

The poultry producer sealed the deal with Dalio's guidance, and McDonald's launched its chicken McNuggets — now the chain's most popular menu item — in 1983. 

SEE ALSO: McDonald's has a new weapon in its war against Starbucks

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NOW WATCH: How all-you-can-eat restaurants don't go bankrupt

• Ray Dalio has once again warned that President Donald Trump's rhetoric could have disastrous consequences.
• In a LinkedIn post Monday, the billionaire hedge fund manager warned of a potential trade war — as well as cyber and capital wars.

Ray Dalio, founder and co-chief investment officer of Bridgewater Associates, the world's largest hedge fund, has doubled down on his warnings against trade wars brought on by President Donald Trump's divisive rhetoric.

"Recent geopolitical developments have led me to raise my probabilities of trade and other types of wars, such as capital wars, cyber wars (and possibly even shooting wars)," Dalio said in a LinkedIn post Monday. "I’m not saying they’re probable, and I’m not sure that my assessment is right. I’m just saying that it seems to me that the odds have increased relative to where they were."

Dalio goes on to explain how Trump's trade fight with China —  one that has already wiped away billions from US equity markets in a matter of days— is most similar to the 1930's in American history. He lists nine reasons:

1. Big deleveragings

2. Monetizations of debt that helped the deleveragings by pushing the markets and the economies higher

3. Large wealth gaps that were increased by the monetizations as well as new technologies and open trade

4. Rising protectionism

5. The emergence of strong populist leaders arising because of the wealth and opportunity gaps and large numbers of people believing that the system did not work for them

6. The emergence of new world powers to challenge the old

7. Growing militarism and nationalism

8. Tightenings of monetary policies

9. More conflicts internal and external, with the external conflicts helping to support the populist leaders

It's not the first time Dalio has taken to LinkedIn to voice his thoughts on the current geopolitical climate. Most recently, he took to the platform in March 2017 to publish a "study of populism" to warn how these movements so often lead to disorder and conflict. 

At the time, he was optimistic an amicable trade deal could be reached between the US and China. 

"When I painted it, I said that if there was a step-up in the conflict, my scenario would be broken and I’d seriously worry," Dalio said. "Then Trump raised the stakes by another $100 billion ... Now we have a very public game of chicken going on. Maybe Trump’s statement was just an impulsive slip-up that he will backtrack on, or maybe he was serious."

As for investing through volatile times, Dalio says not much has changed over the last 120 years.

"Our philosophy for managing money through such geopolitical shifts is to know where our edge is, and to neutralize those exposures on which we do not have an edge, while ensuring our portfolios are liquid (to be flexible) and diversified (to not have concentrated risks)," he said.  "Our advice for others is to do the same."

You can read his full post on LinkedIn here>>

SEE ALSO: RAY DALIO ON TAX CUTS: 'We’re still not dealing with the bigger issues'

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NOW WATCH: Wall Street's biggest bull explains why trade war fears are way overblown

• Ray Dalio— founder of Bridgewater Associates, the world's largest hedge fund — has released a 30-minute animated version of his bestseller "Principles," in eight parts.
• The lessons are focused on recognizing and adapting to challenges and positively using "radical transparency."
• Dalio said he specifically wants new college graduates to see the series.

As the weight of the real world starts to settle in for new college graduates in May, Bridgewater Associates founder Ray Dalio wants to be there to offer guidance.

He's doing so with a new animated adaptation of his 2017 bestseller "Principles," which is itself the full text of Bridgewater's culture book with additional context.

"I'm now at a stage in my own life in which it is much more important to me to pass along what I've learned about how to be successful than to seek more success for myself," Dalio says in the first video in the animated series, which is 30 minutes long and broken into eight parts by theme.

Last year, Dalio completed a seven-year transition away from daily management of his Connecticut-based hedge fund, the largest in the world with roughly $150-160 billion in assets under management. Dalio founded Bridgewater in 1975 and began developing a culture of "radical transparency" in the '80s.

Over time, the firm became as well known for its success as its culture, where employees use proprietary iPad apps to rate each other's performance in real time and nearly every meeting is recorded. While Bridgewater's implementation of Dalio's principles create an intense environment that isn't for everyone, the foundational teachings are universal and focused primarily on individual development.

In a video Dalio released on his Twitter, he said that he oversaw the animated adaption of his book due to the success of his earlier animated feature on how capitalism works, and, "because these principles were responsible for whatever success I've had, and, I've been told, invaluable to millions of other people."

We've included the first episode below, marked by a featured lesson. The production team includes creative director Mark Del Lima and graphic design firm Thornberg & Forester. You can watch all eight episodes on Youtube.

"You need to think for yourself about what is true."

Watch all eight episodes on Youtube »

SEE ALSO: Bridgewater's Ray Dalio shares the piece of advice he wants to be his legacy

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NOW WATCH: How Ray Dalio responds to painful criticism from employees that he sometimes makes them feel 'incompetent, unnecessary, belittled'

• Bridgewater Associates is bearish on nearly every financial asset, it said in a recent note to clients.
• "2019 is setting up to be a dangerous period for the economy," the giant hedge fund said.
• The firm said earlier this month that a major driver of the stock market is nearing its end.

