• Ray Dalio, the founder of hedge fund Bridgewater Associates, said in a Thursday interview with CNBC that globally corporations will lose $12 trillion due to the coronavirus pandemic.
• In the US, companies stand to lose up to $4 trillion, Dalio said. 
• Dalio said that US fiscal stimulus should be in the range of $1.5 trillion to $2 trillion at a minimum. 
• Read more on Business Insider.

Ray Dalio, the founder of Bridgewater Associates, the largest hedge fund in the world, said that corporations around the world will lose trillions of dollars amid the coronavirus pandemic. 

"What's happening has not happened in our lifetime before," Dalio told CNBC's Squawk Box during a Thursday interview.

He estimated that globally, corporations will lose $12 trillion from the shock of the outbreak. In the US, the coronavirus will cost corporations up to $4 trillion, he said.

"There will also be individuals who have very big losses," Dalio said. "And individuals who can't afford the shock they're going to have."

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Because of the economic impact of the coronavirus pandemic, there is a need for the government to spend "a lot more money," according to Dalio. He said that the fiscal stimulus should be in the range of $1.5 trillion to $2 trillion at a minimum, depending on the form that relief takes. 

Currently, the White House is proposing a package that will be between $850 billion and more than $1 trillion. The plan under consideration could include loans for small businesses and emergency support payments to US households. 

In addition, the Federal Reserve has introduced a number of emergency measures including slashing rates to near zero and relaunching quantitative easing amid the crisis. 

Dalio warned that it might not be of much help, however. There's an "inability of central banks to stimulate in a way that's normal," he said. He added that right now, central banks have less capacity to ease monetary policy with interest rates so low. 

"We are now at a point where there will have to be debt restructuring and a monetization of that," Dalio said.

Read more: Dan Rasmussen studied every financial crisis back to 1970. He shares exactly where his data says to put your money as markets plunge — and explains why 'now is a very good buying opportunity'

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• Billionaire investor Ray Dalio still views cash as a bad investment even after the coronavirus sell-off.
• "I still think that cash is trash relative to other alternatives, particularly those that will retain their value or increase their value during reflationary periods," the Bridgewater Associates boss said in a Reddit "ask me anything" session on Wednesday.
• Dalio argued that rock-bottom interest rates and mushrooming money supply will erode the value of dollars.
• Holders also risk missing out on bigger gains from other assets once the global economy starts to recover, he said.
• Visit Business Insider's homepage for more stories.

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Ray Dalio, the billionaire boss of the world's largest hedge fund, still views cash as a poor investment even after the novel coronavirus tanked global markets.

The Bridgewater Associates chief proclaimed that "cash is trash" in a CNBC interview in late January, arguing that a weakening dollar and mushrooming money supply would erode its value over time. Unsurprisingly, Bridgewater's flagship fund eschewed cash in favor of betting on stocks, commodities, and other assets to rise this year.

The strategy meant it suffered a 20% loss in the first quarter, according to Bloomberg. Yet Dalio doubled down on his disdain for cash during a Reddit "ask me anything" session on Wednesday.

"I still think that cash is trash relative to other alternatives, particularly those that will retain their value or increase their value during reflationary periods," he said, giving "gold and some stocks" as examples.

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Cash is less volatile than other assets, Dalio said, but holders risk missing out once the global economy starts to recover.

"There is a costly negative return to it in relation to goods and services and other financial assets that amounts to about a couple of percent a year, which adds up," he said.

The dollar's value is currently being supported by immense demand amid a global shortage, Dalio said, describing the situation a "short squeeze."

However, once the Federal Reserve creates enough greenbacks to satisfy demand — or the shortfall leads to mass defaults and bankruptcies — demand will drop and the dollar will weaken, he predicted.

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The currency could also fall if bondholders, tired of surging money supply and rock-bottom interest rates, ditch dollar-denominated debt, he added.

"I believe that cash, which is non-interest-bearing money, will not be the safest asset to hold," Dalio said.

Dalio differs significantly in his views from another billionaire investor, Warren Buffett, whose Berkshire Hathaway conglomerate had $128 billion in cash and short-term investments at last count.

"I will never risk getting caught short of cash," Buffett said in his letter to shareholders last year.

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• Ray Dalio of Bridgewater Associates said in an interview with Bloomberg on Wednesday that investors would be "pretty crazy to hold bonds" in this period.
• "If you're holding a bond that gives you no interest rate, or a negative interest rate, and they're producing a lot of currency and you're going to receive that, why would you hold that bond?" Dalio said, referring to government bonds.
• Dalio said he liked gold, stocks, and some corporate bonds in the current environment.
• Read more on Business Insider.

Ray Dalio, who leads Bridgewater Associates, the largest hedge fund in the world, said investors would be "crazy" to hold government bonds in the current environment where central banks are printing money and interest rates remain at historic lows.

"If you're holding a bond that gives you no interest rate, or a negative interest rate, and they're producing a lot of currency and you're going to receive that, why would you hold that bond?"Dalio said in an interview with Bloomberg on Wednesday.

"This period, like the 1930-45 period, is a period in which I think you'd be pretty crazy to hold bonds," he added.

Because central banks around the world are easing monetary policy and printing money, that changes the appeal of bonds, Dalio said.

Read more:Billionaire Chamath Palihapitiya has reaped a 997% return since 2011. He shares his 3-part strategy for today's coronavirus-hit market — and outlines how he's mining real estate for opportunities.

For investors looking for areas that could gain amid the market turmoil, Dalio said he liked gold, some stocks, and corporate bonds of companies with strong balance sheets. These assets are poised to rise in this market environment, according to Dalio.

Dalio's fund was blindsided by the coronavirus pandemic, which roiled global markets in February, leading to an epic sell-off. The firm's flagship Pure Alpha Fund II was down about 20% for the year at the end of March. Dalio said the fund was hit at the worst possible moment, as it had bet that markets would continue to rise this year.

Since then, Dalio has doubled down on his view that "cash is trash," arguing that it's a poor investment even during the coronavirus pandemic.

Read more:Bank of America's wealth management chief overseeing $2.7 trillion shares 3 permanent changes investors must make to thrive in a market ravaged by coronavirus

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• Hedge fund managers including Ray Dalio and Adam Levinson suffered record losses in March as the novel coronavirus hammered their portfolios.
• Around 75% of hedge funds posted losses last month, including nine in 10 credit funds, Bloomberg estimated based on preliminary data.
• Dalio's Bridgewater Associates lost 16% in its flagship fund, Levinson's Graticule Asset Management recorded a 9% drop in its macro fund, and Michael Hintze's CQS Directional Opportunities Fund fell by a third, Bloomberg said.
• "Many funds are going to be throwing up gates and going into survival mode," one hedge fund chief told Bloomberg.
• Visit Business Insider's homepage for more stories.

Ray Dalio, Adam Levinson, and other hedge fund bosses posted record losses in March as the novel coronavirus pandemic tore through markets in what one fund manager called an "epically turbulent" month.

Around 75% of hedge funds stomached losses last month, including nine in 10 credit funds, according to a Bloomberg analysis of preliminary data. Equity hedge funds delivered their second-worst performance in at least three decades, Bloomberg reported, citing Hedge Fund Research data.

March was a "devastating" month for the industry, Ed Rogers, the boss of Rogers Investment Advisors in Tokyo, told Bloomberg. "Many funds are going to be throwing up gates and going into survival mode."

Read more:Chris Davis is so good at picking stocks that he made clients $1 billion on a single trade. He breaks down 3 stocks poised to deliver as the coronavirus causes market mayhem.

Bloomberg, relying on a mix of reporting and client letters, highlighted several funds' performances in March:

• Dalio's Bridgewater Associates, the world's biggest hedge fund with about $160 billion in assets, suffered a loss of roughly 16% in its flagship fund after wagering that markets would rise.
• Levinson's Graticule Asset Management registered a 9% drop in its macro fund as equity and fixed-income bets disappointed. In a letter to investors, Levinson described March as "epically turbulent."
• Michael Hintze's CQS Directional Opportunities Fund tumbled by a third, almost triple its previous record monthly decline. Another of its strategies, focused on asset-backed securities, lost more than 40%.

Read more:Bank of America breaks down how to build the perfect post-coronavirus portfolio — one designed to recover losses and get ahead of an eventual economic recovery

Other hedge funds had a much better month. Mark Spitznagel's "black swan" fund, Universa Investments, posted a return of more than 3000%, according to a client letter obtained by Business Insider.

Bill Ackman's Pershing Square posted an 11% gain in March after making a $2.6 billion gain on credit-default swaps that offset losses in its equity portfolio.

Ruffer, a London-based fund nicknamed "50 Cent,"also racked up $2.6 billion last quarter by betting on volatility to spike and equities, credit, and gold prices to fall, again offsetting its losses elsewhere.

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• David Hunter, the chief macro strategist at Contrarian Macro Advisors, thinks the economy is nearing a cataclysmic bust that will ultimately result in an 80% stock market decline. 
• Hunter cites unprecedented amounts of debt, the inability to service that debt, economies running at a fraction of their capacity, and extended economic inactivity as fodder for his thesis.
• He expects significant volatility ahead. Before the 80% drop in stocks, Hunter thinks the S&P 500 will surge all the way to 4,000 by Labor Day.
• Click here for more BI Prime stories.

For nearly five decades, David Hunter— the chief macro strategist at Contrarian Macro Advisors — has had financial markets at the forefront of his attention. At this point he's seen just about all there is it see, and has become known for his prescient analysis of economic cycles.

"It's a different thing when you've lived through these cycles as opposed to reading about them," he said on "The Contrarian Investor Podcast.""I have a lot of conviction on my calls, typically, because I have that experience behind me."

Today, Hunter thinks the economy is nearing the end of a "super-cycle"— the collapse of which will have cataclysmic repercussions.

"We're at the latter-end of a super-cycle," he said. "The super-cycle is the long cycle that starts after the last depression and ends with the next depression."

Hunter's gloomy forecast is mainly predicated upon what he sees as an unmanageable amount of debt and leverage that's been building within the economy.

If that evaluation and skepticism of the overarching landscape sounds familiar, it's because Ray Dalio, the billionaire founder and cochief investment officer of Bridgewater Associates, touts a similar thesis. He's also been equating today's longer-term debt cycle to the Great Depression era.

