Five years ago, Ray Dalio — founder of the world's largest hedge fund, Bridgewater Associates — declared Transcendental Meditation (TM) to be "the single biggest influence" on his life.

Over the past few years, TM has made its way into the mainstream, with celebrities like Jerry Seinfeld and Arianna Huffington proclaiming its benefits, and doctors around the United States recommending it to patients with anxiety and high blood pressure, given its approval by agencies like the American Heart Association.

The Department of Veterans Affairs also works with the David Lynch Foundation (DLF), one of the premiere TM organizations, to offer free lessons to military veterans undergoing treatment for PTSD.

And, following Dalio's lead, hundreds of investors and bankers on Wall Street are signing up for lessons at the DLF. That's where I headed in late September to learn more about TM. The foundation's executive director Bob Roth and one of its teachers, Mario Orsatti, agreed to teach me the technique and waive the $960 fee, as they had previously done with other journalists, so that I would have more context for my research.

It's important to note that you really can't learn the technique without the guidance of a teacher — sitting still with your eyes closed for 20 minutes in a state of "restful alertness" requires practice and personalized advice — but we've developed the below guide to give you a basic idea of how the technique works.

Maharishi Mahesh Yogi, TM's founder, was a young man with a physics degree when he traveled to the Indian Himalayas to study as a Hindu monk under Swami Brahmananda Saraswati, the leader of the monastery in Jyotir Math.

When the Maharishi — a title that means "seer" and is commonly used as shorthand — began his global tour of spreading TM in 1958, he made it clear that although he and his guru were Hindu monks and TM was rooted in the ancient Vedic scriptures, his practice was not tied to the Hindu faith.

Because of the caste he was born into, the Maharishi could not succeed Saraswati, but Saraswati entrusted him with the mission of spreading meditation around the world for the purpose of fostering peace. The Maharishi also immediately got to work partnering with universities to investigate meditation's effect on the brain and body, an effort that eventually received millions of dollars in federal funding through the National Institutes of Health. The technique is now more popular and accepted than it ever had been.

"I think where we are today is where Maharishi always wanted it to be," DLF director Bob Roth told me, "which is science-based, and evidence-based, and fits in with medicine and mainstream wellness programs."

SEE ALSO: Transcendental Meditation, which Bridgewater's Ray Dalio calls 'the single biggest influence' on his life, is taking over Wall Street

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As I sat on a waiting room sofa in the David Lynch Foundation's office in September, it felt like a scene from one of Lynch's surrealist films.

I was waiting for my first Transcendental Meditation lesson.

My teacher Mario Orsatti, a man in his 60s with a penchant for big smiles and unwavering eye contact, took my offering of two apples, a kiwi, and purple irises I'd picked up at a bodega 20 minutes earlier as instructed, and ushered me into a plain, dark room.

In front of an illustration of an Indian guru in an orange robe, sitting cross-legged with a golden aura, Mario handed me one of the irises and began solemnly reciting what I assumed to be a Sanskrit prayer. He proceeded to light candles and arrange the fruit and other items before him.

Hedge fund billionaire Ray Dalio had helped popularize Transcendental Meditation (TM) on Wall Street when he proclaimed it "the single biggest influence in his life" a few years ago, but Dalio is widely known for his eccentricities. I wondered if other finance power players, like TM practitioners Third Point manager Dan Loeb and JPMorgan wealth management CEO Barry Sommers, were just following his lead. As for the celebrities who endorsed it — like Jerry Seinfeld, Martin Scorcese, Oprah Winfrey, and Dr. Oz — well, celebrities are often easy prey for this kind of stuff.

I couldn't help but wonder: Was I being inducted into Wall Street's hot new cult?

SEE ALSO: Transcendental Meditation, which Bridgewater's Ray Dalio calls 'the single biggest influence' on his life, is taking over Wall Street

The David Lynch Foundation's New York center is located on the 14th and 15th floors of a building in midtown, Manhattan.

Lynch, the acclaimed director ("Twin Peaks,""Mulholland Drive"), cofounded his foundation in 2005 with the intention of teaching TM for free to disadvantaged students, veterans with PTSD, and victims of domestic abuse.

Through partnerships with middle and high schools in the US, the Department of Veterans Affairs, and shelters, the DLF has taught TM for free to 500,000 people.

Veterans can also take lessons at the DLF office, as one did during one of my trips.

Donald Trump's election marks a long-term turning point for markets, according to Ray Dalio, founder of Bridgewater Associates, the world's biggest hedge fund firm.

"There is a good chance that we are at one of those major reversals that last a decade," Dalio wrote in a LinkedIn post on Tuesday.

Here are some excerpts from Dalio's note (emphasis added):

On similarities with Reaganomics:

"We believe that we will have a profound president-led ideological shift that is of a magnitude, and in more ways than one, analogous to Ronald Reagan's shift to the right. Of course, all analogies are also different, so I should be clearer. Donald Trump is moving forcefully to policies that put the stimulation of traditional domestic manufacturing above all else, that are far more pro-business, that are much more protectionist, etc."

On a move away from globalization:

"Whereas the previous period was characterized by 1) increasing globalization, free trade, and global connectedness, 2) relatively innocuous fiscal policies, and 3) sluggish domestic growth, low inflation, and falling bond yields, the new period is more likely to be characterized by 1) decreasing globalization, free trade, and global connectedness, 2) aggressively stimulative fiscal policies, and 3) increased US growth, higher inflation, and rising bond yields."

We've likely reached the end of a 30-year top in bond prices:

"As for the effects of this particular ideological/environmental shift, we think that there's a significant likelihood that we have made the 30-year top in bond prices. We probably have made both the secular low in inflation and the secular low in bond yields relative to inflation. When reversals of major moves (like a 30-year bull market) happen, there are many market participants who have skewed their positions (often not knowingly) to be stung and shaken out of them by the move, making the move self-reinforcing until they are shaken out.

"For example, in this case, many investors have reached for yield with the upward price moves as winds to their backs, many have dynamically hedged the changes in their duration, etc. They all are being hurt and will become weaker holders or sellers. Because the effective durations of bonds have lengthened, price movements will be big."

Fears about Trump's economic team might be overblown:

"Our very preliminary assessment is that on the economic front, the developments are broadly positive — the straws in the wind suggest that many of the people under consideration have a sufficient understanding of how the economic machine works to run reasonable calculations on the implications of their shifts so that they probably won't recklessly and stupidly drive the economy into a ditch.

"To repeat, that is our very preliminary read of the situation, which is too premature to take to the bank. Of course, we should expect big bumps resulting from big shifts regardless of who is engineering this big ideological shift."

Last week, before the election results, Bridgewater predicted stock markets would plummet if Trump won the election. Dalio later wrote to clients that he had more questions than answers on how markets would react.

The firm also noted its concerns about the effects of globalization, which influenced Brexit and the US presidential election by mobilizing a populist vote.

SEE ALSO: WORLD'S BIGGEST HEDGE FUND BRIDGEWATER: Stock markets around the world will tank if Trump wins

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Bridgewater Associates, the world's largest hedge fund, is building an artificial intelligence engine to automate the management of the company, according to a report in the Wall Street Journal.

Ray Dalio, Bridgewater's founder, wants the AI system to handle everything from the day-to-day management of investments down to organising staff's days and even hiring and firing, according to the report.

Bridgewater, which has $160 billion (£130 billion) under management, already has algorithms that inform the strategy of its "Pure Alpha" fund, measuring hundreds of economic data points. But the new AI system, referred to as the "Book of the Future" by Dalio and the Principles Operating System officially, would apply data science principles to management, picking up on internal data points such as personality tests and internal polls in meetings. Bridgewater has a number of internal apps employees can use for things like grading colleagues.

The project is being run by David Ferrucci, according to the Journal. Ferrucci was one of the leading developers on IBM's Watson project, one of the most advanced AI systems in the world that is better at detecting cancer in patients than human doctors.

Dalio hopes that the Principles Operating System will make three-quarters of management decisions within five years. One employee told the Journal that the project is "like trying to make Ray’s brain into a computer." Dalio runs Bridgewater according to what he called the "Principles," a set of rules that employees have to follow.

Dalio told Business Insider during a recent interview:

"Imagine what it would be like to have a GPS-like device that converts high-quality decision-making principles into formulas. It then processes data representing what is happening in the world and spits out recommended decisions. This is how our economic and investment thinking works. We are now doing the same things for management."

Artificial intelligence has become one of the hottest areas of technology in the last few years, led by cutting edge development projects such as Google's DeepMind.

Meanwhile, the barriers to entry for the kind of algorithmic trading that informs the "Pure Alpha" fund have come down (although there of course remains a premium on the unique trading strategy.) There have been a slew of so-called "robo advisors" popping up across the world. These online investment companies let people put their money into often automated trading strategies, such as the one offered by startup Scalable Capital.

Scalable, developed by former Goldman Sachs, Barclays, and McKinsey staff, is built around an investment algorithm that forecasts risks and then automatically optimises people's portfolios on the fly to limit losses.

Join the conversation about this story »

NOW WATCH: MICHAEL LEWIS: The biggest way Wall Street culture has changed since 'Liar's Poker'

Ray Dalio is mad again at the media's coverage of his hedge fund, Bridgewater Associates — the world's largest with $160 billion in assets under management — and he's made his longest, angriest statement yet.