Bridgewater Associates, the world's largest hedge fund, is sounding the alarm on nearly every financial asset.

"We are bearish on almost all financial assets," the firm said in a note to clients last week that was seen by Business Insider and first reported by ZeroHedge."Markets are still pricing in Goldilocks conditions, compounding the risks."

Extrapolating from current conditions, the hedge fund — which currently manages about $150 billion, according to its website — says the yield curve for Treasury bonds should remain flat, with oil hitting $62 and the dollar slumping 3.5% compared to other major currencies.

"2019 is setting up to be a dangerous period for the economy, as the fiscal stimulus rolls off while the impact of the Fed's tightening well be peaking," the firm continued. "And since asset markets lead the economy, for investors the danger is already here."

Earlier this month, Bridgewater said a crucial market driver is at 10 o'clock. Once the "dial"— represented visually in Bridgewater's note by an arrow within a feedback loop — reaches 12, liquidity will tighten in earnest. And that's when the going will get really tough.

SEE ALSO: Bridgewater, the world's biggest hedge fund, says a crucial market driver is at 10 o'clock — and forecasts widespread pain once it gets to 12

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• Bridgewater hedge-fund founder Ray Dalio is a proponent of ocean exploration and has long been involved in ocean research.
• Dalio has announced a new initiative, OceanX, which aims to explore the world's oceans.
• About 95% of the world's oceans are still unexplored, so Dalio told Business Insider that learning about that unknown is "like discovering the planet anew."

Ray Dalio wants to know what's in the depths of the world's oceans.

Dalio is the founder of Bridgewater, the world's largest hedge fund, and he has been involved in ocean exploration for years. Using a crewed submersible (a deep-diving underwater vehicle) launched from his ship, the Alucia, researchers captured the first footage of a giant squid in its natural habitat in the wild six years ago.

The team that filmed "Blue Planet II," the remarkable nature documentary, conducted a number of their shoots from the Alucia. These dives took filmmakers deeper under Antarctica than any person has ever gone and resulted in the discovery of new species. Just recently, a researcher from Woods Hole Oceanographic Institution used an underwater drone owned by Dalio to discover a shipwreck off the coast of Colombia that may hold up to $17 billion in treasure.

On Monday evening, Dalio and his son, Mark, announced a new initiative, OceanX, that aims to take ocean exploration to the next level.

OceanX is meant to be a mission like that of Jacques Cousteau, the French undersea explorer, inventor, diver, and filmmaker who introduced much of the public to the wonders of the ocean, Dalio told Business Insider. The effort will combine scientific exploration of the ocean with the production of media designed to show people how exciting the underwater world is.

More exciting than space

Dalio has previously supported scientific research on the Alucia and contributed to the production of ocean-related media like "Blue Planet II" from the ship. Mark Dalio's OceanX Media (formerly known as Alucia Productions) coproduced the BBC Earth film "Oceans: Our Blue Planet."

As a new initiative, OceanX is meant to unify researchers, explorers, philanthropists, and media companies and expand these ocean research, exploration and media-creation efforts.

In 2019, the organization plans to debut a new ship, the M/V Alucia2, which will be roughly 84 meters (276 feet) long and have wet and dry labs for scientific research on board. The vessel will include a hangar for three submersibles that can carry crew members 1,000 meters underwater, along with a deployment bay for underwater drones, a helicopter deck and hangar, and a media center.

Right now, OceanX is seeking ideas for missions that would benefit from being on board the new ship. OceanX already has a long list of partners to help facilitate research, conduct scientific expeditions, and create media, including BBC Studies, James Cameron, Woods Hole Oceanographic Institution, the National Geographic Society, Bloomberg Philanthropies, and many more.

As Dalio explains it, exploring the underwater world on our planet is more exciting than exploring space.

"You go out to outer space and you get an interesting picture of what the Earth in outer space looks like, and then you go to Mars and you get a lot of rocks. I’m not saying it’s not interesting, but how many times can you look at the Earth from up there and say, 'Wow,' and how many times can you go to Mars? I think [the ocean is] far more exciting and I think it’s far more intimate in terms of affecting our lives," he said.

Discovering the unknown

Roughly 95% of the world's oceans are unexplored, according to the National Oceanic and Atmospheric Administration. So there's incredible potential for discovery underwater.

"More than 50% of our air comes from the ocean, it affects our weather, it affects us in so many different ways, and it’s right there. Just go down. It’s cheaper to get to than going to Mars and so it’s more exciting and more important," Dalio said.

He explained that OceanX plans to focus on a vast area of the ocean known as "the twilight zone," which is considered to be particularly unexplored.

"That’s the area where you start to lose light, below 350 to 500 feet, down to a couple of thousand meters," Dalio said. "That’s where we’re particularly interested in exploring. We’re going to do that all over the world, but we will initially start in the Indian Ocean."

