Wednesday, September 13, 2017

Ray Dalio's “Slightly Better” Returns

Now that real life has blended with reality TV, you can't blame the Main Stream Media for stressing out. Still, this lengthy NY Times piece on Ray Dalio, who runs Bridgewater, world's biggest hedge fund firm, seems a bit snarky. For instance:
Since it began, Pure Alpha has made investors an annual average return after fees of 11.9 percent, slightly better than the 9.5 percent average yearly return for the Standard & Poor’s 500.
Slightly better? Any stock picker who can beat the S&P by one percentage point over long periods is
Bridgewater's Westport, CT headquarters
exceptional. Two percentage points? Almost miraculous. With Pure Alpha Dalio has done better by 2.4 percentage points. Compare:

At the S&P's 9.5% average annual return, in ten years a $100,000 investment grows to 247,823.

At Pure Alpha's 11.9%, in ten years a $100,000 investment grows by an additional $60,000, to $307,823.

Over extended periods, that "slightly better" return will make you seriously richer.

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