In Tuesday's editorial, first published on LinkedIn, Dalio links a Wall Street Journal story from December 22 with "the fake and distorted news epidemic."

In the Journal story, reporters Rob Copeland and Bradley Hope explored facets of Bridgewater's unique culture of "radical transparency" and focused on the development of the Principles Operating System, an effort to automate decision-making and conflict-resolution across the firm's 1,500 or so employees.

Dalio's "Principles," a collection of 210 lessons all employees must read, are manifested in Bridgewater's culture in a "management machine." At the company, most meetings are recorded to be made available to all employees, and employees rate each other's performance in proprietary iPad apps.

Dalio writes that he took particular offense to the way the Journal reporters characterized the firm as "a crazy, oppressive place run by a Dr. Frankenstein type character — even though the evidence shows it to be an idea-meritocracy which has, for several decades, succeeded in producing meaningful work, meaningful relationships, and unparalleled results through its radical truthfulness and radical transparency."

He accuses Copeland of disregarding corrections to fact-checks sent to Bridgewater, which he blames on a media-wide loosening of journalistic standards, seen not only in fringe "fake news" but "distorted news" in the mainstream media.

Speaking for the Journal, Dow Jones communications director Steve Severinghaus told us in an email, "The Wall Street Journal stands by its strong reporting about Bridgewater Associates. We have reviewed the efforts undertaken for this article and are confident that the same high journalistic standards that have served the publication and its readers well for more than 125 years were fully applied in this instance."

Dalio suggests that to combat the problem he perceives, the media industry should create "a self-regulatory organization that set standards and conveyed assessments of quality as is done in a number of other industries"

Last year, Dalio criticized Copeland and Hope's reporting in their article from February 5, and Dalio wrote a similar criticism of a New York Times story from July 28.

Bridgewater Associates has been the largest hedge fund since 2005, but did not enter the media's spotlight until 2011. Last year it received more mainstream coverage than it ever had. That coverage included a Wall Street Journal report on possible tensions at the top of Bridgewater, and a New York Times report on a sexual harassment claim that was later withdrawn.

Business Insider's editor in chief, Henry Blodget, recently conducted an extensive interview with Dalio, discussing issues Dalio explored in Tuesday's editorial as well as more facets of Bridgewater's culture. That interview will be published on Business Insider on Wednesday.

We have included the full text of this morning's editorial from Dalio below, and you can see the original post on LinkedIn.

"While I just recently read The Wall Street Journal's article about Bridgewater and was surprised by its intentional distortions, I have been reflecting for quite a while on the destructive effects that fake and distorted media are having on our society's well-being.

"To me, fake and distorted media are essentially the same problem in different degrees. My own experience, which I will share later in this piece, is just one small case within an epidemic. While Bridgewater will survive this case—and even if we didn't, the world would be just fine—it is questionable whether the world will be just fine if this fake and distorted media epidemic is not arrested. As Martin Baron, the Washington Post's Executive Editor, said in reflecting on the problem, 'If you have a society where people can't agree on the basic facts, how do you have a functioning democracy?' Distorted pictures lead us to make bad decisions. In my opinion, if people don't correct such inaccuracies and don't fight against this problem, continued distortions in the media will prevent the public's accurate understanding of what is happening, which will threaten our society's well-being. We in the financial community now openly talk about fake or distorted media being used to manipulate market prices to the harm of many, and similar conversations are taking place in most areas.

"This is not just a fringe media problem; it is a mainstream media problem. And while it is widely recognized, there is no discussion underway about how to rectify it. The Associated Press said that only 6 percent of Americans surveyed have 'a lot of trust' in the media. A recent Gallup study showed that Americans' trust in the media has dropped to an all-time low, with only 32 percent of those surveyed saying that they have either a 'fair' or 'great deal' of trust in the media. That compares with 55 percent having such confidence in 1999 and 72 percent in 1976. The dramatically decreased trustworthiness has even plagued icons of journalistic trust such as The Wall Street Journal and The New York Times, as sensationalism and commercialism have superseded accuracy and journalistic integrity as primary objectives.‎ Many, if not most, 'journalists' are trying to write the story that they want to write and fit the facts to it rather than accumulating facts to accurately report pictures of what is true. To be clear, I am not saying that this is the case for all people in the news media as there are a number of true journalists who do seek to convey accurate information; I'm just saying that they are a rapidly shrinking percentage of the total and the poll numbers reflect that.

"The failure to rectify this problem is due to there not being any systemic checks on the news media's quality. The news media is unique in being the only industry that operates without quality controls or checks on its power. It has so much unchecked power that even the most powerful people and companies are afraid to speak out against it for fear of recrimination. In fact, I presume that I will be widely attacked in the media for what I am saying here. Nonetheless I am compelled to say what many people express privately, which is that 1) the quality of news media is declining in general, 2) those in the news media have an enormous amount of power, 3) the news industry is unique in not having its standards of behavior specified and overseen, and 4) this confluence of realities is dangerous.

"While we all treasure our free press which is the reason that those in this industry are not overseen, the accelerating loss of faith in the media appears to be coming to a head and will probably lead to a backlash. I worry that if the industry doesn't fix its problems, other forces will cause the pendulum to swing in the opposite direction, which will lead to some of the cherished press freedoms being lost. That too could undermine the public's ability to know what is true. There is no getting around the fact that we need a responsible news media, and the powers that be need to start talking about how to bring that about. Personally, I hope that prominent media organizations will explore ways of self-regulating the quality of what they are producing, or at least create ratings in the way the Motion Picture Association of America provides its movie ratings.If the industry created a self-regulatory organization that set standards and conveyed assessments of quality as is done in a number of other industries, it would be much better than most of the other alternatives. In any case, it's not my place to determine how this problem is resolved as much as to speak up about the problem and encourage discussion of it.

"A Case in Point

"I have mixed feelings about describing our most recent experience with The Wall Street Journal because many people might misconstrue my doing this as me simply complaining about an article that I didn't like. While I certainly don't want to let the inaccuracies about Bridgewater stand, my more pressing motivation is to give you a window into how media is often made because I believe that those of you who haven't seen it from the inside will find it eye-opening. It probably will be a little bit like watching sausage being made for the first time.

"About six weeks before the Wall Street Journal story by Rob Copeland and Bradley Hope came out, we were contacted by Copeland, who was 'fact-checking' and seeking information about Bridgewater. Many of the things he was asking about were downright wrong, so we were presented with the choice of either cooperating with him or allowing the incorrect information to go out. Because we've had a history of Copeland and Hope writing misleading stories about Bridgewater even when we cooperated with them, we were inclined to not engage with them because we expected that they might again distort whatever we said. Copeland however insisted that they wanted to 'reset the relationship' to present an accurate picture of the firm. He offered to enter into an agreement in which we would provide him with information that he didn't already have in order to give him a fuller picture but only on the condition that he would not use that information unless we mutually agreed that his presentation of it in the article was accurate. We understand that the culture behind our exceptional success over the last 40 years is both unusual and commonly misunderstood, so we decided to enter into that agreement with him. As explained below, he broke the agreement by presenting distorted pictures of what we told him even after he asked us to 'fact check' his assertions and we replied in writing that they were inaccurate.

"Copeland and Hope allege that Bridgewater is an oppressive environment based on very few conversations—as they put it, on interviews with 'more than a dozen past and present Bridgewater employees and others close to the firm.' We have about 1,500 people who work at Bridgewater, most of whom love it rather than feel oppressed, so the picture they gleaned from these dozen people was clearly not representative. Bridgewater obviously could not have been as successful for as long as it has been without a culture that values its employees and fosters excellence; Copeland wasn't seeking to understand that. We explained to him in writing that 'You are painting a one-sided negative picture of the work environment. The problem is that people who are happy with their experience and respecting our rules are not allowed to speak with the media so you end up hearing disproportionately from disgruntled people. It becomes a gross exaggeration and none of the joy of the Bridgewater experience gets represented.' We offered to provide Copeland an extensive list of employees and former employees who could freely speak with him. He did not take us up on that offer.

"We also offered to put Copeland in contact with three prominent organizational psychologists and researchers who, out of their own curiosity, had studied our culture in depth and conveyed their highly-regarded analyses in three different books. These researchers were on site at Bridgewater and had access to anyone they wanted to speak with when they did their studies. Copeland and Hope never even walked though Bridgewater speaking to its people, yet they also chose not to speak with these experts. If you are interested in reading a few much more informed assessments of Bridgewater, we suggest that you read 'An Everyone Culture' by Robert Kegan and Lisa Lahey, 'Originals' by Adam Grant, and/or 'Learn or Die' by Edward Hess or read the quotations from these books that are included here.

"Copeland asked us about our culture of radical transparency, so we explained the logic behind it. We directed him to Principles, which describes it in depth. We agreed that Bridgewater is a challenging place to work, that the characterization of the firm being like 'an intellectual Navy Seals' is apt, and that it isn't for everyone. We made clear that nobody doubts that our unique culture has worked remarkably well for 40 years, and that no company could produce the results we have without there being deep and meaningful relationships among the people who work there. We tried to explain how the culture works and how it has produced our unique results, and we tried to provide him with facts that substantiated that assertion. For example, in our most recent anonymous annual survey, 89 percent of employees agreed that 'running Bridgewater according to the culture and principles is key to Bridgewater's success' and 94 percent agreed that 'the culture helps my personal evolution.' Similarly, 89 percent of our clients said that they were satisfied or very satisfied with Bridgewater, 95 percent said that 'Bridgewater's investment insights are uniquely valuable,' and 95 percent said that 'Bridgewater's personnel are honest and direct with me, even when we disagree.'