Oceans cover more than 70% of the planet's surface and are ultimately the support systems that allow life to exist here. Yet we know little about them in comparison to what we know about environments on land. That's why, for Dalio, the most exciting thing about this new exploration effort is the unknown.

"Above the ocean’s surface, there are all of these worlds. There are different species, there are different terrains, there are mountains and plains and all of those things," he said. "Beneath the ocean, it is twice as large in terms of the worlds, the total area below, and it’s totally undiscovered. So to me it’s like discovering the planet anew."

Through ocean exploration, there's potential to discover valuable minerals and chemicals, new species that could be sources of novel types of medications, and more. Plus, because ocean systems provide our oxygen and much of the food we rely on, it's important to learn about the underwater world so that we know how to protect these essential resources.

"Imagine continents that have never been discovered, species that have never been discovered, ecosystems that have never been discovered and they’re right there. It’s the not knowing that excites us," Dalio said.

SEE ALSO: 'Do you like to breathe?': A group of scientists have figured out a way to regrow coral reefs and it could help save the oceans

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NOW WATCH: Octopuses are officially the weirdest animals on Earth

• A YouTuber has combined the music of Goldman Sachs President David Solomon with a motivational video from Bridgewater Associates founder Ray Dalio.
• Solomon creates music under the name DJ D-Sol, and has over 425,000 monthly listeners on Spotify.
• Check out the video below.

Wall Street's song of the summer is almost certainly going to be a dance remix of Fleetwood Mac's 1977 hit "Don't Stop."

That's because it was produced by David Solomon, the president and future CEO of Goldman Sachs.

DJ D-Sol, as he is known, released the mix on streaming services like Spotify and Apple Music, and it has already become the talk of Wall Street.

YouTube user Thornton McEnery has taken things to a new level, however, by dubbing the mix over one of hedge fund titan Ray Dalio's now infamous cartoon videos explaining the principles of success.

Dalio, the founder of Bridgewater Associates, recently turned his best-selling book "Principles,"— which contains the full text of Bridgewater's famous culture book with additional context — into a series of cartoon videos aimed at recent college graduates.

The videos were originally narrated by Dalio, but in McEnery's video, his voice is replaced by the strains of DJ D-Sol's EDM remix, creating a hybrid containing two of the most important figures in the financial industry.

You can see the video, which first caught our eye after a tweet by Bloomberg's Tracy Alloway, below (sound on for full effect):

SEE ALSO: Goldman's CEO-in-waiting just released his first electronic dance single, a remix of a popular Fleetwood Mac song, and it's already a hot song of the summer on Spotify

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NOW WATCH: Millennials are leading an investment revolution — here's what makes their generation different

• Bridgewater Associates founder Ray Dalio believes that all organizations can benefit from automated management systems.
• Bridgewater is developing a "coach" that acts like a personal GPS for decision-making.
• The automated management processes parallel the automated investment systems the fund already uses.

"Whether you like it or not, radical transparency and algorithmic decision-making is coming at you fast, and it's going to change your life."

That's how Bridgewater Associates founder Ray Dalio opened his TED Talk in April, and the belief has guided his hedge fund for the past few decades. It's why Bridgewater's 1,500 employees are working with an artificial-intelligence management "coach" that is scheduled to reach a new level of capability and integration within the company in the next two or three years, according to Dalio.

Dalio explained to Business Insider in general terms how this will work:

"Let's say you're dealing with somebody who isn't doing a good job or is somebody who has a personal problem, maybe an illness, or whatever the person's circumstances are. What it does now is if you type into a 'coach' ...  it then gathers information about the person and the circumstances, so they're there. It analyzes what they're like and provides guidance for what to do."

Employees can give daily updates about how they're feeling, and if, for example, one is feeling a 5 on a 1-5 scale of being overworked, the coach will notify that employee's supervisor and recommend that they reach out for a discussion.

Dalio said it's a direct parallel to the investment system that long been in place, which he likens to driving with a GPS. Since the 1980s, Dalio and his team have been creating investing algorithms based on tested theories. As Dalio explains in his book, human investors work alongside the automated investor, considering its suggestions and either acting on them or determining what the algorithms are missing. New algorithms can be adjusted when flaws are revealed.

While he chose to remain co-CIO, Dalio completed a seven-year transition phase away from management this year, and marked the occasion with a book tour around "Principles: Life and Work," the first of two he will write. In "Principles," Dalio shares the collection of insights that every Bridgewater employee reads, and explains that before he left the role of co-CEO, he ensured that the management principles would be automated as much as possible, in the same way that his investment principles already had been.

The management coach is in beta testing and is "providing a lot of help now" but "is not nearly there" in terms of reaching its potential, according to Dalio. He said that, like the automated investment system, it will always be evolving, but a "thorough version" should be available to Bridgewater employees within three years.

The idea is that it will have access to more information than any one person could have about the employees within the company.

This coach is linked to the existing management software at Bridgewater, including the "Dots" iPad app that Dalio publicly demonstrated for the first time in his TED Talk. In Dots, employees rate each others' performance in real time during meetings according to traits like assertiveness and open-mindedness, leaving contextual comments as necessary.

