If a job loss has you down, just know you're in good company. Ray Dalio founded one of the world's largest hedge funds in Bridgewater Associates, but his start on Wall Street was much more humble.
"Your career almost went south when you punched your boss in the mouth, right?" Carlyle Group's billionaire cofounder David Robinson asked Dalio in a recent interview for the 92nd Street Y.
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"No, that was when my opportunities began — when I got fired," Dalio replied.
After being fired from his Wall Street job, Dalio started Bridgewater out of his apartment in New York City. But even then, his success wasn't immediate.
Here's what Dalio learned when he was just starting out — and what he recommends to people who want to follow in his footsteps.
Dalio's rocky start with Bridgewater taught him to never go all-in on just one thing
As he was just getting Bridgewater off the ground, Dalio noticed the U.S. was loaning out so much money to other countries that they wouldn't be able to pay it back. He was right about that — but he was wrong about what happened next.
"I thought we were going to have a big economic crisis because of this," Dalio told Rubenstein. "What happened instead was the stock market went up, they eased monetary policy… It cost me money. I was so broke that I had to borrow $4,000 from my dad in order to pay for family bills."
Dalio says this moment taught him he wasn't always going to be right. More importantly, it taught him the role of diversification in a portfolio — and why you should never put all of your financial eggs into one basket.
"I understood the power of diversification, and how diversification could reduce risk by up to 80% without reducing returns," Dalio said.
"That was then the bottom of Bridgewater, and from then on it was straight because of the lesson I learned."
How to use diversification to strengthen your own portfolio
You don't have to own a hedge fund to profit from diversification. Everyone should have a diversified investment portfolio, no matter whether you're investing as your primary career or if you're just building wealth for retirement.
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