"We also explained the logic behind radical transparency in conversations and in the following written statement: 'If you agree that a real idea-meritocracy is an extremely powerful thing, it should not be a great leap for you to see that giving people the right to see things for themselves is better than forcing them to rely on information that is processed for them by others. Radical transparency forces issues to the surface—most importantly (and most uncomfortably) the problems that people are dealing with and how they're dealing with them—and it allows the organization to draw on the talents and insights of all of its members to solve them. Eventually, for people who get used to it, living in a culture of radical transparency is more comfortable than living in the fog of not knowing what's going on. And it is incredibly effective. But, to be clear, like most great things it also has drawbacks. Its biggest drawback is that it is initially very difficult for most people to deal with uncomfortable realities.' Copeland and Hope chose to not use any of that. Rather than seeking to understand how the culture and radical transparency work or referring to such facts in their article, they chose instead to push the story that they wanted to write.

"We discussed turnover rates at Bridgewater and showed them the statistics that make clear that in the first year or two turnover is unusually high and in subsequent years it is unusually low. This pattern is a result of Bridgewater's culture and its having tough and unique standards. The company is not for everyone but for those who it is for, there is nothing like it. The numbers substantiate this—21 percent leave in the first year and another 10 percent leave in the second year, but the turnover rates of those in years three, four, and five are exceptionally low, at only six percent, four percent, and three percent respectively. Copeland and Hope chose to focus only on the relatively high early turnover saying 'Bridgewater says about one-fifth of new hires leave. The pressure is such that those who stay are seen crying in bathrooms.' They omitted the longer-term high retention rates and the satisfaction levels behind them.

"When Copeland asked about how radical transparency works, he suggested that we were disingenuous because we didn't pursue it totally. We explained our approach: 'Don't get me wrong: radical transparency isn't the same as total transparency. It just means much more transparency than is typical. We do keep some things confidential, such as illnesses or deeply personal problems, sensitive details about intellectual property or security issues, the timing of a major trade, and at least for the short term, matters that are likely to be distorted, sensationalized, and harmfully misunderstood if leaked to the press.' And we pointed him to the relevant principles. Copeland and Hope chose to ignore those explanations and write 'he decided to let only 10 percent have the full measure of what he calls radical transparency.' After he passed that by us, we replied that 'It is incorrect that only 10 percent get radical transparency. Here's the fact. Everyone can see most everything, but only the top 150 or so people get to see the most sensitive type of stuff which, in most companies would be limited to only the top 5 or 10 people.' The authors chose to go with their mischaracterizations, even though doing so was misleading.

"Similarly, their representations regarding our 'secret project' to systemize our criteria for management decision making were both sensationalistic and misleading. We explained that what we are doing in systematizing management decision making is the same thing we have been doing for 30 years in systemizing our investment decision making, which is to collectively agree on good principles for making decisions and to express them in computer code. This allows us to input the relevant data and for the computer to process it according to our mutually agreed-upon criteria. We explained that we are doing this because we have learned that this principled and systemized decision making process allows us to get above our emotional attachments to our own conclusions and focus instead on deciding what our decision making criteria should be, which ultimately leads to better decisions because computers can process these criteria in much better ways than humans can. For example, by collecting data on people, we can learn what they are like, what jobs they are best suited for, and how they would most effectively work together. People also learn a lot about themselves, which helps them and their personal development. We are collecting and building these criteria collectively, yet the writers chose to characterize all this as being 'like trying to make Ray's brain into a computer' because that fit better with their desire to paint a picture of Bridgewater being a crazy, oppressive place run by a Dr. Frankenstein type character — even though the evidence shows it to be an idea-meritocracy which has, for several decades, succeeded in producing meaningful work, meaningful relationships, and unparalleled results through its radical truthfulness and radical transparency.

"Copeland and Hope mischaracterized several other things (e.g., my thinking on Jim Comey, a man whom I admire). In each case, I explained to them that they were mischaracterizing and they chose not to convey anything that didn't fit with the story they wanted to write. I won't delve into more examples because we are past the point of diminishing returns.

"So there you are. You now have a window into how some media is being made, and you're left facing the dilemma I described in the first part of this piece. There is no established party to assess the accuracies of what is being said, and you are left to wrestle with questions of what is true based on the scant evidence you have in front of you. I suggest that rather than worry about what's true about Bridgewater, which probably won't have an effect on your life, you worry instead about the systemic risks arising from fake and distorted media."

UPDATE: This story has been updated with a comment from the Wall Street Journal.

SEE ALSO: RAY DALIO ON TRUMP: 'If you haven’t read Ayn Rand lately, I suggest that you do'

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NOW WATCH: MICHAEL LEWIS: The biggest way Wall Street culture has changed since 'Liar's Poker'

Ray Dalio is the founder of Bridgewater, the world's largest hedge fund.A week ago, his team reached out to me to propose an interview. Mr. Dalio, they said, wanted to discuss the problem of "fake news" and "distorted news," which he believes is exemplified in a recent WSJ article about his company (and which he wrote about in a post on LinkedIn this week). We agreed on some ground rules: We had control over what we published, but Dalio wanted to be sure we shared his views with our readers, not our view of his views. Thus, I suggested a Q&A.

I spoke with Dalio by phone for nearly two and a half hours. To me, the conversation was itself a case study of the Bridgewater discussion style, which includes lively debate and open disagreement. Highlights of the interview include:

• Dalio believes that Bridgewater's culture has been misrepresented in the media to the point that incorrect information is perceived as fact.
• He calls for an independent organization of journalists to regulate the media, asserting that a free press requires regulation just as much as financial markets do.
• Dalio acknowledged that Bridgewater's culture is unusual and "kooky" but notes that it is extraordinarily effective. After working within it, many of Bridgewater's 1,500 employees would never work anywhere else.
• Dalio says Bridgewater has a turnover rate of about 30% for an employee's first two years, but says the employees who remain — those who like the culture and can handle it — are very loyal.
• He shared a personal email from an employee thanking him for Bridgewater's culture and process and Dalio's own "teachings," one of many such emails he says he regularly receives.
• On Bridgewater's unusual decision-making process, Dalio said, "I'm scared of one man, one vote because it suggests that everybody has an equal ability at making decisions, and I think that's dangerous .... I'm also scared of people with power making the decision."
• He offered details of his solution, whereby everyone has a vote at Bridgewater, but the votes of those with expertise on a topic — as determined by a proprietary "believability" rating — have greater weight.
• He believes his decision-making system, which has helped make Bridgewater so successful, would work for other companies and society at large.
• Dalio invited me to take some of Bridgewater's employee-personality-and-capability tests to see what they revealed about me. I eagerly accepted this invitation and will take these tests soon.

The transcript below is edited for length and clarity.

Henry Blodget: Ray, you recently said the Wall Street Journal intentionally distorted the truth about Bridgewater. What do you think the Wall Street Journal intentionally distorted?

Ray Dalio: I think they wanted to create a picture of a weird, oppressive place in which weird things are going on, rather than a place in which there's a lot of hard work and high standards and an unusual culture that works very effectively. The media has the power to create an entrenched perception of reality that's incorrect. Many times people will be quiet about that. I wanted to clarify what Bridgewater is like.

Blodget: I want to be sure I understand the distortions you're referring to. You've been public about Bridgewater's culture, which embraces concepts like "radical truth" and "radical transparency." You yourself have described this culture as "kooky" and "unusual." You have described it as the intellectual and office equivalent of Navy SEALs — where lots of people can't handle it and drop out and only a small tough team of already scrutinized and screened people can handle it and those who can handle it think it's amazing.

Dalio: You're painting something that is in the right direction but an exaggeration. Twenty percent of our people in the first year don't like our culture and leave. Another 10% don't work out. So in the first two years, 30% of the population goes, and then 70% stays. From that point forward, we have hardly any loss. Let me explain what our culture is based on. I think the greatest tragedy of mankind is that people have ideas and opinions in their heads but don't have a process for properly examining these ideas to find out what's true. That creates a world of distortions. That's relevant to what we do, and I think it's relevant to all decision making. So when I say I believe in radical truth and radical transparency, all I mean is we take things that ordinarily people would hide, and we put them on the table, particularly mistakes, problems, and weaknesses. We put those on the table, and we look at them together. We don't hide them. That's what I mean by radical truth. I mean accepting reality. So Bridgewater's culture is not anywhere near as extreme as you're describing.

Blodget: You've talked about how all meetings at Bridgewater are recorded, and anyone can watch the tapes and see how other people talk about them. You've been frustrated that this is often portrayed as oppressive controlling Big Brother behavior. Can you give us some examples of people who have been helped and improved by the culture? People who, as you have said, would not want to work anywhere else?

Dalio: I can read you an e-mail I got yesterday from one our employees. I get them all the time. Do you want me to read that?