Dots ratings come into play with "believability-weighted decision making" process at Bridgewater. When a question is posed to a group, the averages of each employee's Dots ratings are considered.

For example, an investment decision may receive 13 "yes" votes and four "no" votes and still be denied because the four people who voted in the negative significantly outweighed those for the decision in relevant areas, like their experience level and capability for high-level strategy.

Dalio's ideal version of Bridgewater, then, takes its existing automated management programs and gives each employee a fully functioning coach that will help them interact with each other.

And, as he said in his TED talk, he thinks that Bridgewater is ahead of the curve on a global trend, and it's why he plans on making Bridgewater's proprietary management software available to the public in the near future.

"It's a little bit like playing chess and then also being able to have, when you're playing the chess, a computer chess system next to you making the moves," Dalio told us.

"So you make the move, it makes the move," he said. "You compare your moves and you think about them and then you refine them. Well, that's what we're doing in management."

SEE ALSO: Bridgewater's Ray Dalio shares the piece of advice he wants to be his legacy

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NOW WATCH: THE RAY DALIO INTERVIEW: The billionaire investor on Bridgewater’s 'radically transparent' culture and how to bet on the future

Bridgewater Associates founder Ray Dalio sat down with Business Insider CEO Henry Blodget to discuss his book "Principles: Life and Work." Here Dalio explains the importance of learning from his mistakes.

"Principles: Life and Work" is the first of two planned books, and includes a short autobiography along with an expanded version of the "Principles" that all Bridgewater employees read when joining the company. Following is a transcript of the video. 

Henry Blodget: And one of the other principles that you stress is this idea that you should teach your team to fish rather than giving them fish, but you gotta give 'em room to make mistakes. This is something that Jeff Bezos and many other incredibly innovate entrepreneurs have stressed again and again. We have to get over the fear of mistakes. This seems to be a key part.

Dalio: Well, you learn from mistakes and learn from pain. Like I say, you can scratch the car, but you can't total the car. Okay. Mistakes is one of the best sources of learning, right. Successes mean you do the same thing over again, and okay, that's fine, but mistakes that are painful stick. When I look back on my career, I think that the mistakes were the best thing that happened to me.

I remember my mistakes better than I remember my successes. Somehow there must be more of the successes to get me where I am, but I remember all the mistakes, and I remember the lessons. So that's what I mean by pain plus reflection equals progress. So yeah, it's okay for you to make mistakes. It's not okay for you to not learn from those mistakes. That's a principle in there, right. And so you have a culture that operates this way.

If you don't have a culture that operates this way, it's not gonna be self-reinforcing. And so the reason I'm talking about these types of principles rather than my economic and investment principles, which'll come out in the next book is because these are the most fundamental principles, which are the basis of success. And they're not just in investment, investment firms principles. It's not just a hedge funds principles. It's like life principles and how we're gonna deal effectively with each other.

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Business Insider's Henry Blodget and Sara Silverstein check in on the debate raging around the red-hot bitcoin and cryptocurrency market. Blodget doubles down on prior comments that bitcoin is a perfect example of a speculative bubble, and lacks intrinsic value. Silverstein is a bit more enthusiastic about bitcoin's prospects, and says that many of the arguments against it can be applied to other assets, even gold. She also stresses that a great deal of bitcoin pessimism stems from a lack of understanding.

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Ray Dalio isn't like other investors.

His firm, Bridgewater Associates, is the world's largest hedge fund — with about $160 billion in total assets under management — and it's run according to a culture of "radical truth" and "radical transparency."

Dalio has built a workplace according to his vision of the world, and that entails meetings that are filmed so they can be analyzed and an iPad app where employees rate one another's performance in real time.

Dalio is the co-CIO and chairman of Bridgewater, but he stepped away from daily office management earlier this year. To mark the occasion, he published the first of two planned books; the first is "Principles: Life and Work." It's both a short autobiography and an expanded version of his intensive list of management principles that every Bridgewater employee reads when they're hired.

During his book tour, he spoke with "The 4-Hour Workweek" author Tim Ferriss for an episode of Ferriss' podcast. Ferriss asked Dalio which books he would recommend to any new college graduate, and Dalio responded with three titles he thinks everyone should read. The books, which have nothing to do with finance, offer a glimpse into Dalio's mind.

SEE ALSO: Bridgewater's Ray Dalio shares the piece of advice he wants to be his legacy

"The Lessons of History" by Will and Ariel Durant

The husband-and-wife team of Will and Ariel Durant wrote 11 volumes on Western history published from 1935-75, ending with the Napoleonic era only because they died weeks apart from the other. They won a Pulitzer Prize for the 10th volume of that series.

Dalio recommended their brief 1968 book "The Lessons of History," an overview of recurring themes they found through analyzing thousands of years of history.

Find it here »

"River Out of Eden" by Richard Dawkins

Dalio told Ferriss he thought evolution was "the greatest force in the universe."

