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Let's go back to Bloomberg Investo conference for a conversation here with the CEO of Bridgewater Associates, Near Bardea, speaking with Bloomberg's Shanali Bassic.
I have to embrace that change in the macro paradigm and prep yourself for a different reality. I saw other two quick things and then kind of touch on how Bridgewaters align itself for it. The second thing that has happened during that time is that while wealth got distributed, I talked about Asia and China, the Middle East, profess
actually got a lot more concentrated. If you look at our institutional investors, they have more than doubles their allocations to private assets, even if you look at their liquid part of the portfolio, unbelievably concentrated.
In the US.
I heard the questions kind of in the end of the last interview of is US still a great place to invest? Well, a lot of the investments has gone to US equities. Seventy cents of every dollar inequities has gone to USE equities, and.
That means that they are incredibly.
Vulnerable into this new economic shariatim. And the third thing, which I want to talk about more a little bit later. Is all this is happening when we are facing a once in a generation technological disruption. We've been talking about AI for a long time, but here the intelligence is here and the macroeconomic impacts of that are just trickling in. So capicks this year will double last year, and it
starts to move the needle. But the questions around productivity and they're for employment and social implications is still outstanding. Bridgewater's playbook has been looking at this for a long time and saying, how do we position ourselves across these three things in order to be there for our clients when they need us most.
And having talked about that more.
Yeah, let's start with the last piece of that because on a daylight today, maybe everyone's thinking about the short term, but the long term trend has been thinking about what AI would do.
What is the good, the bad, and the ugly of it all.
So, man, there's so much words that are being said about topic, and I'm going to add some words on top of that, but I'll kind of.
Give you our frame or to think care about it.
We've been forever thinking about the best combinations of humans and technology because if you think about our mission, our mission is to understand how the world works through combining humans and technology, because no one human mind can wrap their head around everything in the world, and that means that we've always searched for how technologies can replace what humans are doing, so humans can do what technology can't do.
And what I can tell you is that I think it's a fool's errand to try to be precise about how this is going to play out. I'll give you two examples of that. What I said technology is here. You know, one school is saying we are headed to agentic full agentic AI, which means we will sit back and everything's got to be replaced by AI. That could happen.
Others are saying this is going to be a general purpose technology, which is still very impactful, but it's wildly different than fully agentic AI, and people can be very specific about where they think that's gonna land.
I don't think anybody knows.
And the most important thing to suffroect yourself for a wide range of ACOMA.
Will give you another example, which I think is.
Really important to kind of process with regards to.
The macroeconomic paradigms TIF.
Thing and that is that, you know, the optimists say, yes, we are in a modern mercantilist world. If the opposite of globalization, a world where we have less efficiencies because government are trying to avoid the vulnerability of globalization.
The optimists say, well, we are headed to a productivity miracle.
It's going to be great because these technologies are going to more than an offset whatever we lose from the less collaborative world.
Okay, that could happen, It could totally happen.
But the passive is say, hey, the reason we're here in the first place is because we're massive gains in this macroeconomic paradigm that were distributed very unequally.
We had big winners and losers.
Well, the passive is say, AI is going to exacerbate that tremendously when we have massive winners and losers. It's going to be the show up into society. How those things net out has such a wide cone. And I think again into fool's errands to kind of try to predict exactly what's going to happen. So my advice and what we do with Bridgewater, we try to be practitioners.
So get your hands dirty. Understand that technology deeply and then prep yourself for wide range of outcomes of how this could play out.
Speaking of getting your hands dirty, Bridgewater has been using AI for its own processes. Late last year, you launched a fund over at Bridgewater starting with two billion dollars that uses machine learning as the primary basis for decision making, is built on proprietary technology.
What have you learned from this in terms.
Of how machine learning based investing is different from human lad investing.
So I'd say I feel very lucky.
Because of Bridge Orks DNA as we're coming to this inflection point I said earlier from the eighties, the idea that no human brain and can possibly get their head around everything.
In the world.
Men that we always try to replace humans with machines. So we are not moving from a human lead.