Blodget: You bet.

Dalio:"Ray, I wanted to thank you personally so much for your generous support. I'm always so touched that you continue to think of me and so many other people at this time of year. I'm always at a loss of what to give back to you as you've given so much. I want you to know how much Bridgewater, your principles, and our way of being have meant to me and have helped me, especially through this past year. I've had one of the toughest years of my life personally, and I can't tell you how grateful I am to have the instilling and learning of values from this company as well as amazing people who have been there to help and to support me. Everyone will have tough times. I know that, and your principles have helped to guide and helped me make sense of things. I know I can handle anything that life throws at me, and I'm a stronger person for having worked here for so many years. I can't tell you how grateful I am for that. The principles that I rehearsed in my head often, over the past year: Have trust in truth, and you have nothing to fear from truth as well as everyone gets what they deserve out of life. I know it was the combination of the principles I have lived with now and are just part of me that have truly rounded things out for me through the rough waters. I truly mean what I say and have said to my parents often over the past six months. Thank God for Bridgewater and you, Ray. While I'm sure you do not realize the extent of my gratitude to you, please know that I'm eternally grateful for you, all of your teachings and for this amazing company that I have been honored to be part of in the past 12 years, and I hope will be my home for the rest of my career. I will also do everything I can to make it and keep it great. I love you, Ray. I hope you have a wonderful Christmas."

I get a lot of those.

Blodget: That's a great letter. And I can say, as a leader of a company, it's wonderful to get notes like that.

Dalio: We are successful because we have those kinds of relationships with each other that go way beyond the job. I have a saying that the whole purpose of what we do is meaningful work and meaningful relationships, and they support each other. That's why I was frustrated by the Wall Street Journal's characterization of Bridgewater and the process they used. I described these things to them, and said I was happy to have them speak to people like [the employee who wrote the letter] and see our employee satisfaction surveys. But there was no hearing it, right? Instead, they characterized our decision-making process as something weird like "turning Ray's brain into a computer." [Editor's note: These words were those of a Bridgewater employee quoted in the WSJ article, not the characterization made by the reporter.] They also made it seem like everyone's crying in the bathroom all the time. I'm sure somebody has cried in the bathroom. But it's not like people run around all day crying in bathrooms. I mean, listen to [the employee.]. You can watch so many other people here who hug each other and, you know what, Henry, are in love with each other in a sense and in love with the mission, and that's very powerful.

Blodget: Let me read you some of the facts the Wall Street Journal reported that I think are creating the impression of "weirdness"— the impression that you see as distorted. Now, if we were sitting together on a set, Ray, I would smile and wink at you before I read these things, because a lot of them do sound pretty wacky. First, the Wall Street Journal says Bridgewater is developing a systematic management software system that is sometimes called "The Book of the Future,""The One Thing," or "Principles OS, or just PriOS." This system is described as GPS-style directions for how staff should spend their days and make decisions. Bridgewater employees rate each other all the time on various attributes, using apps. Bridgewater employees each have a "baseball card" that includes their ratings on different criteria, and anyone can access these cards. Every employee takes written tests that measure various attributes, and every employee gets ranked in a "stratum." You, according the Wall Street Journal, are in the highest stratum. You are also considered, based on all of these tests, the most believable and open employee at the company. You've written an extensive set of Principles, and Bridgewater is now developing apps that direct employees to the appropriate section of these Principles that will have the answer to their questions. In the amazing employee letter you just read, the employee referred to your "teachings," and the writer said, "I love you, Ray." Now, you have to admit, all this sounds a little wacky, right, Ray? I mean, can you see where people from the outside would look in and say, "Huh. That is kind of strange and out there"?

Dalio: Okay. Yes, we collect a lot of information. Yes, there are personality tests, there's performance reviews. There are opinions. There's a lot of information that is gathered about people that they participate in. Then we go beyond that. We collectively say, okay, how do we know who is good at what, based on objectively information. "Stratum," for example, is a measure of how well you can view yourself and your ideas objectively. In other words, we as group say, "Okay, now we're looking at the data on people the way we would look at the data on anything else." And, "Okay, given all of those different perspectives, how should we make decisions?"

Blodget: Are there things outside of trying to get to the truth about a particular investment or trade that you're devoting this process to at Bridgewater?

Dalio: Everything.

Blodget: Is there always a majority after the discussion? Is it just a simple vote?

Dalio: No. We have a process of what we call "believability weighting" votes. I won't go through it at length, but each person assesses each other person's credibility on different dimensions, because people are strong and weak in different things. Some people have subject matter expertise in one thing. Some people tend to be creative but not reliable, and others are reliable but not creative. Everybody has different dimensions. What we try to do is to keep that in mind, and we're very clear about it. It's very upfront. It's very data based as to why people have different strengths and weaknesses and what their rankings are. It's like a democracy of determining what people's believability is in different dimensions. And then, when we take a vote, you get two numbers. You get the average number, equal weighted, and you get believability-weighted votes. So you look at those two, and usually they're in alignment. If they're not in alignment, we do another round of discussion and voting, and then we go with believability-weighted vote, generally speaking. It's a little bit more complicated to explain how exactly it works.

Blodget: It must be really complicated because that's pretty complicated.

Dalio: Here's what I'm saying. Here's the overarching issue. We have an idea meritocracy, and it has just worked unbelievably well. It is a real idea meritocracy in which there's this radical truth and radical transparency, and it's not understood. When you're faced with a choice, you have one of three choices that you can have. You can have those with power decide. You can have one man, one vote. Or you can have believability-weighted decision-making. I'm scared of one man, one vote because it suggests that everybody has an equal ability at making decisions, and I think that's dangerous. I'm also scared of people with power making the decision. How do you know that that's meritocratic? How do you self-correct that? I would like it to be that everybody knows that person's knowledge on the subject, and we can draw upon those differences and actually have the more knowledgeable people have more weight in the decision making. That's my motivation. That's my dilemma, and that's what I work to solve. It's not perfect. I'm not saying it's perfect. But now you understand my thinking. That's where it's coming from.

Blodget: Do you ever have situations where you go through all that, and the vote comes out 51% - 49% or something awfully close?

Dalio: Yes. It constitutes a small percentage of the outcomes, but it happens. Then what we do is we try to get past it by discussing it and voting again. And then if we're still stuck with it, we'll just go with it. I really believe in people here. That process is what keeps the independent thinkers here. I must operate by that system. I think the President of the United States must operate by rules. I think our judicial system must operate by the rules. You have to operate by the rules of the system, and if you don't, if you pull rank, then you lose all your credibility. I have never overruled a decision.

Blodget: So, to be clear, what frustrates you about the Wall Street Journal article is mainly that they don't see Bridgewater's culture the way you see it?

Dalio: What I'm saying about the Wall Street Journal is I don't think they were trying to find out what's true. Some people seek to understand, and some people seek to portray what they want to portray. I don't know whether you're trying to understand or whether you have a picture that you want to portray. I came into this discussion with the general assumption that you were trying to do was to understand.

Blodget: That's what I'm trying to do. So let me stipulate for the record: Bridgewater's system obviously works for Bridgewater — and wow does it work for Bridgewater. You have 1,500 folks who can presumably work anywhere, and 95% of them say this system is helping them develop, and they like it.

Dalio: I'm saying something more. I'm saying our system would work for most of the world.

Blodget: That's another question I'm going to ask you. But first, I just want to have us agree that it is true to say that some people hear the facts and the reality of Bridgewater and regard it as, using your words, kooky, unusual and great…

Dalio: I may have used the word, "kooky." I will retract the word "kooky." What I meant by that is unusual. It's unusual, and it has produced unusually successful results — including people not wanting to work anywhere else because they love that we have an idea meritocracy.

Blodget: My question is, Ray, isn't the rich media ecosystem we have in which so many different ideas and opinions and views about reality are shared — Isn't that the "idea meritocracy" you're trying to build at Bridgewater? And isn't that fundamentally a good thing?

Dalio: Let me reply to your question with a question. Do you really believe that most of the media is trying to find out what is true, or do you believe that they are primarily trying to find facts to support their existing views?

Blodget: I believe the some journalists and media organizations are trying to find the truth. I also believe that each journalist and media organization brings a particular perspective to their work, just as each Bridgewater employee brings his or her own ideas and beliefs. But I believe the media ecosystem as a whole — with all of the diverse outlets and perspectives — combined with this amazing thing called the internet in which anybody can publish their own view — is a great tool for helping us get to the truth overall.

Dalio: Wow. We have a different perspective. And now I'm fearful about having this interview with you. Your tone suggests you're you're coming with a preconception. You're not trying to pull out and put down on paper my perspective. You're cross-examining me in a particular way that seems like what you want to do is characterize rather than seeking to understand and convey.

Blodget: I actually, respectfully, in the spirit of — what do you call it at Bridgewater? "Thoughtful disagreement"? — disagree.

Dalio: Well, I hope so because I think if you look at the statistics and you deal with fake media — and fake media and distorted media is a continuum — the vast majority of the population says, "I don't know what to believe." There are no checks and balances in quality control. I treasure the fact there's media freedom, but with that goes responsibility. I think that there should be a self-regulatory organization and that they should start to think about standards. Because I think a lot of people say, "I don't know how to read what is true versus somebody else's interpretation."