"We have debt beyond anything we can ever manage," Hunter said. "When you get these surprises, that leverage really exacerbates whatever downturn you get."

Now, with two of the world's largest economies — the US and China — essentially running at a fraction of their prior capacity, Hunter thinks the bust is inevitable.

"You look at where we are today, and you can become pretty dire about coming out of this," he said. "I think this is the front edge of that bust."

Hunter thinks this will all play out with an intense bout of volatility. And his view of what happens next might be surprising considering his dire long-term outlook.

Hunter actually sees a massive S&P 500 rally transpiring before an eventual collapse. In fact, he thinks the benchmark will exceed 4,000 by Labor Day — implying upside of about 40% from current levels. He refers to this as the final "melt up" and says it will be "a secular top that I expect to be the high-water mark for decades to come."

His reasoning behind his bullish short-term call is simple: unprecedented Federal Reserve stimulus.

"Because you're getting money beyond anything that's ever been pumped before, you can get this run up in the market in spite of the fact that the bust is not going to leave us," Hunter said. "We're not going to start the bust and then not."

He continued: "We will have some sort of a 'V' recovery for a quarter, maybe two, because of all this money — but ultimately, it's all one bust."

A similar degree of medium-term bullish sentiment has been adopted by equity strategists at Goldman Sachs. They recently called the S&P 500 market bottom on the heels of a $2.3 trillion Fed stimulus announcement. It's become a popular sentiment across Wall Street that the Fed's actions have bailed out financial markets and enabled risk-takers.

Unfortunately, Hunter thinks the market's stimulus-induced exuberance will be exhausted in the later portion of the year as participants realize the money printer isn't the panacea that had hoped it'd be.

"There's a lot of things you can't reach with money, and a lot of things you can't fix," he said. "We're also dealing with a virus that is beyond anything we're used to dealing with — and it's going to take time to get that fixed."

That element of his forecast matches that of fellow market bears, including Societe Generale strategist Albert Edwards and John Hussman, the former economics professor and current president of the Hussman Investment Trust.

Both have cited unprecedented levels of Fed stimulus as creating unsustainable asset bubbles that will eventually pop. They say easy lending conditions have backstopped assets and allowed for wild speculation — and believe that's created unsustainable pockets of risk throughout markets.

With all of that under examination, Hunter delivers a stark warning.

"What follows the final leg up is what I call: 'A bear market of historic proportions,'" he said. "From that high this summer, I expect an 80% peak-to-trough decline."  

"Basically the biggest bear market since the '29 crash," he concluded.

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• Ray Dalio discussed how the coronavirus pandemic might reshape the US economy in a LinkedIn Live interview on Tuesday.
• The billionaire co-chief of Bridgewater Associates predicted it would spur people to save more, prompt government to invest more in healthcare, and lead countries to manufacture critical equipment instead of importing it.
• "We're now going to be moving to a self-sufficient world," Dalio said.
• Visit Business Insider's homepage for more stories.

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Billionaire investor Ray Dalio expects the coronavirus pandemic to have sweeping effects on people's financial decisions, governments' investment priorities, and global trade.

"The world will look different," the founder and co-chief of Bridgewater Associates, the world's largest hedge fund, said during a LinkedIn Live interview on Tuesday.

Even after the coronavirus threat fades and lockdowns are lifted, individuals and companies may be more prudent with their money so they're better prepared to weather the next crisis.

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"Savings rates are going to rise," Dalio predicted, "because everybody wants to assure themselves of safety."

Authorities might also address the weaknesses in their healthcare systems exposed by the coronavirus. For example, they could invest in more ventilators and critical-care beds, and bolster their supplies of masks and other protective equipment.

"Priorities are going to shift [towards] healthcare and building the basics," Dalio said in the interview.

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Countries could also shift towards manufacturing critical healthcare equipment instead of importing it, Dalio said, even though it is generally less efficient. He gave the example of the US importing masks and ventilators from China, describing it as a "vulnerability."

"We're now going to be moving to a self-sufficient world," Dalio said, as both individuals and countries have realized that "they're all so vulnerable."

The status quo of global supply chains could change significantly, he added. "That won't be anywhere near the same."

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• Ray Dalio, the billionaire founder of the hedge fund Bridgewater Associates, recently spoke with the founder of Khan Academy, an education nonprofit that offers free courses on a variety of topics.
• In the online video interview, Dalio said the American dream is "lost" in today's world. 
• Inequality in education, as well as low incomes for many in the US, produces economic disparity, he said. 
• Corporate leaders need to declare wealth inequality a national crisis, and policymakers and business leaders need to come together to find solutions, the billionaire said.
• This post is part of Business Insider's ongoing series on Better Capitalism.

The billionaire hedge-fund manager Ray Dalio said the American dream "does not exist" right now and that if leaders don't act, the whole economic system of capitalism could collapse. 

In an online video chat with Sal Khan, the founder of the education nonprofit Khan Academy, Dalio said policymakers needed to take steps to increase access to education and boost incomes for low-income Americans, who have been disproportionately affected by the coronavirus pandemic.

"If you don't have a situation where people have opportunity, you're not only failing to tap all the potential that exists, which is uneconomic, you're threatening the existence of the system, and I think that's coming to home very clearly with the downturn in the economy with this virus," he said. 

Dalio comes from a lower middle class background, he said. The billionaire's father was a jazz musician, and Dalio said it was partly a good public education in the '60s that allowed for his success. 

"That notion of what was fair, equal opportunity on a broad basis was what the American dream was," he said on the video call Thursday.

Today, that ability to rise from a lower middle class background through public education is lost, the founder of Bridgewater Associates said.

"The American dream — it's become lost or it certainly does not exist when we take education, for example," he said.  

Income as a predictor of success in education is a big economic problem, Dalio said.

Dalio cited research he published on LinkedIn that showed the top 40% of wealthy Americans on average spend five times more on their child's education than the bottom 60%. 

And education spending has a big influence on a student's success. In a LinkedIn blog post, Dalio cited research that showed students who come from families earning less than $20,000 score on average 260 points worse on the SAT (out of 1600) than students from families earning more than $200,000.

"And the gap is increasing," he wrote. 

A college education also has a significant influence a student's earning potential. A bachelor's degree is worth $2.8 million on average over a lifetime, according to Georgetown University's Center on Education and the Workforce. Georgetown research also found that holders of a bachelor's degree earn 31% more than those with an associate degree and 84% more than those with only a high-school diploma.

"We can see there is not just a wealth gap; there's an opportunity gap and a productivity gap. And it's a problem," he said. "Something's wrong." 

Government and business leaders must declare inequality a national emergency and come together to form a plan, the billionaire said. 

Education is a part of the problem, but it's not the whole problem, the billionaire wrote. In addition to calling for more federal funding of public schools, Dalio is asking lawmakers and corporate leaders to address low incomes in the US. 

"The pursuit of greater profits and greater company efficiencies has also led companies to produce in other countries and to replace American workers with cost-effective foreign workers, which was good for these companies' profits and efficiencies but bad for the American workers' incomes," he wrote. 

Change, according to Dalio, requires a shift in thinking on the part of corporate leaders, as well as government leaders. 

"There need to be powerful forces from the top of the country that proclaim the income/wealth/opportunity gap to be a national emergency and take on the responsibility for reengineering the system so that it works better," he wrote. 

Policymakers pay too much attention to budgets relative to returns on investment, Dalio wrote. In other words, there's too much short-term thinking and not enough long-term planning going on.

"So I believe the leadership should create a bipartisan commission to bring together skilled people from different communities to come up with a plan to reengineer the system to simultaneously divide and increase the economic pie better," he wrote. 

SEE ALSO: A Stanford economist says we're headed for a crisis worse than the Great Depression. Here's his plan for getting people back to work and spending on businesses.

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• Anthony Scaramucci's SkyBridge is backing Ray Dalio, Howard Marks, and Dan Loeb to the tune of $290 million.
• "The Mooch" is betting on the veteran investors' hedge funds — Bridgewater Associates, Oaktree Capital, and Third Point — to turn around SkyBridge's Series G fund, which is down about 24% this year.
• "These large, well-known managers have built their track records by capitalizing on substantial market dislocations, and we are excited to add them to Series G's portfolio," Scaramucci said in a client letter on Monday.
• Visit Business Insider's homepage for more stories.

Anthony Scaramucci is betting on Ray Dalio, Howard Marks, and Dan Loeb to revitalize his SkyBridge investment firm's fortunes after it suffered heavy losses during the coronavirus sell-off.

Scaramucci said in a client letter on Monday that SkyBridge has plowed a total of $290 million into the hedge-fund managers' respective funds: Bridgewater Associates, Oaktree Capital, and Third Point.

SkyBridge, which managed about $5.9 billion in client assets at the end of January, handed $100 million to both Bridgewater and Oaktree, and added $90 million to an existing wager on Third Point.

Read more: A Wall Street expert lays out how the stock market's 'downright terrifying' surge within this crisis may be laying the groundwork for another 32% crash

Scaramucci also revealed in the letter that SkyBridge's flagship fund, Series G, is down about 24% this year. He blamed investments in credit hedge funds that soured during the market meltdown.

"We learned hard lessons in March, and we are taking decisive corrective action," Scaramucci said in the letter.

"These large, well-known managers have built their track records by capitalizing on substantial market dislocations, and we are excited to add them to Series G's portfolio," he added. 

Scaramucci is best known outside of the hedge-fund industry for lasting just 11 days as White House communications director in 2017.

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• As billionaire investors make the rounds on CNBC and other outlets, sharing their views on the stock market, one top financial adviser says everyday investors shouldn't act on what they say.
• Josh Brown, CEO of Ritholtz Wealth Management, outlined two main reasons why investors shouldn't take cues from billionaires in an interview with CNBC on Wednesday.
• First, billionaires can't see the future. They have no idea what's going to happen tomorrow or the next day. Second, billionaires might tell you when they sold or bought in an interview, but they're not going to reach out and update you when they buy back or sell. 
• Visit the Business Insider homepage for more stories.

Billionaire investors have been making the rounds on CNBC and other media outlets in recent weeks, sharing their views on the stock market and economy.

But one top financial adviser says everyday investors shouldn't act on what they say.