Investment process to a machine let investment process. We are moving.
We were using scientific calculators, and then we were using the seal sheets, and then we were using the most complicated expert system.
This is AI before AI.
To make investment decisions in a systematic, fundamental way. So for us, this is another step along in ARC and what we have learned through this process of what we call AA this is the artificial.
Intelligent Investment Associate.
That's the strategy that we rolled out and begin able to last year is that it does the same thing our people do by a machine learning first way. We learned through scientific breakthroughs within Bridgewater that you can reason you can generate alpha in a machine learning first way. That strategy compete with our expert system in humans. It generates unique alpha that is uncoordinated to what our humans do. That's been running out for a year and a half
and it's comparable. And that's mind blowing in the space of possibility, what can happen? And so one last thing beyond the numbers that are happening this year or in any given short period of times, the most important thing is it keeps us up to date on where things are going, not only within the asset management industry, but also as you think about how this is going to impact the macroeconomy.
So it's interesting. At the time of the launch, your cocio at Bridgewater, Bregg Jensen said, the fund had the potential to change the hiring and composition of staff. What skills do you think the future employees of Bridgewater are going to need? And you know, we were kind of joking a little earlier.
Maybe the junior.
Analysts don't go away, but boy do they have to be doing something.
Different, which has always been the case truly, because when you have an expert system that does a lot of what humans do in other funds, as an example, you really start to move people to do what machines couldn't do.
So we have been shifting the type of humans we bring into Bridgewater for fifty years, and that means from really looking for analytical skills and financial backgrounds to people that are conceptual and can ask philosophical question and query as an example, because they're going to be very levered
with technology and how they explore their questions. That's been constantly moving and I think this is a big shift, but it's a big shift in the same direction of what can humans do the future analysts, what can they do that machines can do. I'll say the one thing that is on my mind that I'm worried about. When you think about that arc, you have to think about what trains people over time.
So there are basic.
Jobs that people have in many places where you sleep under your desk and you do the tough work that then leads you to be able to do the higher level, more conceptual things. One of the things we're thinking about is, hey, we are well positioned already to replace a lot of the basic tasks with machines, But what does that mean to talent development over a long period of time. You have to be conscious not only of today, but what does that mean for your talent strategy over long term?
You know, how does this fit into the broader trajectory of Bridgewater. When I think about where you stand today, You've inherited this firm that's now roughly a half century old.
How do you position the firm for the future.
This is all in the scope of positioning for the next fifty years.
What is Bridgewater two point zero?
So I think the best way to hit this is to go back to the three things that I've said, because it kind of it's where our heads are und There are.
Things that have been that is a bad rocker Bridgewater.
Bridgewater truly, and I think I said this on the stage years ago.
Just after you were yeah yeah, with Eric Shatska.
Bridge was about getting an incredible group of people together and have this very very unique culture that puts in the center of everything.
The desire to be excellent.
And constantly learn, because that's the only way to accomplish this incredible mission of mapping the deepest precenting of how the ward works in a systematic, fundamental way through combination of fewas of technlogy.
That's stay the same.
If you look at the three things that I've said, I said, the microeconomic paradigm is shifting, and because of that, that means that beta, the tailwind is done. Alpha generation, the positive uncredited alpha that pure off as an example, a return for thirty three years is more important than ever. A deep understanding of cause effect languages of how the
world works more important than ever. We have to hold our hand the hands of our clients in days like today and months like the last month, where they're asking, how are these new policies going to flow through the economy?
What's going on?
So tremendous focus on improving the quality of understanding on our in our alpha.
I said.
The second thing is contort portfolios. For fifty years, you've said this. We're selling our fiftieth year this year. It's always been about partnering with CIOs and CEOs of the largest pools of capital in the world.
And helping them achieve their goals.
These are investment goals, resiliency, diversification. We've been very, very focused over the last couple of years to make sure that we can increase the impact act across their profilo because there are allocations of pure office is going to be small.
But in a trillion dollar portfolio.
They're going to want to know that you have the capability to invest, not in the US as an example, if everyone's investing in the US.