"I think the purpose of everything is to evolve," he added. "I think individuals are just vessels for our DNA evolving."

He recommended "River Out of Eden," from 1995, by the prominent English biologist and New Atheist thinker Richard Dawkins.

"It just really puts things in perspective," Dalio said.

Find it here »

"The Hero with a Thousand Faces" by Joseph Campbell

Dalio told Bloomberg that several years ago his son Paul, a filmmaker, gave him Joseph Campbell's 1949 classic"The Hero with a Thousand Faces." By studying the greatest myths throughout all of human history, Campbell discovered narrative structures that resonate with the human spirit.

When Dalio read it, he said he put his own life into these perspectives, and that he thought it was useful for others to do so as well.

He decided he was about to enter the third stage of his life in which he would pass on the lessons he learned throughout his career. It's why he reluctantly is a public figure, who wants to give a "parting gift" to the world through his new book and the upcoming second volume, he previously told Business Insider.

Find it here »

• Ray Dalio, the founder of Bridgewater Associates, shared a chart in a LinkedIn post showing that the top 0.1% of households now hold about the same amount of wealth as the bottom 90%.
• He notes that today's wealth gap is similar to that of 1935 to 1940.
• Both back in 1935 to 1940 era and today we saw the rise of populism.

It's no secret that the US has an inequality problem. But actually looking at the disparity between the top and bottom can still be striking.

Ray Dalio, the founder of Bridgewater Associates, shared a chart in a LinkedIn post showing the share of US household wealth by income level: The top 0.1% of households now hold about the same amount of wealth as the bottom 90%, which he notes is similar to the wealth gap that occurred from 1935 to 1940. 

"To understand what’s going on in 'the economy,' it is a serious mistake to look at average statistics," Dalio writes. "This is because the wealth and income skews are so great that average statistics no longer reflect the conditions of the average man."

Dalio also draws a connection between income inequality and populism, annotating on the chart that the 1935 to 1940 period was the "era of populists," while today we're seeing the "emergence of populism."

Relatedly, Goldman Sachs' Sumana Manohar and Hugo Scott-Gall shared a chart last year comparing a given country's gross domestic product per capita to its Gini coefficient.

The Gini coefficient is a measurement of the income distribution within a country that aims to show the gap between the rich and the poor. The number ranges from zero to one, with zero representing perfect equality (everyone has the same income) and one representing perfect inequality (one person earns the entire country's income and everyone else has nothing.) A higher Gini coefficient means greater inequality.

Developed-market economies such as those in Germany, France, and Sweden tend to have a higher GDP per capita and lower Gini coefficients. On the flip side, emerging-market economies like Russia, Brazil, and South Africa tend to have a lower GDP per capita but a higher Gini coefficient.

The US, however, is a big outlier. Its GDP per capita is on par with developed European countries like Switzerland and Norway, but its Gini coefficient is in the same tier as Russia's and China's.

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• Ray Dalio, the founder of Bridgewater, the world's largest hedge fund, just published a note on the state of the US economy.
• He noted that the bottom 60% of Americans are struggling, listing a litany of depressing statistics to make his case. 
• He said that if he were running Federal Reserve policy, he'd keep an eye on the bottom 60%. 

Brutal.

There's no other word for Ray Dalio's latest note on the US economy, and the situation it describes. The founder of Bridgewater, the world's largest hedge fund with about $160 billion in management, posted the note on LinkedIn on Monday, and sets about splitting the US economy in two: the top 40% and the bottom 60%.

The point of this exercise is to show that while the headline numbers show a growing, healthy economy, there's a lot more going on under the surface that needs to be paid attention to. 

The stats he cites for the bottom 60% are downright depressing. Here's a selection taken straight from the note (emphasis Dalio's):

• Real incomes have been flat to down slightly for the average household in the bottom 60% since 1980 (while they have been up for the top 40%). 
• Those in the top 40% now have on average 10 times as much wealth as those in the bottom 60%. That is up from six times as much in 1980.
• Only about a third of the bottom 60% saves any of its income (in cash or financial assets).
• Only about a third of families in the bottom 60% have retirement savings accounts—e.g., pensions, 401(k)s—which average less than $20,000. 
• For those in the bottom 60%, premature deaths are up by about 20% since 2000. The biggest contributors to that change are an increase in deaths by drugs/poisoning (up two times since 2000) and an increase in suicides (up over 50% since 2000).
• The top 40% spend four times more on education than the bottom 60%. 
• The average household income for main income earners without a college degree is half that of the average college graduate.
• Since 1980, divorce rates have more than doubled among middle-aged whites without college degrees, from 11% to 23%.
• The number of prime-age white men without college degrees not in the labor force has increased from 7% to 15% since 1980.

In other words, the economy isn't as healthy as might appear at first look. And note includes a warning: the "stress between the two economies" will "intensify over the next 5 to 1o years" because of demographic and technological change. 