This week alone, three billionaire investors sounded the alarm on high valuations in the stock market, including Stanley Druckenmiller,Chamath Palihapitiya, and David Tepper.

As tempting as it may be for individual investors to act on these comments and make changes to their portfolios, Josh Brown, CEO of Ritholtz Wealth Management, said in a CNBC interview on Wednesday that they shouldn't.

"I don't think that individual investors or the vast majority of professional investors ... should be reacting at all to what they have to say," Brown said.

Brown gave two main reasons why investors shouldn't react to the billionaires' comments.

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First, according to Brown, these investors usually trade off of their gut and aren't using repeatable systematic strategies.

Their guess as to what will happen in the stock market tomorrow is as good as anyone else's. 

"On January 17, [Joe] Kernen got an e-mail from both of them [Tepper and Druckenmiller] — they were bullish as all get out. They loved being in stocks, intermediate-term bullish, short-term bullish. They couldn't see what was coming, no one else could either, and they changed their minds," Brown cited as an example.

Second, these investors can turnaround and change their minds on a dime, and when they do, they're not going to reach out and update you about their change of heart (and portfolio allocation). 

"This is the key, Sarah: The biggest trade in Druckenmiller's career was pulling two 180s in the space of four days. Being out of the Nasdaq during the biggest tech boom ever, then being all in, and then two days later not only being out, but being short. He's not going to call you," Brown said.

Another billionaire investor who keeps his cards close to his chest when it comes to investing is Warren Buffett.

Buffett told CNBC's Becky Quick on February 24 that Berkshire Hathaway wouldn't be selling stocks amid the initial market sell-off.

Read more: These 25 under-the-radar companies have been neglected for years - but BTIG says that makes them tempting M&A targets with big stock upside

Fast forward six weeks later, and Buffett revealed at Berkshire's annual meeting that they sold all of their airline stocks.

"Do not change your asset allocation based on Druck[enmiller] because Druck[enmiller] ain't gonna call you when he has a different opinion a few days later," Brown concluded.

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• If you're going to start a business, one of the best ways to learn the ins and outs of entrepreneurship is to read advice from those who have gone before you.
  
• We asked founders, business owners, and executives which books they recommend to anyone starting a business.
• "The E-Myth" by Michael E. Gerber was one of the most frequently mentioned business books.
• Tim Ferriss, the angel investor and New York Times best-selling author of "The 4-Hour Workweek," is a popular author among entrepreneurs.
• Click here for more BI Prime content.

If you're starting a business this year, one of the best ways to learn the ins and outs of entrepreneurship is to read advice from those who have gone before you. 

Whether you need to know how to pitch, get funding, or create an effective company culture, there's a book written by experts who have spent much of their lives helping businesses thrive. To find the best reads out there, we asked founders, business owners, and executives which books they recommend to anyone starting a business.

One of the most frequently mentioned books is "The E-Myth" by Michael E. Gerber, which was originally published in 1986 but remains a timeless staple in business literature. Tim Ferriss, the angel investor and New York Times best-selling author of "The 4-Hour Workweek," is also a popular author among entrepreneurs.

Here are 15 books to read if you're launching a company, want to hone your leadership skills, or need help reaching the next milestone of your business.

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'The E-Myth: Why Most Small Businesses Don't Work and What To Do About It' by Michael E. Gerber

Though it was originally published in 1986, the New York Times best seller "The E-Myth" is one book you'll hear about frequently in today's entrepreneurial world. Its relevance withstands economic changes, thanks to Gerber's expertise in business consulting — Inc. magazine has called him the No. 1 small-business guru.

Ginger Siegel, the North America small-business lead at Mastercard, recommends the book for teaching entrepreneurs that there is more to business than pursuing a passion — in fact, understanding numbers and spreadsheets is very necessary. "Even if you went into the business and love baking cookies or love consulting, you have to know the other side," she told Business Insider. 

Ken Lineberger, the cofounder and CEO of Waters Edge Wineries, a winery franchise based in California, said the book is eye-opening for both new and veteran business owners. "It really changes your paradigm about how you see your role in the business as an owner and how you see your employees," he said. 

Buy the book on Amazon

'Profitable Partnerships: Improve Your Franchise Relationships and Change Your Life' by Greg Nathan

As the CEO of a franchise business, Lineberger said it's common for franchisees to rely heavily on corporate leadership during startup, but once they are running smoothly, they stop seeing value in the relationship. "It doesn't matter if you're McDonald's or Subway or Water's Edge, you go through this evolution as a franchisee where you can start to resent the corporate mothership if you don't get back on track," he said.

That's why he makes "Profitable Partnerships" required reading for all of his franchisees. "I want them to know how to correct it and how do you value the relationship from both sides of it," he said.

Buy the book on Amazon

'The 4-Hour Workweek' by Tim Ferriss

Ferriss' book is a popular choice in self-help, particularly for career success and time management. He puts practicality behind the saying, "Work smarter, not harder," by explaining how he cut his hours from 80 to four per week and earned more money.

Daina Trout, the cofounder and CEO of Health-Ade Kombucha, said the book showed her that the higher up you get in a business, the better it does. It helped her "to push away from being a technician and into a manager, and then to push away from being a manager to a leader," she said.

Buy the book on Amazon

'Shoe Dog: A Memoir by the Creator of Nike' by Phil Knight

Another book recommended by Trout is "Shoe Dog," which tells the story of Nike's creator, Phil Knight, who was CEO of the company from 1964 to 2004.

After he graduated business school, Knight borrowed money from his father to sell shoes out of the trunk of his car. His success in building a company with a market capitalization of more than $125 billion set a precedent for startups, sneaker culture, and brand power. 

Buy the book on Amazon

'This Is Marketing: You Can't Be Seen Until You Learn To See' by Seth Godin

Adii Pienaar, the vice president of the marketing company CM Commerce, said he found this book fascinating because it explains marketing in terms of finding like-minded people. "It really gets into storytelling and how to think about building a brand in a business and not necessarily trying to be everything for everyone," he said.

Buy the book on Amazon

'The Tipping Point: How Little Things Can Make a Big Difference' by Malcolm Gladwell

Though Gladwell's "The Tipping Point" has been around for 20 years, Angela Wator, the owner of the party-supply store Bash Party Goods, said the concepts felt especially relevant today. "I've read it a few times, and I find it really helpful in marketing to millennials and also analyzing my business growth," she said. 

Buy the book on Amazon

'Start With Why: How Great Leaders Inspire Everyone To Take Action' by Simon Sinek

Simon Sinek is known for having one of the most popular TEDx Talks of all time, with more than 47 million views on Ted.com. His message on leadership is based on his book "Start With Why," which says people won't buy into a product until they understand the "why" behind it.

Jessica Morelli, the owner of Palermo Body skin-care brand, found this book helpful for her business. "It shows that all humans really want is connection and to be understood. If you approach business in the same way, and find how to connect with your customers, you'll end up being a heck of a lot more successful than the gimmicks that trap so many businesses from next-level success," she said. 

Buy the book on Amazon

'Business Plans for Dummies' by Paul Tiffany and Steven D. Peterson

Before starting her Cleveland bakery, Colossal Cupcakes, Kelly Kandah read "Business Plans for Dummies" to write her first business plan. She didn't go to business school, so the book made the concepts easy to understand, and she recommends it to any first-timers, regardless of experience or degrees. "It helped me know if I was able to afford my location, and it put everything in front of me that I was probably unaware of or afraid to even look at," she said. 

Buy the book on Amazon

'Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World-Class Performers' by Tim Ferriss

Matthew Cummings is the owner of Pretentious Glass Co. and Pretentious Beer Co., a glassware company and a beer brewery in Knoxville, Tennessee, respectively. As a self-proclaimed recovering workaholic, he said the content and approach in "Tools of Titans" were refreshing.

"This book really pushed me to dive deeply into entrepreneurial self-education and was one of the first times in my adult life I started to think about my own self-care," he said. 

Buy the book on Amazon 

'Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!' by Robert T. Kiyosaki

Mark Stallings is the CEO of Casely, an e-commerce company that sells fashionable phone cases, which he cofounded with his sister Emily. Before starting Casely, 17-year-old Stallings operated a small eBay business out of his bedroom. That's when he read "Rich Dad Poor Dad," which helped him think differently about business and investing. "I always knew I did not want to take the traditional path that most people follow, and this helped me feel confident that I was not making a mistake," he said. 

Buy the book on Amazon 

'The Effective Executive: The Definitive Guide to Getting the Right Things Done' by Peter F. Drucker

Mark Stallings read "The Effective Executive" in early 2019, when Casely was gaining traction. As an introvert, he said leadership has always been daunting. The book changed his mindset and taught him that "effectiveness can be learned and must be earned." 

"There may be some individuals better suited for leadership roles, but to be an effective manager, you need to develop the skill of effectiveness," he said. 

Buy the book on Amazon

'Steal Like an Artist: 10 Things Nobody Told You About Being Creative' by Austin Kleon

Before she became the lead designer and cofounder of Casely, Emily Stallings loved taking on creative projects in her spare time. But she was never formally trained in graphic design or art. She said "Steal Like an Artist" was transformational for her creative confidence.

"Creative ideas don't just come out of nowhere, you need to seek them out. After reading this book, I couldn't stop coming up with case-design ideas," she said. 

Buy the book on Amazon 

'Principles: Life and Work' by Ray Dalio

"Principles" is a compilation of advice from the most successful hedge-fund founder, Dalio. Emily Stallings had a friend who worked at Bridgewater and recommended the book to her. "I found his principles to be harsh but very honest and full of important lessons," she said. 

Stallings found one principle in the book particularly influential in the way she and her brother approach their roles at Casely. "Everybody has their strengths and their weaknesses in the workplace — and it's important to identify them and use people efficiently," she said. 

The cofounders identified their unique strengths and compartmentalized the tasks best suited to those strengths. "Often what I was bad at, Mark was able to take the lead on and vice versa. And when neither of us were proficient, we looked to outsource or hire someone who would be better suited for the job," she said. 

Buy the book on Amazon 

'Clockwork: Design Your Business To Run Itself' by Mike Michalowicz

Deidre Mathis is the owner of Wanderstay hostel in Houston. On top of running her business, she's an avid reader. "I have 15 books on queue," she said. One of her favorite books, "Clockwork," gives advice to entrepreneurs who feel bogged down by daily tasks and shows them how to manage their businesses more effectively so they have more free time. 