Blodget: If you think the current media system is broken, what is the perfect system?

Dalio: I don't think there is such a thing as the perfect system. I do think people need to recognize that a lot of journalists want to write a story a certain way because the story will be better or the portrayal will be better, or at least recognize that whenever you're looking at something, you're seeing it through somebody's eyes who may actually not be the person who is the most insightful. Like the saying goes, don't believe everything you read. Second, the motivations are not as pure or the fact checking as not as pure as some people might believe. I think that that's a threat because people don't know what's true. You have to put yourself in my shoes as a person who believes in radical truth and in being radically transparent, not in seeing things through somebody else's eyes. With the media, we don't know what's true, and we don't have radical transparency because we're seeing everything through somebody else's eyes. There's no other industry that has as much power and as much freedom and as little quality control. I can't imagine how anyone could not think that's a problem.

Blodget: Isn't the check and balance in media the existence of a free media? In which other outlets can say "Hey, that thing that they wrote was complete crap. Here's the truth"?

Dalio: Quote me on this. That sounds like saying, "Isn't the checks and balances on the financial system a free financial system?" No, I don't think individual media outlets will regulate. There are such things as self-regulatory organizations that will look at the members of the industry and their behavior and establish standards of behavior.

Blodget: So this would be a self-regulatory organization? Or a government regulator? And what would the regulator do, exactly? For example, we just had a controversial, contentious election. Different media outlets had very different views and portrayals of it. What would the regulator do in this situation?

Dalio: First of all, the question is, does the industry have a problem or not? Consumers believe there is a problem, and it's a pervasive problem and it's probably coming to a head. We don't know what truth is anymore. You or other media people can say there's no problem, but you're losing your credibility. There's distortion, and it's hurting our society. And as a result of that, there will be forces that, one way or another, are going to naturally bring that into equilibrium. Pendulums swing from one extreme to another extreme. As a result I would think that a self-regulatory organization would be probably the best path. I wouldn't want a government regulator because it would threaten what I treasure as the free media. Who would decide on what's quality? I think that good media people could do what other self-regulatory organizations do — say, okay, we're going to have standards. The American Motion Picture Association represented the industry in creating rating for movies. I think the industry can probably self-correct without regulation, but I don't believe an individual outlet can regulate itself.

Blodget: I would suggest that the media spends a lot of time effectively regulating itself because media organizations criticize other media organizations constantly and talk about how everybody else is getting it wrong.

Dalio: No, I'm not talking about that.

Blodget: But…

Dalio: I'm not talking about that. You want to understand me, right?

Blodget: Absolutely.

Dalio: I think the media argues all the time with itself. That's not what I'm talking about. I'm talking about something in which there's a standard of behaving. There's no regulatory body. There's no judge. There's no means of assessing whether the truth was handled in a quality way. We're stuck with, "The Wall Street Journal said this.""I said this." How do we know what's true? We're just left with two people screaming at each other.

Blodget: My perspective is there is a self-regulating system in which everyone can share their view, which is exactly what we're doing right now.

Dalio: I thought this was an interview in which you wanted to convey what I think. Is it an interview in which you want to convey what I think? Or is it an interview in which you want to convey what you think?

Blodget: It's an interview that I see as part of an overall process to understand more deeply a very interesting situation at Bridgewater and also something that you've identified as a major issue in society, which is distrust in the news media and distortion.

Dalio: Okay, so let me then be clearer in terms of your last question. Now, what you've asked, I think, is the question of, is it a self-correcting system? The answer is I don't believe it's an effective self-correcting system because I think it is in the nature of individuals and individual entities not to self-correct.

Blodget: Is what we have done today, is this what happens at Bridgewater when you are trying to get to the truth when people have different perspectives on things, and they challenge each other and ask questions of each other? Is this the process?

Dalio: It's partially the process. The way it works is that it would be a group of people who are having this conversation. I thought that this was mostly an interview to get out my perspective, but in any case, let's suppose that we have two different perspectives and instead of this being an interview that this is a disagreement. Then what we would do is have a voting process. Then you would be asked to judge whether the parties were open-minded as well as assertive. In other words, what's expected of everybody is that they're trying to find out what's true. It's even more valuable and more admired to change your opinion than to be right. But anyway, at the end of it, there needs to be a resolution of a disagreement. That resolution happens in a voting way. In order to get past disagreements, you just can't have one person with power decide. In other words, so just because I'm a boss, it would be terrible if I then said, "Okay, we're gonna go do this." That's why, after that thoughtful disagreement, there has to be a process of an idea meritocracy. That means okay, now you have to vote, not that the decision resides with power. And then you vote and move beyond it.

Blodget: Let's say that we have a group of journalists who are interested in the truth. Let's say that they try to write the truth in a fair way, and our President Elect, Donald Trump, doesn't like it or believe it. Have they done their job?

Dalio: Henry, I think the basic problem is that everybody thinks they know what the truth is, and sometimes they're even distorting the truth to make their arguments. I'm sure Donald Trump will think that he has the truth, and some journalist is arguing that he has truth, and somebody else is arguing that they have the truth. And in fact it's even worse than that because they're so hell bent on their arguments that they will distort the truth consciously. They'll manipulate the facts to support their arguments because they're so hung up in the fight. That's where the problem is, so we argue all the time. We don't have ways of resolving the arguments in idea meritocratic way.

Blodget: Given that we're having a philosophical discussion about the media, one of the problems the media struggles with is that we have to work within the attention spans and schedules of the people who are consuming media. And although I could talk about these topics all day, I think most people will have only a few minutes that they can devote to figuring out which portrayal of Bridgewater's culture is true.

Dalio: Totally. We suffer from the same problem. Therefore, I empathize. And that is what actually produced the tools we are developing at Bridgewater — the technologies that people can get at particular points so that the technology can help them sort through decisions. I'm trying to find a way so that anybody in the process can literally push a button and get an answer or see the relevant part of a tape. Forget about what the technology is. Just understand the motivation behind it. If you have the power to see things through somebody else's eyes, it's like going from black and white to color or two dimensions to three dimensions. It's shocking, and we have systems that do that. This is what's cool, and that's what I'm talking about.

Blodget: When I went out with Trump on the road early in his campaign, just talking to a lot of the folks who were coming to the rallies, it was the same thing. It's like, wow, okay. I respect and like these people, they have just a different view of this person than a lot of the people that I talk to every day. And knowing that is very helpful.

Dalio: And then how do you get past that? In other words, how do you see it through their eyes? How do they see it through your eyes? And then, at the end of the day, rather than arguing, how do you get past that and make a decision in an idea meritocratic way? That is what has made Bridgewater successful.

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DAVOS, Switzerland — The world today looks very much the way it did in the 1930s, and Ray Dalio doesn't like it one bit.

Referring to increasing wealth inequality, the rise of nationalism, and a rebellious middle-class voting for Donald Trump and Brexit, the founder of the massive Bridgewater Associates hedge fund warned that Europe and the US face a dark future unless they turn back the rising tide of populism. Populism usually devolves into extremism, Dalio said.

Dalio was careful to not say that the West is literally on a descent into fascism again. But he hinted it was one possible path by mentioning Huey Long, the Louisiana populist who was shot to death after he announced a run for president in 1935.

"Populism scares me. I want to be loud and clear, populism scares me. It is the extremes," Dalio said during a debate with Harvard professor Larry Summers, IMF chief Christine Lagarde, and others on a Bloomberg panel at Davos. "Where are we headed and what does that look like? Define its left version, define its right version."

"The left becomes more left, the right becomes more right. This is the first year that populism is the most important issue globally," he said.

This chart from a study by Emmanuel Saez and Gabriel Zucman shows what he was talking about:

"If you study the 1930s to understand what the wealth gap was in the 1930s, it rhymes. Populism is not just the belief that there is a wealth gap, although the wealth gap is the highest since the 1930s," he said.

"In the 1930s every government that existed practically was populist. So populism by definition is nationalist and protectionist. And it's also a matter of values. There is a sense of threat, my country is losing its values to internationalism."

"Every country in the 1930s ended up becoming more extreme. Bernie Sanders was Huey Long," Dalio said.

Long was a Louisiana senator who favoured wealth redistribution. He was assassinated in 1935 after launching a campaign for the presidency as a Democrat. Long was allied with Father Coughlin, the anti-Semitic radio broadcaster who sympathised with the Nazis and Mussolini in the early 1930s.

"If you look at those elements they have repeated over time. ... it's not just income," Dalio said.

Summers poured some cold water on the idea that Trump's election was a response to American concern about inequality. "The US has just elected the world's most visible symbol of conspicuous consumption — that is a bizarre manifestation of a concern about inequality," he said.

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NOW WATCH: How Donald Trump used bankruptcy to stay rich

Ray Dalio, the head of the hedge fund Bridgewater Associates, is cooling off on his opinion of President Donald Trump.

Dalio, who had been hopeful about a Trump presidency and some of his economic policies, seems to have struck a less optimistic tone, according to a letter obtained by Bloomberg.

In the letter, Dalio warned that there was a high level of uncertainty in the market and told clients to avoid investing too heavily in a particular asset, according to the Bloomberg report.