How does this relate to markets? Well, Business Insider reported back in September that Bridgewater had told clients that the Fed was making a mistake by raising rates. And there is a hint of that view in Dalio's latest note, where he said that the "average statistics could lead the Federal Reserve to judge the economy for the average man to be healthier than it really is."

He warned that that could lead the Fed to run "an inappropriate monetary policy."

Dalio said: 

"Because the economic, social, and political consequences of an economic downturn would likely be severe, if I were running Fed policy, I would want to take this into consideration and keep an eye on the economy of the bottom 60%."

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• Republicans passed the Tax Reforms and Jobs Act this week, slashing corporate taxes while lowering them for some American individuals.
• Ray Dalio, the billionaire founder of hedge fund Bridgewater Associates, took to LinkedIn to voice his concerns about the new policies.
• He says the bill ignores key investments that will affect the economy's future. 

Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, has some concerns about the GOP's newly passed tax plan.

"When we look at the tax plan holistically, it looks to me like it’s a short-term minor boost to the economy that will have some minor positive longer-term impacts," the billionaire wrote on LinkedIn Thursday. 

Dalio expressed two concerns. First, the tax bill won't have a significant impact on economic conditions for the bottom 60% of the Americans who are struggling.  He said: 

It won’t have any notable effect on our biggest economic, social, and political issue, which is the conditions of the bottom 60% and the growing disparity with the top 40% (especially the growing disparity between the bottom 90% and the top 10%).

And second, it doesn't deal with the "impediments that are holding back investment and productivity in the US economy." Specifically, Dalio points to two places where the government should be investing more money. 

"The reforms to the structure of corporate taxes at the core of the bill will certainly make the US a more attractive environment to do business," he said. "But the impact of those changes is likely to be small relative to the improvement that could be achieved by investing more in things like infrastructure and education, which more directly boost productivity."

Dalio added: 

"There’s a tremendous opportunity cost arising from common sense sorts of things not being done or being cut back on—from not investing in infrastructure because of budget concerns and regulatory bureaucracy, to not improving education for similar economic and bureaucratic reasons.  So we’ll do the tax adjustment tweak and the regulatory tweak—a little bit here and a little bit there—but we won’t change things materially.  In other words, the headline is that we’re still not dealing with the bigger issues."

SEE ALSO: The founder of the world's largest hedge fund just shared brutal analysis of the US economy

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• Bridgewater Associates executive Bruce Steinberg and his family were among 12 dead in a Costa Rica plane crash on Sunday.
• Steinberg was a senior researcher at the firm, the world's largest hedge fund.
• Costa Rican authorities say strong winds or mechanical failure are likely causes.

Bridgewater Associates senior researcher Bruce Steinberg and his family were among 12 who died in a plane crash in Costa Rica on Sunday.

Bridgewater founder Ray Dalio noted the loss on his Facebook page, calling Steinberg a "wonderful man."

"Right now, we are each processing this devastating tragedy in our own ways," Dalio wrote. "At this time I will be devoting my attentions to doing this and helping others."

Steinberg, his wife, Irene, their sons Matthew (14), William (19), and Zachary (20), along with another American family of four, an American tour guide, and two local pilots all died in the crash, leaving no survivors.

The families had taken a charter flight on a Cessna 208B Grand Caravan that crashed in a wooded area off the beach town of Punta Islita just minutes after takeoff, Costa Rican authorities told Reuters. The Journal News reported the flight was en route to Costa Rica's capital, San Jose, where the Steinbergs had planned to celebrate the new year.

The US State Department and Costa Rican authorities are investigating the crash.

Costa Rica's Judicial Investigation agency deputy director Michael Soto told the Associated Press that "No possibility can be left out for certain," but that the two most likely causes are inclement weather or mechanical failure. Costa Rican authorities told the AP that there were strong winds during the time of the crash.

The Steinberg family lived in Scarsdale, New York, and were philanthropists and prominent members of their local Jewish community.

"They were wonderful people. We need a whole world of people like them," Steinberg's mother Diane told the New York Daily News.

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• Ray Dalio, the founder and chairman of Bridgewater Associates — the world's largest hedge fund — says investors must keep an eye on what a Jeremy Corbyn premiership would look like for the markets.
• Speaking to the Financial Times, Dalio said investors must now look beyond traditional market events like central bank meetings.

LONDON – Ray Dalio, the founder and chairman of Bridgewater Associates — the world's largest hedge fund — said investors must keep an eye on what a Jeremy Corbyn premiership would look like for the markets in a new interview with the Financial Times.

Dalio said that the world's investment landscape must change to reflect growing political unrest and uncertainty sweeping major economies, singling out Jeremy Corbyn in the UK as a particular point of interest.

"[These days] there’s not the same volatility of inflation, growth and interest rates. So political issues are more important than macro [economic] issues," he told the FT's Gillian Tett, adding that investors must look beyond traditional points of interest like central bank meetings and statements, and look instead to events like "the next election in France or in the UK, or how hospitable will Jeremy Corbyn be to capital?"

Dalio believes that this shifting landscape has fundamentally altered the way he looks at investing, saying that Bridgewater has created algorithms to track and forecast these notoriously unpredictable political developments.