Buy the book on Amazon  

'Leadership 101: What Every Leader Needs to Know' by John C. Maxwell

Mathis has won 12 pitch competitions, raking in a total of $75,000 to help fund her hostel. Her leadership presence, defined by the way she knows every detail of her business, is one of the traits that helped her stand out in these competitions. 

For entrepreneurs who want to learn how to lead and pitch successfully, she recommends reading "Leadership 101," written by the leadership speaker, writer, and coach Maxwell. 

Buy the book on Amazon

• JPMorgan CEO Jamie Dimon called the coronavirus pandemic "a wake-up call" for leaders to address inequality in the US in a Tuesday memo to stakeholders.
• He joins a number of other business leaders calling for change. 
• For example, the billionaire Ray Dalio is sounding the alarm on income inequality in the US, and Facebook Chief Operating Officer Sheryl Sandberg is calling for paid sick leave and bereavement leave for workers. 
• This post is part of Business Insider's ongoing series on Better Capitalism.
• Visit Business Insider's homepage for more stories.

JPMorgan CEO Jamie Dimon is the latest billionaire to speak out about inequality in the US during the coronavirus pandemic — joining the ranks of Ray Dalio, Mark Cuban, and others.

In a memo to stakeholders on Tuesday, Dimon said the coronavirus pandemic was "a wake-up call" for the country to address inequality. And he's calling on government and business leaders to act.

"This crisis must serve as a wake-up call and a call to action for business and government to think, act, and invest for the common good and confront the structural obstacles that have inhibited inclusive economic growth for years," Dimon wrote.

A number of business leaders have been vocal about the stark inequalities the pandemic has exposed. Mark Cuban, the billionaire Dallas Mavericks owner, has spoken out about income disparities in the US, joining Dalio in highlighting the issue. Facebook Chief Operating Officer Sheryl Sandberg is calling for paid sick leave and bereavement leave, and Melinda Gates is urging corporate leaders to prioritize childcare.

Here are the changes they're highlighting. 

SEE ALSO: Sheryl Sandberg and I video-chatted about grief during a time when the whole world is experiencing it. Here's her personal advice for persevering.

JPMorgan CEO Jamie Dimon says the coronavirus pandemic shows that too many Americans are "living on the edge."

Dimon said he hoped leaders would take the opportunity to build a more inclusive economy, which he defines as one where there is "widespread access to opportunity." 

"The last few months have laid bare the reality that, even before the pandemic hit, far too many people were living on the edge. Unfortunately, low-income communities and people of color are being hit the hardest, exacerbating the health and economic inequities that were already unacceptably pronounced before the virus took over," he wrote. 

For example, one in 10 black Americans in a recent Morning Consult poll said they personally knew someone who died from COVID-19. Almost 20% of black Americans in the survey said someone in their household had lost their job amid the crisis, Business Insider's Eliza Relman reported. 

While Dimon did not mention any one particular issue or call for any specific change, he did say that the period during which the economy reopens is a time for big conversations on a variety of topics. 

"From the re-opening of small businesses to the rehiring of workers, let's leverage this moment to think creatively about how we can mobilize to address so many issues that inhibit the creation of an inclusive economy and fray our social fabric," he wrote. 

Bridgewater Associates founder and billionaire Ray Dalio says the American dream "does not exist" right now.

Dalio, the billionaire founder of the hedge fund Bridgewater Associates, recently said in a virtual interview that America's jarring inequality is a "national emergency" that is threatening capitalism. 

He specifically called out income inequality in the US, as well as the disparity in education between the rich and poor. 

"If you don't have a situation where people have opportunity, you're not only failing to tap all the potential that exists, which is uneconomic, you're threatening the existence of the system, and I think that's coming to home very clearly with the downturn in the economy with this virus," he told the founder of Khan Academy, an education nonprofit that offers free courses on a variety of topics.

Dallas Mavericks owner and investor Mark Cuban is urging leaders to tackle income inequality.

Cuban recently urged action around income inequality on Twitter. 

"Whenever we get through this, we will look back and wonder why we didn't use this as an opportunity to attack income inequality. Let's not make that mistake. This is our chance to do the right thing and reward EVERYONE who contributes to the turnaround in the economy," he wrote. 

Many workers on the front lines, such as grocery-store workers, food-delivery workers, and factory workers make less than people who are receiving unemployment benefits from the US government. 

For example, according to self-reported salary data from the careers website Glassdoor, a cashier at Walmart may make $10 per hour, which translates to a salary of about $20,800 per year. This does not include the company's onetime hazard payment of $300 for full-time hourly associates and $150 for part-time hourly associates.

Facebook Chief Operating Officer and billionaire Sheryl Sandberg says the coronavirus pandemic underscores the need for paid sick leave and paid bereavement leave.

Sandberg recently told Business Insider that the pandemic underscored the need for paid sick leave and bereavement leave. 

"This is a full-on economic crisis. So we need full and effective support for families. And this is showing us that in America, we don't have the support we need in the first place," she said. 

There is no federal regulation mandating paid sick leave for workers. The majority of corporations, 54%, provide between five and nine days paid sick leave per year, with 27% providing less than 5 days, according to the US Bureau of Labor Statistics. During the coronavirus pandemic, people who have been diagnosed with the coronavirus are told to self-isolate for 14 days.

Workers need paid sick leave to adequately recover from the coronavirus, the exec said. They need time to tend to sick loved ones. And as the country grapples with a rising death toll, which now tops 90,000, workers who've lost a loved one need time off to grieve.

The US does not guarantee paid time off for any of these reasons. When it comes to bereavement leave, the national average most companies provide is three days for the death of an immediate family member, with many companies providing just one day, according to multiple human-resources experts. 

Billionaire philanthropist Melinda Gates says the pandemic shows the need for a new childcare system in the US.

Gates is calling on leaders to address childcare in the US, which disproportionately falls on the backs of women. Research has shown that mothers perform about 60% of childcare: 7.2 hours per week for fathers versus 13.7 hours for mothers.

A recent Business Insider report said the pandemic was set to close 30% of US childcare centers for good, as many depend on daily enrollment fees that are no longer coming in. Economists said these potential closures could prove catastrophic for the careers of American women, who may drop out of the workforce to care for their children.

"I would say to business leaders, think about what you can do,"Gates told Politico. She suggested they have more flexible work hours and consider on-site childcare.

"You can make this happen," she said. 

• Hedge fund manager Ray Dalio who runs Bridgewater Associates is one of the world's wealthiest hedge fund managers. 
• Dalio recently said the American dream "does not exist" and capitalism may collapse if leaders don't act now. 
• Read more to discover more about his insights into investing and his life principles.
• Visit Business Insider's homepage for more stories.

Legendary hedge fund investor Ray Dalio is renowned figure in the world of finance, but is equally famous for his views on life, investing, and much more.

The founder of Bridgewater Associates made a whopping $2 billion last year, the Institutional Investor's annual Rich List, shows. 

Dalio recently said the American dream "does not exist" right now and that if leaders don't act the whole economic system of capitalism could collapse during the coronavirus-induced recession

Dalio said policymakers needed to take steps to make education available to all and boost incomes for low-income Americans, who have been disproportionately affected by the coronavirus pandemic.

Dalio loves a soundbite, so Markets Insider decided to round up some of his most insightful and interesting quotes. Check them out below:

On philanthropy: "I pay about a third in taxes, I give away about a third, and I follow the law."

Source: New York Times

On over-reliance on predictions: "He who lives by the crystal ball will eat shattered glass."

Source: CNBC 

On trusting your gut: "Do the opposite of what your instincts are."

Source: The Motley Fool 

On meditating: "Meditation more than anything in my life was the biggest ingredient of whatever success I've had."

Source: Medium

On spending: "Pull in your belt, spend less, and reduce debt"

Source: Barron's

On progress: "Pain + Reflection = Progress"

Source: Business Insider

On debt: "Printing money is the most expedient, least well-understood, and most common big way of restructuring debts. It's like playing Monopoly in a way where the banker can make more money and redistribute it to everyone when too many of the players are going broke and getting angry.

Source: Bloomberg 

On economic opportunity: "If you don't have a situation where people have opportunity, you're not only failing to tap all the potential that exists, which is uneconomic, you're threatening the existence of the system, and I think that's coming to home very clearly with the downturn in the economy with this virus."

Source: Business Insider

On the value of money: "Remember that the only purpose of money is to get you what you want, so think hard about what you value and put it above money. How much would you sell a good relationship for? There's not enough money in the world to get you to part with a valued relationship."

Source: His Facebook page

On jobs: "Don't just pay attention to your job; pay attention to how your job will be done if you are no longer around."

Source: Ray Dalio Principles

On the 2020 economic crisis: "This is not a recession; this is a breakdown. You're seeing the same thing that happened in the 1930s."

Source: Forbes 

On playing the long-game: "I don't get caught up in the moment."

Source: CNBC

• Hedge fund manager Ray Dalio who runs Bridgewater Associates is one of the world's wealthiest hedge fund managers. 
• Dalio recently said the American dream "does not exist" and capitalism may collapse if leaders don't act now. 
• Read more to discover more about his insights into investing and his life principles.
• Visit Business Insider's homepage for more stories.

Legendary hedge fund investor Ray Dalio is renowned figure in the world of finance, but is equally famous for his views on life, investing, and much more.

The founder of Bridgewater Associates made a whopping $2 billion last year, the Institutional Investor's annual Rich List, shows. 

Dalio recently said the American dream "does not exist" right now and that if leaders don't act the whole economic system of capitalism could collapse during the coronavirus-induced recession

Dalio said policymakers needed to take steps to make education available to all and boost incomes for low-income Americans, who have been disproportionately affected by the coronavirus pandemic.

Dalio loves a soundbite, so Markets Insider decided to round up some of his most insightful and interesting quotes. Check them out below:

Read more:Billionaire investor Mario Gabelli's flagship fund has delivered a 3,082% return since its inception. He told us his 13 favorite stocks right now — and the trends he's betting on for a post-coronavirus world.

On philanthropy: "I pay about a third in taxes, I give away about a third, and I follow the law."