We've been really focused on building and capability to invest in China as an example.
Are our Onshore strategy lasts and return thirty percent? And I say that not because of the number. I say it because it shows where our focus has been. And the last thing is we've talked about, which is in a world that technology technology is going to disrupt us tremendously, making sure that you have a partner in Bridgewater.
That is the curve that is where.
The scientific breakthroughs are happening that you can lean on to show you where things are headed.
Those are the big three areas that we've been focused on. For now.
We'll get back to where things are headed, but before we get there, I just want to give the audience a chance to get to know you a little bit, because the more I've learned about you, the more your story is kind of like nothing I've ever It is like nothing I've ever seen in finance. So you didn't graduate from high school initially, you eventually went to Warton and then you started at Bridgewater as a thirty.
Three year old intern.
How I mean, sir, my Jewish mother, for you saying that I didn't graduate high school on this stage is probably like her heart is broken right now, But it's true. And I've never shared with this. Actually, So I've said many times that I look different. I know I'm different. The amount of people that commented on the fact that I'm not wearing a tie today, I am different. I come from the outside of the world. I come from Israel.
I've talked historically about being a third generation to grandparents that were Jewish refugees, family that was murdered in.
The Holocaust, and I talked about how the.
Story of my life is connected to seeing them establish a country. And I talked about how an incredible group of people with values can do incredible things. And I always jump the story and say and then I ended up a Bridgewater. To your point, if you doubleclated on that story, and I've been reflecting this a lot lately.
I was a bad student in high school.
I didn't get a diploma on the other of twelve years and I was very, very lucky that in Israel there is a mandatory service that everybody.
Has to do with the age of eighteen.
And because people like my grandparents that come from Libya and Hungary and Poland, looking different, different backgrounds, different languages, needed to come together to accomplish this really incredible task of putting a country together. They knew they had to make the most out of the told human capability and do that.
Through the service.
So the service ignores everything that happens up until the age of eighteen, and based on your merit, reassesses you.
I tested at.
Eighteen thinking that I was incompetent and tested extremely highly, and that changed my life.
It led to a very successful service.
And the reason that's important is because fifteen years later, you're right, I am a thirty three year old already with gray hair.
Winter intern in Bridgewater.
It's me and six other hung over Dartmouth twenty year olds, and my English is not great and I'm out of context and it's pretty confusing, and to say that I feel lost is not even the beginning of it. But again, I'm at an organization that is trying to make the most in an amertocratic way out of these human capital that it has because we're trying to accomplish this incredible goal.
And it leads me to kind of three big lessons. One, luck matters. Luck matters.
I was lucky to be in a society where I got a second shot in the service, and I was lucky to come across a Bridgewater.
I could have come across a different organization.
The second thing, and I connected it back to the AI point that you talked about, differences in thinking and unique contributions are very valuable, and I think that's especially true in a world where a lot of the generic intelligence is going to be commoditized.
And the third thing is the way to.
Capture unique ways of thinking is to aspire these to have a real meritocracy.
That's true in Israel, it's true at Bridgewater.
I think that is the key in US unlocking and facing some of the biggest challenges we have as corporations and as a society.
So another major part of your background, as you've been talking about, is your Israeli heritage, and you were talking about complicated geopolitics. In the past year alone, you've been back to Israel, You've spent a lot of time in the Middle East, including Saudi Arabia, Qatar, Bahrain. All in your capacity as the CEO of Bridgewater, what can you share about the trajectory of the Middle East and do you see a path to peace when it comes to the conflict in Israel.
Wow, let me start where I feel like I have to.
October seventh.
Is incredibly personal for me, and not just Ocstober sevens, but also what happens subsequently. There's still fifty nine hostages in Gaza. There's suffering in Gaza, They're suffering in Israel, They're suffering in the entire region. These are family members, my community. These my community at Bridgewater. Some of them are neighboring countries. These are partners of Bridgewater and neighboring countries.
It's been a year and a half of trauma, truly trauma, and my heart goes to everyone on this.