"You can convert whatever you are thinking into an algorithm," he said.

"We’ve created a conflict gauge looking at words [in the media] and things. We’ve done examinations of all political conflicts in the past and their impact on markets [for models]."

The potential for Prime Minister Corbyn has been the subject of much hand wringing in the UK's financial markets, with Morgan Stanley in December warning that for the markets "domestic politics may be perceived as a bigger risk than Brexit," highlighting the potential for a drastic shift in economic policy under a Labour government.

Should he get to power Corbyn is expected to carry out a major programme of nationalisations, as well as ramping up government spending on services and infrastructure, with the National Health Service a major focus.

Morgan Stanley's comments sparked an angry response from Corbyn, who criticised Morgan Stanley for its role in the 2008 financial crisis, labelling it as one of the "speculators and gamblers who crashed our economy."

"Their greed plunged the world into crisis and we're still paying the price," he said.

"Nurses, teachers, shopworkers, builders, just about everyone is finding it harder to get by, while Morgan Stanley’s CEO paid himself £21.5 million last year and UK banks paid out £15 billion in bonuses."

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• Ray Dalio is the founder the world's largest hedge fund. 
• He follows principles in his life, and in business, to be successful.
• Anyone can learn from them to become more satisfied with their own lives. 
• A few principles include: align your direction with your innate nature, use a five-step process to make decisions, and be transparent.

Bridgewater Associates is the world's largest hedge fund. They manage over $150 billion.

In the past decade, a lot has been written about them. They have a very unorthodox method of operation. Almost to the point where many outsiders claim that they function like a cult.

They're known for their policies of radical honesty and openness, which means that every employee is always expected to say what they think. It's a culture that tolerates mistakes but doesn't believe in hiding them. It values each opinion but doesn't accept sugarcoating.

Naturally, not everyone feels comfortable working there, and almost 30% of new hires leave within a year. Those that do stay, however, tend to stay there for the very long-term.

Their founder is a man named Ray Dalio. He is among the wealthiest people in the world, and it's his influence that has allowed them to operate as effectively as they have done.

His Principles are famous in the investing world and beyond. They're a set of rules and algorithms that he has created for himself and his firm to ensure that they are getting the most out of their effort. In fact, he attributes much of his performance record to them.

While some are unique to his experience, most of them can actually be applied quite broadly.

The thing about Dalio is that he's not just any investment manager. He's a deep thinker whose philosophy extends beyond just his own domain.

His principles are designed to work as rules for creating a good life, and some of his key ideas show precisely how to do that. Let's break down a few of them.

1. Align direction with your innate nature

Generally speaking, most perspectives about how to live life well fall into two categories on the opposite ends of the spectrum. Depending on your culture, one of the two dominates.

The first is achievement-based. This is a very common view in the west, and it essentially states that meaning comes from growth and impact. It accepts that things will be difficult, and it relies on a compromise for something greater than oneself. Something that leaves a mark.

The second is presence-based. This is more common in eastern cultures, and it contends that the joy in life grows from being in the moment and really enjoying the little day to day things that make life worth living. It's more concerned with smelling the roses if you will.

These aren't mutually exclusive, and many people do find a good balance between the two, but more often than not, for every person, one side is more appealing than the other.

One of the big things that Dalio has implemented at Bridgewater is ruthless testing. They test everything from strengths and weaknesses to personal preferences and life outlook.

A thing that he has consistently come across over the years is that while people are flexible and can adapt reasonably well to most situations, everybody is genetically conditioned to be motivated by certain things that are relatively ingrained in them and that are hard to change.

Some people are programmed to prefer contentedness, while others thrive on challenge.

Dalio believes that there is essentially a spectrum where one end is about savoring and enjoying life in presence, while the other side is about pushing oneself to make an impact.

The first step to living a good life is understanding where on that spectrum you lie. Once you know your innate nature, you can better choose the kind of goals that are meaningful to you.

2. Build a life machine from start to finish

Once the direction is set, according to Dalio, then it becomes a process of goal achievement.

You know what appeals to your nature, and the path forward is clearer, but even then there are still wants and needs demanding attention. You still have to choose how to invest your time.

Dalio has a five-step process for this. He sees any pursuit as a machine that has different parts interacting with itself to make it run better. By separating the parts individually into different compartments and periodically addressing them, he contends that anything is within reach.

The first step is choosing a goal. The second step is identifying and not tolerating problems. The third step is diagnosing any problems to the root cause. The fourth step is designing a plan to eliminate those problems. The fifth step is executing the established plan.

Anytime you feel confused or stuck during an effort to get what you want, you can go through these steps to see which individual part of the machine needs your attention.

By adequately optimizing this process, there is a high likelihood that you can align whatever it is that you need to do to improve your life with the actual requirements of reality.

Naturally, no one person excels at every one of these steps. We can improve our ability in each individual compartment, but everyone has their own unique strengths and weaknesses.