Source: New York Times

On over-reliance on predictions: "He who lives by the crystal ball will eat shattered glass."

Source: CNBC

Read more:Bank of America says a new bubble may be forming in the stock market — and shares a cheap strategy for protection that is 'significantly' more profitable than during the past 10 years

On trusting your gut: "Do the opposite of what your instincts are."

Source: The Motley Fool 

On meditating: "Meditation more than anything in my life was the biggest ingredient of whatever success I've had."

Source: Medium

Read more:David Herro was the world's best international stock-picker for a decade straight. He breaks down 8 stocks he bet on after the coronavirus decimated markets — and 3 he sold.

On spending: "Pull in your belt, spend less, and reduce debt"

Source: Barron's

On progress: "Pain + Reflection = Progress"

Source: Business Insider

Read more:A part-time real-estate investor quit his traditional job 5 years after snagging his first deal. He shares his no-hassle strategy that's allowed him to travel the world with his 6 kids.

On debt: "Printing money is the most expedient, least well-understood, and most common big way of restructuring debts. It's like playing Monopoly in a way where the banker can make more money and redistribute it to everyone when too many of the players are going broke and getting angry.

Source: Bloomberg 

On economic opportunity: "If you don't have a situation where people have opportunity, you're not only failing to tap all the potential that exists, which is uneconomic, you're threatening the existence of the system, and I think that's coming to home very clearly with the downturn in the economy with this virus."

Source: Business Insider

Read more:GOLDMAN SACHS: Buy these 25 stocks that are wildly popular with hedge funds — and have crushed the market this year

On the value of money: "Remember that the only purpose of money is to get you what you want, so think hard about what you value and put it above money. How much would you sell a good relationship for? There's not enough money in the world to get you to part with a valued relationship."

Source: His Facebook page

On jobs: "Don't just pay attention to your job; pay attention to how your job will be done if you are no longer around."

Source: Ray Dalio Principles

On the 2020 economic crisis: "This is not a recession; this is a breakdown. You're seeing the same thing that happened in the 1930s."

Source: Forbes 

On playing the long-game: "I don't get caught up in the moment."

Source: CNBC

• No crisis is the same, and there are significant differences between the recession in 2008 and the coronavirus pandemic of 2020 —  but for many hedge funds, this is the first sustained economic disturbance in their existence. 
• Business Insider rounded past comments from some of the biggest names in hedge funds, including legends like George Soros, Seth Klarman, Paul Tudor Jones, and several more.
• For some, the 2008 recession was a chance to reevaluate their businesses and decide the best path forward in a new world; for others, it was a realization about the market forces at play and how governments will respond to crises like this in the future.
• Visit Business Insider's homepage for more stories.

Ken Griffin changed his business. Steve Cohen got back to basics. Jamie Dinan and David Tepper reexamined old investing maxims in a new light.

The financial recession of 2008 led to more than a decade of low-interest rates, uneven recovery, and re-energized populist movements across the world. It was also the last time there was sustained economic disruption at the scale that is currently being experienced thanks to the coronavirus pandemic. 

For many hedge funds, this is the first time they've had to invest in this type of environment — hundreds have been launched since 2008, and industry stalwarts have closed down as well. 

Business Insider pulled together what some of the industry's loudest voices took away from 2008, whether it was a realization about their business, investing as a whole, or even human nature.

All crises are different, and this is no exception. Katy Kaminski, chief research strategist at Natixis' AlphaSimplex, told Business Insider that the coronavirus pandemic was felt quicker and deeper than past crashes. 

"What was unique about the recent event was the depth was spectacular," she said. 

Read more: Tens of billions in redemptions, hundreds of billions in losses: Here's a look at the worst month for hedge funds since the financial crisis

The economic recovery from the pandemic has been even quicker. Already, equity markets have mostly bounced back, despite major cities still mostly working from home and an unemployment rate that is still higher than any time during the Great Recession.

The tide may be turning for the virus as well — Wednesday was the first day in months New York, which has been the epicenter of the outbreak in the US, did not have a death related to COVID-19.

But there are parallels, especially in the money management space, where money has poured into credit strategies, with the hopes that managers can repeat some of the bargain hunting that was done in 2008. 

Below is a list of 12 billionaire hedge-fund founders as well as the chief investment officer for the largest publicly traded hedge fund in the world.

SEE ALSO: The world's biggest hedge funds like Bridgewater are blending quantitative and fundamental trading. Here's why it's gaining hype on Wall Street.

SEE ALSO: Investors' usual way of valuing companies is under scrutiny— and it could mean the end of the unprofitable unicorns that dominated in the last decade

Steve Cohen: 'Shoemakers make shoes'

In a 2011 Vanity Fair article, one of the few times Point72 founder Steve Cohen has done an interview, the billionaire said 2008 could have hit harder if they didn't reduce exposure as soon as they did.

Still, "we got stuck in some positions that we couldn't get rid of. Argentine bonds, stuff like that. But we were lucky. We got out of that stuff at the right time. Otherwise we could've been crushed," he said. His old fund, SAC Capital, lost nearly a fifth of its assets in 2008 still, and Cohen refocused on what his firm did best: pick stocks.

"My dad had a saying, 'Shoemakers make shoes,'" he said. 

SAC eventually closed due to an insider trading investigation, and Cohen was personally barred from trading outside capital for a stretch of time. His current fund, Point72, primarily focuses on equities, but has stretched beyond human stock-pickers, with quant arm Cubist. The firm's private investing arm, Point72 Ventures, is also a departure from the tried-and-true strategy of stock-picking Cohen originally made his fortune in. 

Read more: Stock-picking hedge funds are suddenly back in vogue— a welcome shift for an industry that's hemorrhaged billions

Ken Griffin: Changing from a balance-sheet business to a skill-based business

Ken Griffin's Citadel was hit hard in 2008, and he owned up to it in a recent talk with Goldman Sachs president John Waldron. 

Speaking at an Economic Club of New York lunch shortly before the coronavirus shut down the US economy, Griffin said it was "the 16 worst weeks of my life, of my professional life."

"We lost half of our investors' capital in 16 weeks. We'd never had a double-digit drawdown in roughly – at that point – 20 years and lost half of our capital in 16 weeks," he said.

The firm survived, of course, but Griffin made changes. "We simplified our business," he said.

Citadel stopped being what he called a "storage business" where they would buy "if we thought an asset was cheap and it'd create value to us over time, we'd buy it, we'd fund it."

Now, "we're in the moving business. So unless we think there's a very clear reason as to why an asset we own is going to appreciate soon, that's just not where we're going to be. And we drove our business away from balance-sheet intensive businesses to – in a sense – all skill-based businesses."

"So will Netflix beat on subscriptions this quarter? And is Amazon going to beat in AWS Cloud revenues? Everything today is a skill-based, fundamental-based investment decision for all intents and purposes across Citadel. It's a different business than the balance sheet-intensive business that we had pre-08."

David Tepper: Don't fight the Fed

David Tepper was able to make 100% returns in 2009 because he followed a simple investing maxim: Don't fight the Fed.

With stimulus desperately needed after the economy cratered in 2008, Tepper said in a CNBC interview in 2010 that in times like this either the economy would improve — and stocks would go up — or the Fed would pump money into the markets, which also often causes stocks to go up.

"What, I'm going to say, 'No Fed, I disagree with you, I don't want to be long equities?'" said Tepper, the founder of Appaloosa Management, which he has partially closed to outside investors to focus on his NFL team, the Carolina Panthers.

Ray Dalio: Understand what happened a long time ago in 'faraway' places

Bridgewater was hit hard when the coronavirus sell-off initially happened in March, but billionaire founder Ray Dalio reminded investors in a note that the firm was down 20% in September of 2008 before making money for the year. 

Dalio laid out why he felt so many investors were caught flat-footed that year.

"2008 was a year in which those who built their strategies on the basis of what happened in their recent lifetimes did not understand what happened in 2008 and did so badly, and those who had a perspective of what happened in long ago times in faraway places did well," he wrote.

"Since I believe that a big common mistake that caused many investors problems in 2008 was not having a broad enough perspective, I believe that one of the most important lessons for those who did badly in 2008 is to have a 'timeless and universal investment' perspective, which means to broaden your perspective to understand what happened in long ago times (e.g., in the 1930s) and faraway places (like Japan and Latin America)"

Paul Tudor Jones: Human nature means there will always be bubbles

In a 2009 foreword written for an updated version of legendary investing book "Reminiscences of a Stock Market Operator", billionaire Paul Tudor Jones advises investors to always expect bubbles to come about in the markets "I would be reluctant to think that men will ever be smart and farsighted enough to avoid the next bubble."

"We know wars are not good, but they seem to be a permanent staple of humanity. Why not bubbles? It seems pretty clear that excess leverage ultimately leads to a very painful unwind. But is this new news?" he wrote.

Jones, the founder of Tudor Investment Corporation, said it's human nature to believe that "it will be different this time."

"It will take a fundamental change in human nature to ever truly control this."

Read more: Coatue's $350 million quant hedge fund pulled money out of the market in a move that exposes the dangers of data-driven trades

Cliff Asness: Luck is a part of this

Cliff Asness has been fighting against Black Swan evangelist Nassim Taleb for a decade now, with a recent battle lighting up Twitter for several days. 

In 2011, with quants gaining power but still somewhat unknown to many in the industry, the question was how would these computer-run strategies handle economic catastrophes that can't be predicted, also known as Black Swans. 

Asness, the founder of AQR, sees the logic in that argument, and even believes more of these events are happening now, according to a 2011 profile of the feisty billionaire in The Atlantic. 

"I do have a recurring nightmare about being hacked to death by a pack of rabid black swans," he said.

"What do you think that means? Seriously, anyone, quant or not, with a shred of intellectual honesty recognizes that there is some chance their historical success is just luck."

The reason quants and others are able to start their strategies everyday is because they believe in the copious evidence pointing away from a Black Swan event.

"We had to first convince ourselves we were right," he said.

Seth Klarman: Government bailouts for bad companies were a 'moral hazard'

Baupost founder Seth Klarman, whose long annual letters become the talk of the investing world every year, told his investors in early 2011 that many did not learn their lesson from 2008.

