Ray Dalio: The Macro Master Behind the All Weather Portfolio

TradingKey - Not many names command as much respect in the investing world as Ray Dalio. He founded Bridgewater Associates, the world’s largest hedge fund, managing over $150 billion at its peak. But... what truly sets Dalio apart isn’t just his success. TradingKey analyst Petar Petrov will explore the core principles behind Ray Dalio’s investing philosophy, and how retail investors like you and I can apply these in our strategies.

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Not many names command as much respect in the investing world as Ray Dalio. He founded Bridgewater Associates, the world’s largest hedge fund, managing over $150 billion at its peak. But... what truly sets Dalio apart isn’t just his success. It’s his obsession with understanding how the economy works.

Hi everyone, I’m Petar Petrov, senior analyst at TradingKey. In this video, we’ll explore the core principles behind Ray Dalio’s investing philosophy, and how retail investors like you and I can apply these in our own strategies.

Before we begin, remember to tap the like button. Now, let’s dive in.

Let's start with Dalio’s first core principle: diversification. He believes that proper diversification across asset classes, countries and sectors, is the most reliable way to reduce risk without sacrificing returns. At Bridgewater, this principle translates into holding 15 or more low-correlation assets to offset volatility. As reflected in his portfolio, with consumer staples like Procter & Gamble, bonds like long and mid-term Treasuries, commodities and ETFs. With over 950 positions globally, his goal is clear: no single market event should derail the whole portfolio.

This ties closely to Dalio’s signature of risk parity, where assets are allocated not just by capital, but by their contribution to overall risk.

The second principle is Dalio’s focus on understanding the economy. While Buffett focuses on individual businesses, Dalio focuses on the economy as a whole. His strategies are grounded in macroeconomic cycles and its effects on debt, interest rates and liquidity. Bridgewater’s recent increase in Spider Gold Shares signals a hedge against currency depreciation, while positions in Emerging Market and Chinese tech companies like Alibaba and Baidu reflect optimism in policy-driven recoveries. Despite the rally in mega-cap tech, Dalio emphasises fundamentals over sentiment. Reductions in giants like Meta and Nvidia holdings suggest caution amid a possible economic slowdown.

For Dalio, it has never been about chasing trends. Rather, he believes in anticipating shifts before they happen.

Dalio's third major principle is the construction of the All Weather Portfolio. Dalio’s legendary portfolio is designed to perform in any economic climate, and he’s not gatekeeping this. The ideal breakdown includes 30% stocks, 40% long-term bonds, 15% mid-term bonds, 7.5% gold and 7.5% other commodities. Bridgewater’s own allocations mirror this approach. This enables gains from stocks in growth periods, stability from bonds in recessions and protection from commodities during inflation. In fact, when the S&P 500 fell by 33% in early 2020, the All Weather Portfolio only dropped by 6%.  That’s the power of balance and discipline.

In his book Principles of Life and Work, Dalio wrote, “Balance risks in ways that keep the big upside while reducing the downside.”

His fourth key investing principle is systematic decision making. Dalio doesn’t believe in relying on hunches. He built Bridgewater on an algorithmic system, with large amounts of historical and real-time data fed into models that guide his investment decisions, thereby removing emotion from the equation.

Rooted in the belief that history repeats itself with slight variations, Dalio consistently studies the past to navigate the present.

Now that we’ve covered Dalio’s four core principles, let’s welcome Mario, our Senior Equity Analyst to demonstrate how these ideas play out in the real world.

Thanks Petar. Hey everyone, I’m Mario! Let’s move on to how these principles work in the real world. 

While Dalio isn’t typically seen as a tech-focused investor, Bridgewater’s portfolio tells a different story. Tech firms like Microsoft, Alphabet, Booking Holdings and Nvidia make up a substantial portion of his holdings. As of Q2 of 2025, over 37% of Bridgewater’s assets are parked in tech and semiconductor stocks. The big question here is, why? Ultimately, Dalio sees productivity as a key driver of long-term economic growth, and tech firms are leading that charge. Even during downturns, the foundational nature of major tech players often keeps their operations resilient.

One company that stands out in his portfolio is Alibaba. Dalio has long believed in China’s ascent as a global powerhouse, and Alibaba offers direct exposure to its consumer and digital economy. It also adds geographic diversification, which fits perfectly into his risk parity model.

Dalio’s playbook offers plenty of takeaways. Diversify wisely. Understand the bigger picture. Stay balanced. And most importantly, build systems that keep emotion out of your decisions.

Wanna track Dalio’s latest moves in real time? Check out Star Investors on tradingkey.com, and get access to full portfolio breakdowns, detailed sector allocations, 13F filings from more than 100 top investors, all in one place.

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