"While there is a lot of potential to improve fiscal policies and make beneficial structural reforms (to enhance the business friendly environment, reduce regulatory inefficiencies, etc.), there is also significant risk that his populist policies could hurt the world economy (and worse)," Dalio said in the letter.

It's a quick turnaround for Dalio after the head of the world's largest hedge fund said in a note after the election that Trump's policies could be beneficial to business and the US.

"A pro-business US with its rule of law, political stability, property rights protections, and (soon to be) favorable corporate taxes offers a uniquely attractive environment for those who make money and/or have money,"Dalio wrote in December.

Dalio seems to have since cooled on Trump amid some of the trade policies coming from the Trump White House including a proposed 20% border tax, strained relations with Mexico's president over NAFTA and a border wall, and attacks on China and Germany over their currencies.

"Nationalism, protectionism and militarism increase global tensions and the risks of conflict," Dalio's letter said, according to Bloomberg. "For these reasons, while we remain open-minded, we are increasingly concerned about the emerging policies of the Trump administration."

You can read the full Bloomberg post here»

SEE ALSO: There are a lot of problems with Trump's 20% border tax idea

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NOW WATCH: Here's how to use one of the many apps to buy and trade bitcoin

London-based fund of funds LCH Investments, a subsidiary of Edmond de Rothschild Capital Holdings Limited, just released its annual top 20 "most successful money managers" list for 2016.

The list measures net gains, after fees, of hedge fund managers since their respective funds' inception.

We've included the top seven fund managers below.

As a group, they manage more than $275 billion in assets, and have generated more than $200 billion in gains since inception.

They generated $10.6 billion in returns in 2016, with one of the seven, George Soros' Soros Fund Management, losing money over the year. 

7. Och Ziff - Daniel Och

Net gains in 2016: $1.1 billion

Net gains since inception: $23.1 billion (1994)

Fund's assets under management: $33.5 billion

Highlights: Och-Ziff Capital Management agreed to settle charges of bribery, paying nearly $200 million to the Securities and Exchange Commission, in September. The hedge fund's CEO, Dan Och, agreed to pay nearly $2.2 million to settle the charges with the SEC, as did the firm's CFO, Joel Frank. The firm was accused of bribery in its financial dealings in Africa, which the SEC says included run-ins with Muammar Gaddafi's relatives.

The fund also found itself the recipient of some savvy investing advice from a 24-year old Chipotle cook. 

6. Appaloosa - David Tepper

Net gains in 2016: $0.7 billion

Net gains since inception: $23.5 billion (1993)

Fund's assets under management: $15.8 billion

Highlights: Tepper came out in support of Hillary Clinton ahead of the US election, calling Donald Trump, who went on to win the election, "the father of lies." He has said however that the US would benefit from some infrastructure spending, a key leg of Trump's campaign platform. 

5. Citadel - Ken Griffin

Net gains in 2016: $1 billion

Net gains since inception: $25.2 billion (1990)

Fund's assets under management: $24.1 billion

Highlights: Citadel has been hiring, recently adding portfolio manager Jennifer Pollak, who moved from Folger Hill Asset Management. Citadel's Aptigon unit last year poached about 17 portfolio managers from Visium Asset Management amid an insider-trading scandal.

• Investors are realizing the tax cuts and pro-business reforms will take longer to materialize than they expected. 
• In the meantime, stocks are bonds are correlating with President Trump's popularity (or lack of), Credit Suisse says.
• Adding to this pressure, stock valuations are high by any measure.

Ever so slowly, Wall Street is being shaken from the trance of President Trump's promises of deregulation and tax reform.

As this happens, an entire industry known for sharing notes and trading tips is starting to worry if it's been working off of the wrong playbook. 

"When Trump’s favorability initially rose after the election, equity investor optimism was driven by an intense focus on how to position for rising interest rates and improving prospects for economic/earnings growth driven by corporate tax reform, infrastructure spending, and regulatory relief," analysts at Credit Suisse wrote in a recent note. "But since Trump’s favorability peaked in mid-December, that optimism has been replaced by a wait and see approach among many investors, along with a healthy dose of frustration."

The fears that are rattling the "Masters of the Universe" are varied: Baupost's Seth Klarman is worried about Trump's tax cuts and spending plan. He's also, along with Bridgewater's Ray Dalio, is scared of populism and trade wars. Greenlight Capital's David Einhorn is worried about inflation, and Elliott Management's Paul Singer worries that the world has gone complacent.

He's right. It has. That means it's time to be afraid of the stock market. 

First things first, next things, perhaps never

The "frustration" Credit Suisse is describing comes from the fact that investors don't know when the plans they like will actually be enacted, while measures that are actually disconcerting to investors – immigration bans, trade war mongering, and Obamacare uncertainty – have taken center stage.

They are also frustrated that details of plans they thought they liked could hurt some industries. Think, for example, what the border-tax element of Trump's plans – essentially a tax on importers – could do to retailers like Kohl's, Lululemon and Urban Outfitters that make their products abroad and sell them at home.

Messages from the administration have not been reassuring. Peter Navarro, the head of Trump's National Trade Council dismissed Wall Street analysis that concluded that retailers would be hurt and jobs lost through the border adjustment tax as "fake news."

Navarro has, so far, been the clearest messenger of President Trump — and top adviser Steve Bannon's — vision for the economy: taking resources away from the services economy we have, and recreating the manufacturing economy we used to have, in order to save jobs.

"We envision a more Germany-style economy, where 20 percent of our workforce is in manufacturing," Navarro told CNBC in a recent interview. This comment, as we've pointed out before, compares apples to oranges. Standing alone the US manufacturing sector is the 8th largest economy in the world. Germany's entire economy is the fourth largest in the world.

This is not an idea Wall Street signed up for.

Trading on Trump

But let's say Wall Street does get a few things on its wish list, even though House Speaker Paul Ryan says they won't materialize until 2018.

In that event, according to Credit Suisse, we still have a problem.

"Investors have been asking how valuations look on 2018 EPS, when it is becoming more likely... that stock market friendly policy changes in Washington could materialize. On current 2018 expectations, US stocks still look highly overvalued..."

The charts below trace forward looking price-to-earnings ratios all the way back to the mid-1980s:

Perhaps more disconcerting to Credit Suisse – and this correspondent – than any of these things, is that the stock market along with a few macro-economic indicators are actually trading on Trump's favorability right now. (For more on that, see the slides below).

It seems as if Wall Street has given up the difficult work of picking stocks and making models, of calling experts and building theories. Instead it is allowing the market to try and figure out if the President can handle his new job. Of course, it's unclear how long that will take.

As a result, 10-year treasury yields, the dollar, crude oil, small cap stocks, financial stocks, high tax paying stocks and more are correlated to Trump's favorability. 

This is a delicate state, to say the least. The American people don't like it when their president is rattled, and we know it doesn't take much to rattle Trump – a skit on Saturday Night Live, poor sales at his daughter's company, The New York Times reporting the truth. It could be anything.

And you don't want to be in a stock market that can move on just anything.

Stocks and yields are correlated to Trump's favorability. (Red is Trump's favorability rating, blue is the market).

The US Dollar and crude oil are also trading on Trump.

Large cap stocks have also caught the bug, depending on what they pay in taxes. It seems that low tax-payers get hurt when Trump's favorability is high – a sign that the market thinks it will be easier for him to pass tax reform.

There are two basic power structures, says Bridgewater Associates co-CIO Bob Prince: democracy, with one equal vote per person, and dictatorship, where all decisions come from the top.

At Bridgewater, the world's largest hedge fund, there's a third option.

The fund calls it "believability-weighted decision making," and assigns certain votes more pull than others. It's "probably the optimal way to do it,"Prince told Business Insider.

Bridgewater, with $150 billion in assets under management, is as well known for its size as it is for its unusual culture of "radical truth" and "radical transparency." Founder, chairman, co-CEO, and co-CIO Ray Dalio's handbook of "Principles" is required reading for all 1,500 employees, and the collection of management and life lessons serves as a sort of constitution for the Westport, Connecticut-based firm.

One of the most obvious manifestations of this culture is the way employees rate each other's performance, which in turn affects decision-making.

Every employee has a company-issued iPad loaded with proprietary apps. One of them, called "Dots," contains a directory of employees and options to weigh in on various elements of each person's work life, categorized in values, abilities, skills, and track record.

There are more than 100 attributes in total, but the collections of attributes are customized to roles in the company, in the sense that an investor's performance would not be measured according to the same traits that would be used to measure a recruiter's performance.

Employees are free to use Dots whenever they'd like, when they want to praise or criticize a colleague for a particular action.

The chart below includes some of the attributes found in Dots.

When an employee enters a rating for a coworker, they are asked to measure the attribute on a scale from 1-10, with seven considered average. They then enter a brief statement to add context. These number and statement combos — known as "dots"— are associated with the name of the person who input them, are public, and are permanent. Prince told us that he has about 11,000 dots assigned to his name.

Prince explained that employees are not expected to strive for 10s in every category as a student would attempt to get straight As; rather, they are expected to have clear strengths and competency for other traits, the same way a basketball team is composed of players with complementary talents.

The numerical value of these Dots is considered along with performance reviews, surveys, tests, and ongoing feedback and averaged into public "baseball card" profiles for every employee. The profiles get their name from the list of attributes and corresponding ratings, the same way a baseball card would list something like a player's batting average accompanied by a brief description of their career.