Some people are more visionary. They know what they'll want in the future, and they excel at setting goals. Others are better problem solvers. They can take an issue and really break it down. Few yet are competent executioners. They know how to turn a plan into reality.

The most effective people don't just hone their own skills at each step, but they also know how to compensate for their weaknesses by getting the right people to help them along the way.

3. Harness the power of full transparency

In day to day life, very few of us say what we think in our interactions with other people.

There are many reasons for this. Much of the time, what we think just isn't relevant to the situation, so it doesn't make sense to. Other times, there is a real cost to saying what we think. Insulting somebody isn't the best way to make friends. Nor is it a good way to live.

These inhibitions are understandable. That said, the most common reason that we aren't always honest, or that we tell white lies, is that we worry about bruising the ever-present ego.

We worry about hurting someone else's feelings (even if they are in the wrong) because we, ourselves, don't want others to similarly hurt our own feelings (even if we need to hear it).

In a TED Talk, Dalio showed the audience a work email he received as an example. It was from an employee below him in the company, but the email very bluntly stated how poorly prepared Dalio was for an internal meeting, and how it negatively affected everyone else.

In fact, it was so direct that most people would have been personally insulted by it. Dalio, however, claims that this is precisely what has enabled them to constantly improve.

In their culture, it's accepted that this isn't personal. It's about helping each other succeed.

Of course, this isn't feasible in every environment or interaction, but if you go out of your way to establish this expectation with either your team or the people closest to you, then you can be radically honest with them and be radically open-minded to feedback without the costs.

The result is an ability to bypass the harmful effects of an ego that doesn't tolerate criticism, and as a result, fails to improve and get better. It will also lead to kinder, deeper, and more meaningful relationships with those around you. That's the power of full transparency.

All you need to know

It's not always clear what the best route of action is at any given point. There are many ways to live a full life. That's good in that it provides options, but it's bad because choosing is hard.

Ray Dalio is not only one of the most accomplished people in his field, but he's also a great thinker. He has hundreds and hundreds of principles written down for exactly this purpose, and he recommends that people note their own so that they can make better choices.

Many situations in life arise again and again. Good mental models and principles can be applied to more than one instance, and they stop us from making the same mistake twice.

If you're diligent in keeping them in mind, there is no reason you can't optimize a good life.

Want to think and live smarter? Zat Rana publishes a free weekly newsletter for 20,000+ readers at Design Luck.

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• Bridgewater Associates is the world's largest hedge fund.
• On his new podcast, Wharton professor Adam Grant spoke to some Bridgewater employees about their culture of "radical transparency."
• One manager remembered finding out in front of 200 coworkers that he'd been ranked the worst performer. He said it "energized" him by motivating him to either improve or leave.
• Bridgewater founder Ray Dalio told Grant that if you care about results, you'll want this kind of candid feedback.

Kiran Rao is a smart guy. Before joining Bridgewater Associates, the world's largest hedge fund, he'd been a medical doctor who worked with the World Health Organization and a principal at a consulting firm.

One day after joining Bridgewater, he was sitting in a meeting with 200 other employees when an announcement was made. Everyone was would be shown a list that ranked the people in the room according to their performance.

"Some of the people in this room probably shouldn't be here," the person presenting the list said.

Sure enough, there was Rao's name — the worst performer on the list.

Rao recounted this story — in fact, he shared the recording from the meeting — on the first episode of "WorkLife with Adam Grant," a new podcast hosted by the Wharton professor Adam Grant.

Rao was able to share the recording because almost all meetings are recorded at Bridgewater, a company that's by now well known for its culture of "radical transparency."

As Business Insider's Richard Feloni has reported, Bridgewater employees constantly rate and critique each other's performance. (The meeting footage is available to all employees.)

On the podcast episode, Grant spoke to Bridgewater founder Ray Dalio, who built the culture of radical transparency. Dalio said that if your objective is to be as good as possible — if you care about results more than your image — you'll want criticism of your performance.

It's unclear that public rankings motivate everyone at every company

On the podcast episode, Grant mentioned that research suggests ranking employees can be demotivating. It could depend on the specific work environment.

In one 2016 study from New York University and Columbia Business School (not mentioned on the podcast), researchers looked at the effect of performance ranking among truck drivers. Results showed that drivers who were told to emphasize teamwork performed worse after the rankings were posted, while drivers who had not been told to emphasize teamwork performed better.

Rao told Grant that learning he was the worst manager was like "dressing for the beach one day in flip flops and your swimwear and you swing your door open and you're in a full-force winter storm." But, he added, "I felt great."

On the recording, you can hear Rao introduce himself to the group and say that he agrees he should be in this spot. "This leaves me more energized versus not," he says. The feedback motivated him to either improve — or leave.

Rao is still a manager at Bridgewater.

Rao more or less echoed what Dalio said. He told Grant: "It's just data, objective data about what I'm like. I would rather know how bad the bad is and how good the good is so I can do something with it."

SEE ALSO: Ray Dalio, head of the world's largest hedge fund, explains his succession plan for Bridgewater and how its 'radically transparent' culture is misunderstood

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