Long before he became a billionaire, Ray Dalio was a successful investor as a pre-teen.
Dalio now heads Bridgewater Associates, the world's largest hedge fund with roughly $160 billion in assets. But when he was only 12 years old in the early 1960s, Dalio just wanted somewhere to invest the money he'd earned caddying on a golf course and everyone he knew was talking up the stock market.
"In the '60s, the stock market was the hottest it has ever been," Dalio said in an interview at the Stanford Graduate School of Business that was posted online last week. "Literally, if you got a haircut or anything, we would talk to you about the stock market. And, so when I was caddying, [the golfers] were talking to me about the stock market."
Dalio would save the money he made caddying — about "$6 a bag," he says in the interview — and eventually he took about $300 and bought shares of Northeast Airlines, a Boston-based airline that was later acquired by Delta Air Lines in 1972.
He decided on the stock after hearing the golfers mention it, he wrote a Reddit "Ask Me Anything" interview last year, and his jazz musician father introduced him "to a kind broker" who helped Dalio buy it.
Born in New York City, Dalio has said he grew up caddying at a local golf club frequented by wealthy Wall Street traders and even powerful politicians (including a future president, Richard Nixon).
Northeast, Dalio says, "was the only company that I ever heard of that was selling for less than $5 a share." The billionaire investor admits now that this was a "stupid rationale" for buying Northeast shares, especially since it turned out the company was near bankruptcy at the time, he says.
However unsophisticated, the buy still ended up being a profitable move when billionaire Howard Hughes' company bought control of Northeast, sending the company's stock price surging. With that, Dalio became a successful investor right out of the gate, and he never looked back.
"I thought, 'This game's easy; I can make a lot of money [on] games that easy,'" Dalio says in the interview at Stanford. "But, that's what got me hooked."
Dalio kept investing his modest earnings from caddying and other side-jobs, such as mowing lawns and delivering newspapers. He read companies' financial filings and asked professional investors for advice, and he'd built a stock portfolio worth thousands of dollars by the time he graduated from high school in the late 1960s.
Dalio went on to study finance at what is now Long Island University, and then he graduated from Harvard Business School in 1973. He founded Bridgewater Associates a few years later, first working out of his two bedroom New York City apartment, and he's built the firm into the world's largest hedge fund. Dalio's personal fortune has also grown considerably, as Forbes recently estimated his net worth at $18.4 billion.
Last year, when Dalio discussed his first attempts at investing on Reddit, one user asked the billionaire for his top piece of advice for young investors looking to hone their abilities.
"Dive into the markets, have the sh-- kicked out of you, and learn how to do things differently," Dalio said in response.
"One of my most basic formulas for life is Pain + Reflection = Progress," Dalio added. That's a common sentiment from Dalio, who regularly advises leaders that learning from painful moments through self-reflection can lead to success.
"If you can develop a reflexive reaction to psychical pain that causes you to reflect on it rather than avoid it, it will lead to your rapid learning/evolving," Dalio wrote in a 2018 Facebook post.
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Ray Dalio, founder of investment firm Bridgewater Associates, speaking at the WEF in Davos, Switzerland on Jan. 22, 2019.
Adam Galica | CNBC
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