"Most of us learned about the Great Depression from our parents or grandparents who developed a 'Depression-mentality,' by which for decades people shunned leverage, embraced thrift, and thought twice before quitting their secure jobs to join risky ventures," he wrote.

"By bailing out the economy rather than allowing the pain of the economic and market collapses to be felt, the government has endowed our generation with a 'really-bad-couple-of-weeks-mentality:' no lasting lessons are learned; the government endlessly intervenes in the economy, and, ironically, the first thing to strongly rebound from the 2008 collapse isn't jobs or economic activity but speculation."

Klarman rolled out a Warren Buffett phrase to describe "people who are in over their heads: patsy."

"If you buy debt based on credit ratings from the established agencies, if you trade based on a computer program that sometimes causes you to sell stocks of perfectly solvent companies at a penny a share, or if you think that past correlations are a precise guide to the future, then you are a patsy," he wrote.

"The great financial disasters of our era all involved patsy-like behavior by one or more major institutions," he noted, naming AIG in particular. The issue was the government didn't let the patsies "out of the game."

"For no apparent reason other than indirectly rescuing AIG's creditors, the government bailed out the parent company's debt-holders, thus elevating moral hazard to new heights."

Paul Singer: Little confidence in policymakers and central bankers

Billionaire Paul Singer, the doomsday investor who founded Elliott Management decades ago, is worried about many things. In a recent note to investors, he talked about the possibilities of solar flares shutting down the electrical grid and hackers attacking our systems.

One of the biggest issues for Singer is that, if a worst-case scenario were to hit the global economy, he no longer believes those in charge can handle it. In a 2017 interview with Carlyle founder David Rubenstein, Singer said "I don't think the fixes that have been put in place have created a sound financial system."

He blamed policymakers and central bankers for creating an uneven recovery to the financial crisis of 2008, which has spurred populist movements around the world.

"I don't think confidence is justified in policymakers and central bankers," he said. 

Read more: 2 portfolio managers featured in 'The Big Short' are set to join the new hedge fund being set up by Steve Cohen's former right-hand man

George Soros: Markets left alone will produce bubbles

Billionaire George Soros hasn't managed outside capital in some time, but continues to write on his views of the markets and geopolitical realities.

In a 2012 collection of essays titled "Financial Turmoil in Europe and the United States", Soros argues against the infallibility of a free market, saying "the basic tenet of market fundamentalism is plain wrong: financial markets, left to their own devices, do not necessarily tend toward equilibrium — they are just as prone to produce bubbles."

Still, he cautions against too much government intervention — or government aid that comes too late. He faults former Treasury Secretary Hank Paulson for saying that taxpayer money wouldn't be used to bail out Lehman Brothers.

"When Lehman Brothers failed the entire system broke down," he said. 

A word of warning though for governments that are currently pumping money into economies all across the world — Soros believes the state, especially in Europe, replaced leveraged corporate credit with their own sovereign debt. 

"Just as when a car is skidding the driver first has to turn the wheel into the direction of the skid to prevent it from rolling over — and only when he has regained control can he correct the car's direction," he wrote. 

Izzy Englander: There was 'a mistrust of wealth management' after the crisis

In a 2010 presentation to elite investor group Tiger 21, Millennium founder Izzy Englander said the top four questions he most frequently is asked since the collapse of Lehman Brothers are all the same: "How do I get out of a fund?"

Millennium weathered 2008 reasonably well, dropping 3% for the year overall. Englander predicted the trust issues would linger on, even if losses were made back.

"The mistrust that now permeates the wealth management business will take a few years to subside." 

Millennium became more transparent with investors after 2008, giving his investors  semi-annual copies of Millennium's audited financial statements and monthly reports detailing the fund's trading exposures.

"Hedge funds will have to get used to more rigorous scrutiny from regulators as well as investors," Englander predicted a decade ago. 

Funds seemed to have learned this lesson from the 2008 crisis — managers were far more communicative with investors during the coronavirus sell-off than they were during the housing crisis. 

Stanley Druckenmiller: Debt accumulating at low interest rates is dangerous

Billionaire Stanley Druckenmiller has been sounding the alarm about the unsustainable reality of low rates for years since the financial crisis.

In a 2015 talk to the Lone Tree Club in Florida, Druckenmiller said "if you think we can have zero interest rates forever, maybe it won't matter, but in my view one of two things is going to happen with all that debt."

The first thing is "if interest rates go up, they're screwed," he said about companies who borrowed on low rates.

The second is "if the economy is as bad as all the bears say it is, which I don't believe, some industries will get into trouble where they can't even cover the debt at this level."

Already, debt-laden companies like JC Penney's, Hertz, Neiman Marcus, and several others have filed for bankruptcy since the pandemic started. 

Read more: POWER PLAYERS: Meet the bankers, traders, investors, and lawyers seeing huge opportunities in a wave of corporate distress and bankruptcies

Jamie Dinan: Best time to buy is when blood is in the street — unless it's your blood

The best time to buy is when others are feeling pain. 

It is easier said than done, of course, but value investors and others are often opportunistic when a large market correction happens.

Jamie Dinan, the billionaire founder of York Capital, had a small addition to that advice during a 2018 panel on the financial crisis.

"The best time to buy is when there's blood on the streets, but not if it's your blood," he said.

He also told the audience that "when the dead start walking, that's when you start paying attention"— and start buying. His firm made money, and recouped its slight losses from the previous years in 2008, he said.

Sandy Rattray: The dangers of overleveraging and crowding came to fruition

As the chief investment officer for the largest publicly traded hedge-fund manager, Man Group, Sandy Rattray had a privileged vantage point into the causes of the crisis.

In a 2017 Financial Times article, Rattray said there were three lessons he took away from the crisis: liquidity risks are more complicated than they appear; crowded strategies should always worry investors; and leverage needs to be kept under control.

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• The world's biggest hedge funds like Bridgewater are blending quantitative and fundamental trading. Here's why it's gaining hype on Wall Street.
• Macro managers have been the stars of the pandemic-stricken markets. Here's a breakdown of how big names like Alan Howard, Paul Tudor Jones, and Greg Coffey are performing.
• Citadel just poached Two Sigma's data chief for its tech team — and it's the latest sign of how aggressively the $30 billion firm is pursuing top talent from Wall Street and Silicon Valley
• For more stories like this, sign up here for our Wall Street Insider newsletter 

• Ray Dalio's Bridgewater Associates, the largest hedge fund in the world as measured by assets under management, has shrunk 15% amid the coronavirus market sell-off in March and April, Bloomberg first reported.
• Assets at the firm fell to $138 billion at the end of April from $163 billion at the end of February, according to Bridgewater's most recent ADV filing.
• According to a Bloomberg source, almost all of the decline was due to performance-related losses rather than clients pulling their money from the fund.
• Visit Business Insider's homepage for more stories.

Even the world's largest hedge fund couldn't avoid the swift and steep decline in the stock market amid the coronavirus pandemic in March and April.

Bridgewater Associates, founded by Ray Dalio, saw its assets decline by 15% during the market sell-off, according to a filing made by the company and first reported by Bloomberg.

Assets at the firm fell to $138 billion at the end of April from $163 billion at the end of February, but according to a Bloomberg source, that drop was primarily driven by a decline in its funds rather than clients pulling money out of the firm's hedge fund strategies.

In mid-March, Dalio explained in a LinkedIn post that his firm had been positioned to profit from rising markets.

"The novel coronavirus is a pandemic that came and hit us at the worst possible moment because we had a long tilt in our positions," Dalio said. 

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While Bloomberg's source said redemptions at the hedge fund have been "modest and consistent with levels from previous periods," one client that did decide to pull funds from the hedge fund was the Virginia Retirement System.

According to a notice, the VRS Investment Department decided to withdraw $178 million from the Bridgewater Pure Alpha II fund at the end of April. 

The decline in assets has led Bridgewater to reopen its Pure Alpha Strategy fund to new investors who have been on a waiting list and existing clients who want to add more money to the strategy. One new investor who is allocating funds to Bridgewater is Anthony Scaramucci's SkyBridge Capital, which told investors that it would allocate $100 million to the hedge fund in May.

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• Ray Dalio's Bridgewater Associates said in a note on Tuesday that the stock market could be on the verge of a "lost decade" for investors, Bloomberg reported on Thursday.
• A "lost decade" for stocks would reverse a years-long trend of strong growth for corporate earnings as globalization has already peaked, Bridgewater said.
• The firm said the COVID-19 pandemic would harm companies. "Left with lower levels of profits and cash shortfalls, companies are likely to come out on the other side of the coronavirus more indebted," the note said, according to Bloomberg.
• Bridgewater, the largest hedge fund in the world, recently suffered a 15% slump in assets amid the COVID-19-induced market sell-off.
• Visit Business Insider's homepage for more stories.

The stock market could be on the verge of a "lost decade" for investors, as globalization "has already peaked," Ray Dalio's Bridgewater Associates said in a note on Tuesday, Bloomberg reported on Thursday.

Bridgewater, the largest hedge fund in the world, said it thought the years-long trend of strong corporate earnings could see a multiyear reversal exacerbated by the COVID-19 pandemic.

"Globalization, perhaps the largest driver of developed world profitability over the past few decades, has already peaked," the firm said, according to Bloomberg. "Now the U.S.-China conflict and global pandemic are further accelerating moves by multinationals to reshore and duplicate supply chains, with a focus on reliability as opposed to just cost optimization."

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The note pointed to developments from two companies, Intel and Taiwan Semiconductor, to back up Bridgewater's thinking on globalization, Bloomberg said. Both firms have recently said they intend to build their next production facilities in the US despite the higher costs.

"Even if overall profits recover, some companies will die or their shares will devalue along the way," the analysts said, according to Bloomberg. "Left with lower levels of profits and cash shortfalls, companies are likely to come out on the other side of the coronavirus more indebted."

Bridgewater recently suffered a 15% slump in assets amid the COVID-19-induced market sell-off.

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• Billionaire hedge-fund manager Ray Dalio said the Federal Reserve is boosting markets, conventional valuation metrics don't apply anymore, and the US dollar could lose its appeal in a Bloomberg interview on Thursday.
• "The capital markets are not free markets allocating resources in the traditional ways," the Bridgewater Associates co-chief said.
• Dalio also predicted that central banks' balance sheets will "explode," but argued the Fed needed to take sweeping measures because "the whole economy is systemically important."
• Visit Business Insider's homepage for more stories.