It is important for.
Me to say that I'm proud to be Jewish. I'm proud to be Israeli. I'm proud of my country men and women, and I feel very lucky that I've had the chance in this job, to your point, to go around the world and including in the Middle East and places that matter and represent hopefully the best of Israel, and learn about the best in many of the countries that you've mentioned, forge real friendships with people and incredible, incredible leaders. And your question about where things are had
I've said this before. I have a deep belief that look tragedy and trauma and suffering leads to resiliency, and resiliency leads to evolution. If you look at the Second World War and the new World order they came out of. If you look at a great depression and the new economic paradigm that came out of, if you look at the Holocaust and my grandparents rising from the ashes and
building a country. If I said that a great group of people can come together and share values and force a different future, I go back to all the people that are in the Middle East, not just in Israel, but in Saudi Arabia and Bahrain, in the UA. There's an incredible resilient generation that has suffered a lot, and I am actually more hopeful than ever that that generation can create a completely different future going forward to the Middle East and one hundred year piece.
What role does Saudi Arabia, does Katar?
Does the US play in negotiating peace here?
And is there a two point zero version of the Abraham Accords?
I mean, that's really not for me to answer.
The thing I would say is yes, I think that Saudi Arabia, the US, the Ua baharein. When I say there's a generation, there's a generation of leaders. Then when I talk to these people, they're.
Just like me. They have the same exact aspirations as I am.
And I think a coalition of that group of people in Israel and in the region is the way to create what you call the second Abram Accord, and it's coming. I'm more hopeful today, Chanelli, honesty that have been five years ago, because out of this suffering there's a crystallization of the realization that creates the necessity to evolve and take the region in a different direction.
And I want to get your thoughts clearly on this, because the human toll has been devastating, both in Israel and in Gaza and beyond. Really at this point how do you see the conflict playing out, given that the ceasefire talks have stalled.
Well, if I.
Said that, it's a fool's err and to guess where AI is going, this is truly a fool's erin to guess. But I would say this, until Bill the hostages are released, there is no solution. Also, until there is a future for the Palestinian.
People, there is no solution. And there are solutions that.
Can be put together, but they will be put together by a new generation taking leadership and coming together and making sacrifices the previous generations were.
I'm willing to do.
You know, a lot of people look around and they say, in the wake of World War Two, when you look now, there are a lot of the protections that were put in place to make sure that the world didn't fracture again, some of those protections are now under threat, particularly with the changing guards across countries.
Do you worry about that?
I mean, personally yes, I think that's a part of the macroeconomic paradigm that is also a geopolitical paradigm that has shifted the world post World War Two.
Out of the trauma of World War Two started a.
Series of events that led us to not only for protections and institutions, but increased collaboration decade after decade after decade, leading us to a long period of extreme collaboration over the last thirty years. There is no question that that paradigm, geopolitical and macroeconomic paradigm is being undone. Now there are reasons why that's getting undone. There are problems that were created that I mentioned earlier in this conversation that need
to get fixed. But if that's not done well, you can instead of correcting the problems that the system.
Had, you can create a disaster.
And I worry that between correcting the problems and causing complete chaos, we can easily end up being in chaos.
Before I let you go, this is kind of another bumber of a question, so I apologize, But do you think the world is more dangerous today than it's been in a long time?
The world is more dangerous today than it's been in r in recent history. But I think this is one of the problems that we have as humans. If you go back not that long, go back one hundred and fifty years, if you're in the US and eighteen hundreds, it is tough you have militias.
Women have no rights, black people have no rights.
Then you have the Spanish Flu, then you have the Great Depression, then you have World War one, World War two, you have the assassination of Kennedy and Martin Luther King. We have a bias to remember the last thirty years, which will particularly come. So the world is more dangerous today, but this is not a bigger problem than we have seen in the history.
Of our parents and grandparents.
We can deal with this as long as we embrace reality, understand it well, and come together.
To find solutions.
Thank you for such a clear conversation that is near Bardaya of course, the CEO of for daughter, thank you.
Thank you, our allies feat to be