A maverick hedge fund billionaire thinks Trump will ignite the US economy’s “animal spirits”

Rise of the plutocrats.
Rise of the plutocrats.
Image: AP Photo/Anja Niedringhaus
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Business under Trump should thrive like never before, says Ray Dalio, the billionaire chairman of the world’s biggest hedge fund firm.

Trump’s cabinet of former executives and dealmakers could spark economic growth well beyond what could be expected from tax cuts and new spending priorities alone, by infusing investors with renewed confidence, Dalio says. This summoning forth of “animal spirits”—a term coined by John Maynard Keynes to describe investors’ impulse toward action—could unlock the estimated $70 trillion in cash sitting on the sidelines as investors await higher returns.

“If this administration can spark a virtuous cycle in which people can make money, the move out of cash (that pays them virtually nothing) to risk-on investments could be huge,” Dalio wrote in a post on LinkedIn.

Dalio has a track record that lend his theories credibility. His firm, Bridgewater Associates, is the largest operator of hedge funds in the world, with $150 billion under management, and his flagship Pure Alpha fund earned $45 billion in returns since its inception in 1975. Dalio’s personal fortune of $14.1 billion makes him the 63rd richest person in the world, according to Bloomberg.

He’s amassed his riches by studying financial and economic trends and understanding how they fit together, according to a 2011 profile in The New Yorker. He’s also applied his philosophy of being open to the world to how he runs Bridgewater. That has fostered a corporate culture of  ”radical transparency,” where employees criticize each other openly and all meetings are videotaped for later scrutiny. He’s published a 100-page guide to his business and moral philosophy, called Principles, which is required reading for Bridgewater employees.

Dalio’s views on management and personal growth have been compared, negatively, to the objectivist philosophies of Ayn Rand. Dalio, in turn, invokes Rand to describe the Trump cabinet and what he sees as an aggressively market-friendly ideology.

“(I)f you haven’t read Ayn Rand lately, I suggest that you do as her books pretty well capture the mindset. This new administration hates weak, unproductive, socialist people and policies, and it admires strong, can-do, profit makers.”

The switch from the policies of Obama to Trump may be as profound as the UK’s shift to Thatcherism the late 1970s, or China’s embrace of capitalism in the 1980s, Dalio wrote. For billionaires and their investors, it’s very good news indeed.