These are then brought into play in meetings where decisions are being made. Using their iPads, colleagues will vote on certain choices, and in the system of believability-weighted decision making, each vote will have a weight depending on the individual's baseball card and the nature of the question.

"A person's believability is constantly relevant," Prince said. "In a meeting, it is relevant to things like how you self-regulate your own engagement in a discussion, how the person running the meeting manages the discussion, and in actual decisions. At all times a person should be assessing their own believability so that they can function well as part of a team."

The baseball card approach fits into a system where most meetings are recorded via opt-in audio recorders or cameras, and where some of these recordings are included in weekly "management principles training" (MPT) lessons. The culture of radical truth and radical transparency that Dalio has created is demanding and not for everyone, and that's why 30% of employees leave within their first two years.

While a culture where everything's on the table turns out to be intolerable for some, those who stay are committing to operate within such a system. As one former employee told us last year in a conversation about MPT lessons, "Ultimately, if you're signing up for Bridgewater, you're saying I'm signing up to be proven wrong sometimes and I'm willing to work to look at that."

In an interview with Business Insider CEO Henry Blodget in December, Dalio said that the aim of this radical truth and transparency is an "an idea meritocracy, and it has just worked unbelievably well."

"I would like it to be that everybody knows that person's knowledge on the subject, and we can draw upon those differences and actually have the more knowledgeable people have more weight in the decision making," Dalio said. He added that the process isn't perfect, but that finding a path to the best answers is "what I work to solve."

SEE ALSO: Top Bridgewater exec explains how its intense, unique culture helped the world's largest hedge fund make $50 billion

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Ray Dalio, who oversees the world's biggest hedge fund firm, is stepping down from management amid a company-wide shake-up.

Dalio will stop managing Bridgewater Associates by mid-April, according to a client note Wednesday reviewed by Business Insider. Dalio said in the note that he had "temporarily stepped back into management" 10 months ago to help transition Greg Jensen's co-CEO role.

Dalio will remain co-chief investment officer along with Bob Prince and Jensen. Dalio wrote that he expected "to remain a professional investor at Bridgewater until I die or until those running Bridgewater don't want me anymore."

Bridgewater is the world's biggest hedge fund firm, managing about $103 billion in its hedge funds as of midyear 2016, according to the HFI Billion Dollar Club ranking.

Bridgewater's culture is known for being unusual and difficult. In its world of "radical transparency" and "radical truth,"employees rate one another's performance in real time on proprietary iPad apps, and nearly all meetings are recorded to be available for scrutiny. The company reports that 30% of employees leave within their first two years.

A slew of other changes were also announced in the client note:

• "David McCormick will be stepping up to join Eileen Murray in the co-CEO role."
• Jon Rubinstein is leaving Bridgewater after 10 months (he was previously also co-CEO) because he did not fit into Bridgewater's culture, Dalio wrote. Rubinstein, who previously worked for Apple's Steve Jobs, will continue to advise the firm.
• "Osman Nalbantoglu (who has been at Bridgewater for nine years) continues to run our portfolio implementation and trading/execution areas, and eight of our key investment research associates will step up into senior researcher roles."
• "Carsten Stendevad, the former CEO of the large Danish pension fund ATP, is joining Bridgewater as part of our new 'Bridgewater Senior Fellowship Program,' which will bring highly distinguished individuals into Bridgewater for a year to explore what our culture is like and lend their expertise and insights to our organization."
• "John Megrue joined me as a co-chairman on January 1st. John has been a leader in the private equity industry for over 30 years and is currently chairman of Apax Partners US."

Bridgewater has now posted the full memo to clients on LinkedIn.

SEE ALSO: The new co-CEO of hedge fund giant Bridgewater worked for Steve Jobs for 16 years — here's why Ray Dalio hired him

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Billionaire Ray Dalio just went off on the New York Times again – this time at one of the newspaper's own events.

"I'd like to talk about the ridiculous New York Times article," Dalio told moderator and Times' editor Charles Duhigg in response to his question about how he handles criticism. Dalio is the founder of Westport, Conn.-based Bridgewater Associates, the world's biggest hedge fund with about $103 billion in assets. 

Dalio was referring to an article that the Times ran earlier this week that detailed a case in which Dalio fired at least one staffer via a company-wide email and an instance where the company had employees review a video challenging whether a senior executive had lied.

Asked about his opinion that the story had been "miscovered," Dalio said: "Worse than that, it was intentionally done."

"There are journalists, writers who are intended to be, let's call them investigative reporting," Dalio added later in the talk. "And they're supposed to come out with things that they think are scandalous. And as a result of doing that, they kind of weave together things in ways that are meant to be, like, they say, good news that doesn't sell. So it's meant to be that way. So in the interactions that I've had with 'em, there has not been a desire to get at truth."

Dalio didn't specifically dispute any facts in the Times article, and a spokeswoman for the paper said it stands by its story.

Criticizing the media has become something of a passion for Dalio. In early January, he wrote a 2,700-word post on LinkedIn about a Wall Street Journal story about Bridgewater, and last year wrote a separate LinkedIn post that called a different New York Times report "a distortion of reality."

Last week, when the company announced that it was changing up its management team, he published the memo announcing the change on LinkedIn. Dalio wrote that he had made that decision because "our communications often find their way into the media in distorted ways."

The news reports about Dalio all dig into Bridgewater's unique and highly scrutinized culture — which includes the recording of nearly all staff conversations to make them available to other employees in a policy he calls radical transparency. Dalio addressed this at the conference and compared the practice to nudist camps.

"Ninety-nine percent of the meetings are taped for everybody to see," Dalio said.

"Not everyone wants to stand naked in front of everybody," he later added. "It's a little bit like going into a nudist camp for the first time. I don't know if you've ever gone into a nudist camp, but in other words, you first walk into a nudist camp and it's very awkward... If you can stand naked in front of other people and have them stand naked in front of you, you can have actually better relationships and be more productive."

Bridgewater manages about $103 billion in hedge fund assets as of midyear 2016, according to the HFI Billion Dollar Club ranking.

You can watch a recording of Dalio's comments here.

SEE ALSO: Ray Dalio slams Wall Street Journal story on Bridgewater, linking it to 'fake and distorted news epidemic'

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Tony Robbins, the high-energy performance coach who sells out arenas for his seminars, has made it his primary mission the past few years to spread personal finance literacy.

Starting with his client of nearly 30 years, the billionaire investor Paul Tudor Jones, Robbins interviewed 50 of the top financial minds in the United States to break down complex ideas for the average person.

One of these people was Ray Dalio, the founder of Bridgewater Associates, the world's largest hedge fund with $150 billion in assets under management. Robbins writes in his new book "Unshakeable" that,"I've met a lot of extraordinary people over the years, but I've never met anyone smarter than Ray."

Robbins recently came by Business Insider's New York office for a Facebook Live Q&A where he discussed "Unshakeable," a much slimmer version of his 2014 book "Money: Master the Game," with additional insights from Peter Mallouk, who was rated the No. 1 wealth adviser in the US by Barron's three times, and who brought Robbins into his firm Creative Planning in 2016.

Robbins told the audience that Dalio explained to him the importance of diversification and having sound investor psychology. We'll break down these lessons using Robbins' comments from the Q&A as well as his book.

You won't beat the market.

Unless you're one of the greatest investors on the planet, who also happens to be very lucky, you're not going to craft a portfolio that brings you a higher return than had you just tracked the market's longterm growth with an index fund.

"Before you try to beat the market, recognize that your likelihood of being successful is extremely small and ask yourself if you spent the time to train and prepare to be one of the few who actually wins," Dalio told Robbins.

"If you know your limitations, you can adapt and succeed," Dalio said. "If you don't know them, you're going to get hurt."

Which leads to the next point.

Diversify.

In the Facebook Live Q&A, Robbins said that Dalio told him that "people tend to invest in what heard about, what they read about, or what their family did"— and that's a mistake.

"The problem is, every single asset class that you love will have a day where it drops 50 to 70% in a day," Robbins said. "Dalio showed me this statistically on every asset you can look at. And he said, Tony, if it's later in life, you have no time to make up for it."

In "Unshakeable," Robbins also includes four principles from the renowned economist Burton Malkiel, who told him:

• "Diversify across different asset classes. Avoid putting all your money in real estate, stocks, bonds, or any single investment class."
• "Diversify within asset classes. Don't put all your money in a favorite stock such as Apple, or a single MLP [a publicly traded partnership], or one piece of waterfront real estate that could be washed away in a storm."
• "Diversify across markets, countries, and currencies around the world. We live in a global economy, so don't make the mistake of investing solely in your own country."
• "Diversify across time. You're never going to know the right time to buy anything. But if you keep adding to your investments systematically over months and years ... you'll reduce your risk and increase your returns over time."

For the average investor, it's best to work with a fiduciary, a financial adviser who has pledged to value your interests over their own, to determine the best portfolio for your needs.

A good place to start on your own, however, is investing in an index fund, which allocates money across companies in an index, essentially giving you representative ownership of that market — which, again, will grow over time regardless of short-term performance.