Billionaire investor Ray Dalio warned that the Federal Reserve is artificially inflating markets, normal valuation metrics no longer apply, and the US dollar risks being displaced as the world's reserve currency in a Bloomberg interview on Thursday.

"The capital markets are not free markets allocating resources in the traditional ways," said the co-chief of Bridgewater Associates, the world's largest hedge fund with $138 billion in assets at last count.

"The economy and the markets are driven by the central banks in coordination with the central government," Dalio continued.

The Fed has spent trillions of dollars on bonds and other assets to boost liquidity in financial markets and prevent companies from collapsing during the coronavirus pandemic.

Dalio defended the central bank's unprecedented actions. He argued more sweeping measures were justified compared to the 2008 financial crisis, when it focused on shoring up the financial sector.

"The whole economy is systemically important," he said. "If they didn't go out and lend to companies ... we would lose large parts of our economy."

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However, Dalio cautioned that actions on that scale have consequences.

"You are going to see central banks' balance sheets explode," he said.

Moreover, the flood of cash into markets has detached them from the real economy, meaning valuations no longer reflect fundamentals, Dalio said.

Investors might feel "sticker shock" when they see price-to-earnings ratios north of 40, but those are "no less implausible than zero interest rates," he continued.

"Multiples shouldn't be used in the traditional way of a frame of reference," he added.

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Dollars could lose their appeal

Dalio, who famously said "cash is trash" in January, doubled down on that stance during the Bloomberg interview.

He argued that investors should avoid cash and bonds because rock-bottom interest rates mean they offer no returns, or even negative real returns after taxes are paid. There's been a shift towards "storeholds of wealth" such as gold and equities as a result, he said.

The Bridgewater boss also described the limits to the Fed's current interventions. If a compelling alternative to the dollar emerges, investors will pile into it and dump bonds offering no return, he said.

"That would be terrible for the United States," Dalio continued. "It would be probably the biggest disruptor not only to the markets but to the whole world geopolitical system."

The outflow of money would force the central bank to buy even more bonds or raise interest rates, he continued.

Hiking rates might not be possible as it would push down asset prices, he added, and potentially spark a wave of defaults due to the high levels of debt in the economy.

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• Since the coronavirus outbreak hit New York City full force in March, thousands of affluent New Yorkers have fled the city.
• More than 1,300 of them have decamped to Greenwich, a town on Connecticut's coast that's about an hour outside of the city.
• Greenwich has been consistently ranked one of the wealthiest towns in the US.
• The town is home to several hedge funds and is known for drawing wealthy Wall Street buyers who snap up summer homes or permanent residences.
• Last year, I spent a day in Greenwich to explore the posh community and take a look at some of its famous mansions.
• Visit Business Insider's homepage for more stories.

Since the coronavirus outbreak hit New York City in March, the city has seen an exodus of wealthy residents.At least 420,000 people left the city for places like upstate New York, the Hamptons, and Connecticut, according to mail forwarding data.

Many of those New Yorkers headed to Greenwich, an affluent town on Connecticut's coast about an hour from the city. In fact, about 1,319 New Yorkers moved to Greenwich in the past four months, per the Hartford Courant.

One moving company told The New York Post last month that it had seen a 75% surge in relocations from NYC to Connecticut between March 15 and April 28. Connecticut's governor said in May that "phones are ringing off the hook at real-estate agent offices."

A wealthy enclave on Connecticut's Gold Coast, Greenwich is consistently ranked as one of the richest cities in America. In 2018, the average household income in its Old Greenwich neighborhood was $336,692, the 12th-highest in the nation, according to Bloomberg. The year before, two Greenwich ZIP codes— 06878 in Riverside and 06831 in Greenwich — ranked among the wealthiest in the US.

Greenwich's "hedge fund capital" nickname is well-earned: The city is also to several hedge funds that include AQR Capital Management, Viking Global Investors, K7 Investments, and Axiom Investors.

On an unseasonably cold March morning last year, I got on the Metro North from Grand Central Terminal in New York to spend a day in Greenwich and get a feel for the affluent community. Here's what it was like.

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Greenwich, Connecticut, is known as one of the wealthiest cities in America.

In 2018, the average household income in its Old Greenwich neighborhood was $336,692, the 12th-highest in the nation.

"For more than a century, Greenwich, Connecticut, has attracted some of the biggest, newest, shiniest fortunes in America," Nina Munk wrote in Vanity Fair in 2006. "Today that money comes from the trillion-dollar hedge-fund business, which occupies a third of the town's office space, and whose managers are behind a decade of over-the-top real-estate deals, teardowns, and mega-mansions."

During the coronavirus pandemic, thousands of wealthy New Yorkers fled the city, and many of them came to Greenwich. At least 1,319 New Yorkers moved to Greenwich— a small city of about 62,000 people— in the past four months, according to mail forwarding data analyzed by the Hartford Courant.

Last year, I spent a day in Greenwich to see what it's like in the affluent Connecticut town. My journey began at Grand Central Terminal in New York City.

I got on a Metro North train toward Stamford, Connecticut, which would stop in Greenwich in under an hour.

The train was fairly empty, but I imagined the train from Greenwich to New York City at the same time of day would be full of people commuting into the city.

Kencel said she gets about 45% of her sales from Manhattan. Buyers from the city are "always surprised how quick it is to get here," she said.

My peaceful train ride lasted a little less than an hour. I got off the train at the Greenwich station.

One of the first things I saw after getting off the train was the headquarters of AQR Capital Management, a hedge fund that has about $196 billion in assets under management.

Greenwich is home to several hedge funds, earning it the nickname "hedge fund capital."

Robin Kencel, a real-estate broker at Compass in Greenwich, told me last year that about half of her buyers work in finance, and many others are entrepreneurs or work in the entertainment business.

"Finance is still very important to Greenwich, but I think you'll find it's much more diversified in terms of occupations than when people were first coming out in the turn of the century and the trains came out and it was the summer homes for finance folks," Kencel said.

After stepping out of the train station, I soon passed a car dealership selling Rolls-Royces ...

... and a neighboring Lexus dealership.

It seemed that most any car on the street was either a Mercedes, a BMW, an Audi, a Lexus, or a Range Rover.

I started making my way toward Belle Haven, an exclusive gated neighborhood that used to be a resort community for summer vacationers from New York City.

Belle Haven has been home to some prominent people over the years, including the hedge fund mogul Paul Tudor Jones, the singer Diana Ross, and the businessman George Skakel.

The very first house I saw had a sign indicating it was equipped with a home security system.

As I walked through the neighborhood, I saw that was the norm. The streets were quiet and lined with trees.

Some of the homes were on smaller lots ...

... while others sat on large swaths of land.

As of July 2020, the median home price in Greenwich was $2.15 million, according to Zillow.

The houses seemed to get progressively larger the farther I walked into Belle Haven.

Shelly Tretter Lynch, a real-estate broker at Compass in Greenwich, said her average home sales in Greenwich were between $4 million and $10 million.

I was surprised to come across a luxury hotel in the residential neighborhood.

The Homestead Inn has a top-rated restaurant by the chef Thomas Henkelmann.

The hotel's rates range from about $280 to $495 per night, according to its website.

Source: Homestead Inn

As I continued my walk, I noticed that many of the neighborhood's homes were set well back from the road and protected by gates.

Others were hidden from view behind tall hedges.

Many of the homes I saw seemed quite old, but they were very well maintained.

I headed toward Belle Haven Club, the neighborhood's waterfront country club.

But when I made it to the club, I found I couldn't get a clear view through the hedges and fences.

The members-only club is apparently not quite as exclusive as it used to be.

"As long as you're a citizen in good standing and you have friends in the area, it doesn't seem to be an issue getting into the club," Debbi-Lyn Trager, a local real-estate agent, told Greenwich Time in 2015.

With my attempt to get a peek at the country club thwarted, I took an Uber back to Greenwich's downtown area, with a plan to walk up Greenwich Avenue, the town's commercial center.

The street had a charming and historic small-town feel.

But the shopping options were anything but quaint.

One of the first stores I spotted was Theory, which sells $600 blazers, $285 pants, and leather jackets for upwards of $1,000.

As I strolled up the street, I spotted someone wearing the Orolay coat from Amazon, the parka that's said to have originated with Upper East Side moms and went on to take over New York City.

I'd go on to see three or four more people wearing it in Greenwich.

Source: Business Insider

Greenwich has its own Apple Store, right next to the upscale menswear retailer Rodd & Gunn.

All the shops on the avenue, from Athleta to Warby Parker, looked almost brand-new.

I passed by darkened windows of a former Tesla dealership, with a sign in the window saying all sales are now online.

Many of the cars parked on Greenwich Avenue had license plates from New York and New Jersey.

I couldn't help but notice how clean the sidewalks and streets were — usually a mark of an affluent community, I've found.

The luxury French retailer Hermès has a spot on Greenwich Ave.

There's also an impressive-looking Tiffany & Co. ...

... and a Saks Fifth Avenue, the luxury department store whose flagship is in New York City.

Source: Saks Fifth Avenue

I stopped at the local Starbucks for coffee.

It seemed to be a go-to spot for informal business meetings.

It was there that I spotted the first person wearing a Canada Goose parka — which can cost up to $1,600 — though I'd go on to see several more throughout the day.

Source: Canada Goose

Just a block or so from Greenwich Avenue are some hedge fund headquarters, including that of K7 Investments ...

... and Axiom Investors. Robin Kencel, a real-estate broker at Compass in Greenwich, said that about 50% of her homebuyers work in finance.

Ray Dalio, the founder of Bridgewater Associates, is reportedly one of the town's most prominent residents.

After my tour of Greenwich's compact shopping center, I started walking up West Putnam Avenue.

I passed a Whole Foods Market, which, of course, had several Mercedes cars in the parking lot.

Earlier this year, Greenwich was ranked the safest town in America by the home security company SafeHome.org.

Source: Patch

I started heading away from the town center to another residential area, the Putnam Hill Historic District, which was once the center of Greenwich.

Source: Greenwich History

Like in Belle Haven, the streets were extremely quiet and filled with large, beautiful homes.

It was a weekday afternoon, and I saw very few people walking around, apart from one older couple with a dog.