Dalio told Robbins that in 1971, when President Richard Nixon took the US off the gold standard, he logically believed that stocks would plummet, but they skyrocketed. "What I realized is nobody knows and nobody ever will," Dalio said. "So I have to design an asset allocation that, even if I'm wrong, I'll still be okay."

You can watch the full Facebook Live Q&A with Robbins below.

SEE ALSO: 7 questions to make sure your financial adviser is on your side, according to the one who helped Tony Robbins write his second book about money

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NOW WATCH: TONY ROBBINS: Your happiness depends on mastering these two skills

"Unshakeable" author Tony Robbins shares advice he learned from interviewing the top minds in finance. Following is a transcript of the video.

I’ve got access to the smartest financial people in the world. What if I interviewed 50 of the smartest people, found out whether the average investor can still win or not.

I’ve been coaching a man named Paul Tudor Jones one of the top 10 financial traders in the world for 24 years now. He’s extraordinary and I’ve learned so much from him.

How do I set myself up to win, even when I’m losing? First thing you got to do at the basic level is you need to have three months, six months for some people, 12 months for some people. You want to build to have enough emergency cash that if you lost your job, if you lost everything, if you went through a medical emergency, and so forth, you don’t have to worry that your gonna fall off.

So the first thing is really start to build that emergency fund for people, I think, is one of the most important things. It’s a simple thing, it’s not an easy thing because it’s hard to get yourself to just put money aside that’s not growing, but you need some that’s available to you for those situations.

Ray Dalio, who's the most successful hedge fund manager in the world, he's returned more money to investors than anybody in history. When I met him and talked with him he taught me something simple, he said "Tony, people tend to invest in what they heard about, what they read about, or what their family did."

But the problem is every single asset class that you love will have a day where it will it drops 50-70% in a day. If it's later in life you have no time to make up for it so you have to diversify.

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Since it was invented over 200 years ago, the wristwatch has been an integral component of men's fashion.

In addition to their practical functionality of telling time, a watch serves as a collectible piece of art that communicates the personality and style of its wearer.

With the help of Crown and Caliber, an Atlanta-based preowned-luxury watch marketplace, we've put together a list and commentary about the wristwatches worn by some of the most powerful men in the financial services industry.

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Bridgewater Associates, the world's largest hedge fund, on Wednesday published a 61-page research paper on populism, which it considers the most important issue in the world today.

"Populism has surged in recent years and is currently at its highest level since the late 1930s," founder and chairman Ray Dalio and his coauthors wrote in the note.

The authors say they consider today's strain of the ideology to be "much less extreme" than it was before the start of World War II in 1939. But at the World Economic Forum in Davos, Switzerland, in January, Dalio said populism's tendency to turn into extremism scared him.

"This is the first year that populism is the most important issue globally," he said.

Wednesday's client note looks at the history of populist movements in the United States, Europe, Russia, Japan, and South America, drawing insights from each.

In a LinkedIn post linking to the full report, Dalio said:

"Given the extent of it now, over the next year populism will certainly play a greater role in shaping economic policies. In fact, we believe that populism's role in shaping economic conditions will probably be more powerful than classic monetary and fiscal policies (as well as a big influence on fiscal policies).

"It will also be important in driving international relations. Exactly how important we can't yet say. We will learn a lot more over the next year or so as those populists now in office will signal how classically populist they will be and a number of elections will determine how many more populists enter office."

Bridgewater is the world's biggest hedge fund firm and managed about $103 billion in hedge funds as of mid-2016, according to the HFI Billion Dollar Club ranking.

The firm has generated close to $50 billion in net gains since its inception, according to London-based LCH Investments. Dalio personally earned $1.4 billion last year, making him one of the top-earning hedge fund managers. Bridgewater's main fund, Pure Alpha, returned 2.4% in 2016, losing to the S&P 500, which gained 9.5%.

Bridgewater sends research notes every day to clients. On the day of the 2016 US election, Bridgewater told its investors that stock markets worldwide would tank if Donald Trump won, Business Insider reported. Stock markets have since rallied to historic highs.

You can find the full report on Bridgewater's site »

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Ray Dalio is with Jamie Dimon.

Dimon, the JPMorgan CEO, said this week that while the US is "probably stronger than ever before," it is "clear that something is wrong."

And in an interview with Business Insider's global editor in chief Henry Blodget on The Bottom Line, Business Insider's new weekly business news show, Dalio, the founder of Bridgewater Associates, agreed. 

"He's right," he told Blodget. 

Dalio launched Bridgewater from his kitchen, and the firm is now the world's biggest hedge fund. He made $1.4 billion in 2016, according to Forbes. 

Like Dimon, Dalio is focused on the education system. Dalio cited a study his wife funded in Connecticut that found 22% of students in the state are disengaged or disconnected. In his annual letter to shareholders, Dimon said "we are creating generations of citizens who will never have a chance." 

"Now you think not only is that a human tragedy in terms of those kids, but that's also going to be a terrible social tragedy," Dalio told Henry Blodget. "When you look at some of the educational things that can be done that make such a world of difference to people, it's a terrible waste of resources and inefficiency. We have a problem with our human infrastructure."

 Here's the full transcript:

Henry Blodget: Jamie Dimon earlier this week said, 'Look, there's a problem in this country, it's a great country, but there's a problem.'

Ray Dalio: He's right.

Henry Blodget: You agree with that?

Ray Dalio: Oh totally. I think it's very inefficient. In many parts of this country, we don't create a bottom. There's no bottom. In other words, there is no minimum level of acceptable education, there's no minimum level of acceptable circumstances in some places. There's a tragedy that we're losing, in many ways, our human infrastructure in lots of those places.

That's also a bad investment. My wife is very much involved in education in the worst parts of Connecticut. This is something that's particularly important to her. She funded a study that looked at the number of disengaged and disconnected youths. A disengaged youth in a high school is a student who comes in and doesn't participate. They go to class, they don't do their homework, they don't do anything. A disconnected youth is one that doesn't even know where they are, they don't come to school. She had this study done: 22% of the students in Connecticut are either disengaged or disconnected.

Now you think not only is that a human tragedy in terms of those kids, but that's also going to be a terrible social tragedy. What will they end up doing? How will it be? How does it make sense? When you look at some of the educational things that can be done that make such a world of difference to people, it's a terrible waste of resources and inefficiency. We have a problem with our human infrastructure that is a major problem.

Henry Blodget: Do you think that that is a different infrastructure to the one that allowed or helped you to do what you do?

Ray Dalio: Yes, I was lucky in the sense that I had parents who cared about me, I went to school, I was able to have that kind of infrastructure in this wonderful country that allowed me to have those kinds of opportunities and inspirations, you know, when you look at people, and they could do those things, so there was a dream that can happen.

There is a wonderful documentary movie called 'Waiting for Superman.' I don't know if you know the movie, OK, 'Waiting for Superman.' It tells the story of being in the inner city and having this aspiration of Superman, and then waiting for Superman, and there is no Superman, he doesn't come, there's no hope. You need hope. You need family. You need infrastructure. You need certain basic things that I had the benefit of having and a lot of the population doesn't have the benefit of having. 

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Ray Dalio thinks the world's current path is looking eerily similar to one of the worst decades in recent history.

The founder and former CEO of Bridgewater Associates, the world's largest hedge fund, said the economic and political issues popping up around the world were similar to the problems experienced in the lead-up to World War II.

In an interview with Business Insider's global Editor-in-Chief Henry Blodget on "The Bottom Line," Business Insider's new weekly business news show, Dalio said the rise of populist leaders across the globe could lead the world down the same path as the 1930s.

"In the 1930s, which was quite similar to a lot of the period we've been through economically," Dalio said, "we had the wealth gap, we had large debts, we had zero interest rates."

The economic fallout of World War I and the Great Depression led to a growth of inequality in the 1930s, pushing many people around the globe toward populist politicians they felt were more aggressive and combative.

"During this same type of period, we experienced more populism, most countries became populist, and so it's very important to understand that," Dalio said.

Given the devastating impact of the rise of populist leaders in the 1930s, Dalio said the current rise of populist sentiment in the US and Europe should warrant scrutiny.

"If you were to see that happen in the United States, Europe, and so on you would have something that would be of concern, because that would alter how the economic conditions work," he said.

Dalio highlighted the rise of President Donald Trump and nationalist French politician Marine Le Pen and said it was important to keep an eye on the institutions that undergird democracies in the US and Europe.

"There are issues here that will be interesting to compare with, such as the sanctuary-city question, or such as the Supreme Court," Dalio said. "Will those conflicts become such that they will become more antagonistic than normal and that tend to be more detrimental to the efficient running of the system?"

The Trump administration has said it intends to remove federal funding from so-called sanctuary cities, which resist some cooperation with federal immigration agencies, but local governments have promised to fight back. Additionally, the Senate decided on Thursday to go "nuclear" and get rid of the filibuster for Supreme Court nominees to confirm Trump's pick of Judge Neil Gorsuch for the high court.

If these events undermine established systems, there could be economic consequences, in addition to the political changes.

"Those are the things we have to watch out for," Dalio said.

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This week, Henry Blodget sat down with Ray Dalio, founder and C0-CIO of Bridgewater, the world's largest hedge fund.

Here is part 1 of their extended interview, which appears in the premiere episode of Henry's new weekly markets and economics show, The Bottom Line.

Watch the full episode here.

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