My next stop was Round Hill, an area north of town where you can apparently find sprawling countryside mansions. Out here, the homes were indeed noticeably huge and set on large pieces of land.

Source: Stanton House Inn

Some were set back at the end of long driveways marked by ornate gates. A few had intercom systems right outside.

Peeking through one gate, I got a glimpse of Round Hill Manor, one of Greenwich's great estates, according to Sotheby's International Realty.

Last year, it was on the market for $22.5 million, and the price has since been lowered to $16.5 million.

Kencel told me that more and more wealthy city dwellers are choosing Greenwich for a vacation home.

"People who might be looking in the Hamptons for summer residences are now realizing Greenwich is just 45 minutes from the city," she said, adding that Greenwich has four beaches.

As I headed back to Greenwich's train station for the journey back to New York City, I definitely understood why wealthy Wall Street types and so many others are drawn to the town.

After all, it's a quiet, clean, and safe place to live — if you can afford the price tag.

• The legendary hedge fund manager Ray Dalio said he thinks economic tensions between the US and China could conceivably escalate into a "shooting war."
• In a LinkedIn post on Thursday — part of a series on the changing world — he wrote that an economic war is usually a precursor of a military conflict.
• Dalio said he reviewed events in the 1930s and leading up to World War II to help explain the dominance of world powers now.
• "The United States and China are now in an economic war that could conceivably evolve into a shooting war," he wrote in a long post.
• Visit Business Insider's homepage for more stories.

Ray Dalio said economic tensions between the US and China could escalate into armed conflict, drawing parallels between today and the years before World War I and World War II.

While calling himself "no great historian," Dalio attempted to explain in a LinkedIn post on Thursday (part of a series on the changing world) how the world got to where it is now and how to deal with it.

In the 8,000-word post, Dalio, the billionaire founder of the investment management firm Bridgewater Associates, said that understanding the volatility in the 1930s and in the years leading up to World War II would help clarify today's world powers.

"Because the United States and China are now in an economic war that could conceivably evolve into a shooting war, and I've never experienced an economic war, I studied a number of past ones to learn what they are like," he wrote.

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"Comparisons between the 1930s leading to World War II and today, especially with regard to economic sanctions, are especially interesting and helpful in considering what might be ahead," he added.

In evaluating the US's previous debt problems, Dalio said the trend was to implement protectionist policies and increase tariffs to protect employment and domestic businesses.

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He said that while tariffs do contribute to greater economic weakness, they "benefit those entities protected by the tariffs and can create political support for the leader who is imposing" them.

"Severe economic downturns with large wealth gaps, large debts, and ineffective monetary policies make a combustible combination that typically leads to significant conflicts and revolutionary changes within countries," he wrote.

He added that "during periods of great conflict there is a strong tendency to move to more autocratic leadership to bring order to the chaos."

Dalio said rival powers enter into wars "only when their powers are roughly comparable."

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"Smart leaders typically only go into hot wars if there is no choice because the other side pushes them into the position of either fighting or losing by backing down," he wrote. "That is how World War II began."

This week, China imposed sanctions on US politicians including Sens. Ted Cruz and Marco Rubio for condemning Beijing's treatment of Uighur Muslims and other minorities.

Tensions between the two nations have ramped up in recent weeks since China imposed a new security law on the semiautonomous region of Hong Kong. The US hit back at Beijing by suspending its special trade measures with Hong Kong.

Read Dalio's full 8,000-word piece here »

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• Bridgewater's legal battle with the small systematic-macro shop Tekmerion Capital spilled out into the public eye recently because Tekmerion's lawyer is suing Bridgewater for attorney's fees.
• The unsealed filings show how Bridgewater tried to stop Tekmerion, founded in 2017 by Bridgewater alumni Lawrence Minicone and Zach Squire, with allegations of intellectual-property theft and broken confidentiality contracts.
• One of the biggest focuses for Bridgewater in a 2017 arbitration filing was that Tekmerion's 53-page pitch deck for prospective investors "closely resembled" Bridgewater's.
• Business Insider pulled out the five slides from the pitch deck Bridgewater highlighted in the 2017 filing.
• Bridgewater has since been found by an arbitration court to have "manufactured false evidence" in its pursuit against the small fund and is appealing an order for the firm to pay Minicone and Squire's legal fees.
• Visit Business Insider's homepage for more stories.

Bridgewater's inner workings are an object of fascination within the finance industry and other fields, thanks to billionaire founder Ray Dalio's "radical transparency" concepts of being directly honest in the workplace and with coworkers. 

But the world's biggest hedge fund is also known for strict confidentiality contracts with former employees, and recently unsealed documents from a yearslong legal battle with the small macro fund Tekmerion Capital Management show how aggressive the firm can be.

Tekmerion, founded by Bridgewater alumni Lawrence Minicone and Zach Squire and backed by former Goldman Sachs partner Michael Novogratz, was almost immediately on Bridgewater's legal radar once the fund went live in 2017, according to a recent Institutional Investor story. 

Minicone and Squire were investment analysts at Bridgewater but never ran their own portfolios.

Read more: Outgoing Bridgewater co-CEO Eileen Murray hints at her next moves and explains how she smashed the hedge fund world's glass ceiling

One of the biggest cruxes of Bridgewater's arbitration case against Tekmerion — named for Aristotle's definition of the Greek word from his work "On Rhetoric" as an irrefutable sign or signal — was that the pitch deck the young firm used to market to prospective investors "closely resembled" Bridgewater's, according to the filings. Bridgewater, however, declined to submit its own pitch deck into evidence to compare during the arbitration proceedings, according to a statement from Aaron Zeisler, a lawyer for Minicone and Squire. 

Out of Tekmerion's 53-page pitch deck, five slides were highlighted by Bridgewater's legal team in a November 2017 arbitration filing that was recently made public. Business Insider pulled the five slides below and added Bridgewater's allegations from the filing. The finding from the arbitrators can be found here.

An arbitration court found that Bridgewater "manufactured false evidence" in bringing its claim against the young fund and its cofounders, and awarded legal fees to the two founders of Tekmerion.

Read more: Hedge funds are in uncharted waters right now. Here's how billionaires like Ray Dalio, Steve Cohen, and Seth Klarman rode out 2008.

The hedge fund told Business Insider it was appealing the arbitrators' decision that the fund has to pay for Minicone and Squire's legal fees and pointed to the opinion of the one arbitrator who dissented from the case. That arbitrator said the majority's findings were an "incomplete, inaccurate and one-sided summary of the evidentiary record." 

Zeisler, the lawyer for Minicone and Squire, said in a statement to Business Insider that "the panel of arbitrators found as a matter of fact that 'Bridgewater refused to produce a copy of its marketing materials — its deck — but Jensen testified that TCM's deck was 'generally not the same' as Bridgewater's.' Bridgewater's latest legal filing does not contest any of these factual findings from the panel's final, binding award, which denied all of Bridgewater's claims."

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Slack measure versus output gap

Bridgewater's slack-measure process is how the firm finds the datasets that most often correlate with different signals and market moves, a never-ending equation that requires constant monitoring and tinkering.

A slide from Tekmerion shows their version of that process, which Bridgewater says rips off its process, using the same language, like "estimate diagnostics." The filing said Minicone worked on several research projects at Bridgewater related to the slack-measure process.

The arbitration court found that Bridgewater's internal records showed Minicone was exposed to only 2% of the firm's trade secrets. The experts Bridgewater called in the arbitration also sided with Tekmerion, saying Bridgewater mischaracterized what should be considered trade secrets. 

Similar estimates

Minicone was also involved in Bridgewater's statistics-based growth-estimator tool while at Dalio's firm, the filing claims, and replicated this tool for his new fund.

"Understanding the correct macro drivers for each asset is a starting point, but to beat the market you need to measure those drivers accurately and in real time, before the headline statistics are published," the pitch deck reads.

Of course, every investment firm uses some mix of data and models to try and determine what will happen in the future, but Bridgewater alleged Tekmerion's way of doing so directly copied its own. 

The filing cites "substantial similarities" between estimates Tekmerion's model produced and what Bridgewater's model produced. Minicone, though, was not exposed to a vast majority of what Bridgewater considers its trade secrets, according to the findings of the arbitrators.

Once again, the experts called by Bridgewater in the arbitration proceedings thought Dalio's firm misused the term trade secrets and found no evidence to support the firm's claim. 

How Bridgewater and Tekmerion find investment signals

One of the most important processes for an asset manager is how they find their investments, along with which signals they are monitoring to point them to opportunities. 

Bridgewater alleged that Squire and Minicone, who worked on the tool at Bridgewater that finds and creates investment signals, created a replicate tool for their fund and that the "confidence percentages" shown in the slide were nearly identical to what Bridgewater's tool would create.

The filing said Squire and Minicone had an in-depth look at different inputs for Bridgewater's tool when they were a part of a team that created automated tasks on Microsoft Excel. 

The arbitration filing said Bridgewater pulled back the claim on signals 10 days before the arbitration panel made a decision.

Risk management

Squire was exposed to Bridgewater's risk-management tool, the filing said, and Dalio's firm said he recreated it for Tekmerion.

One example given in the filing is Tekmerion's "Macro Risk Exposure" diagram in the slide. The filing said it was "functionally equivalent" to its "Covar capping" technique. 

The pie charts in the slide, which Bridgewater claims are based on "information and belief," are also nearly identical to how the firm measures risk across different macro signals, the filing said. 

Bridgewater's internal records, according to the arbitration filing, show that Squire had zero exposure to "trade secrets" while at Bridgewater. Further, Bridgewater's experts found that the risk management procedures the firm claimed as trade secrets were actually generally available to the industry and well known. 

Bridgewater's short-rate trading technology

Minicone worked on Bridgewater's short-rate trading technology while at the firm, the filing said. 

Bridgewater claimed the technology, using "proprietary" information, trades on the short-rate market based on investor confidence. 

The slide's chart, which shows investor confidence in blue against different returns in red, is again "substantially similar" to Bridgewater's results, the claim said. Minicone, though, was not exposed to a vast majority of what Bridgewater considers its trade secrets, according to the findings of the arbitrators. 

If you are interested in seeing the full arbitration claim from Bridgewater or the entire pitch deck, click below: