50 Years of the Bridgewater Daily Observations

As part of Bridgewater’s 50th anniversary celebration, we recently released the 50 best Bridgewater Daily Observations of the past 50 years. Throughout Bridgewater’s history, the Daily Observations—or what we call “the wire” internally—has been our way of giving our clients and readers a real-time view into how we’re processing the world.

To mark the release of the 50 Best Bridgewater Daily Observations, we’re sharing a documentary exploring the history of the BDO from Bridgewater’s founding through today.

In the video above, Co-CIOs Bob Prince, Greg Jensen, Karen Karniol-Tambour, founder Ray Dalio, and some of our senior investors and BDO editors discuss the early years of the Daily Observations and reflect on some of the best Observations from Bridgewater’s history. They also share what the BDO means to them, its role in our investment process, and how the process of writing a BDO works today.

50 Years of Insights

Below, we’re also sharing selections from our “50 Best” Daily Observations compendium. These BDOs represent our approach to understanding economies and markets—and highlight how we processed some of the most important events of the last few decades.

World Grains/Oilseeds/Products Analysis

January 15, 1978

This is one of the first Bridgewater Daily Observations (and the earliest example we have been able to locate). While the early BDOs were more in the weeds on particular markets and market action than they are today, you can still see the systematic thinking of our founder, Ray Dalio, that would become a hallmark of how Bridgewater invests and how we would share our perspectives in future Observations.

Why the Economy Is Unresponsive to Stimulation or the Decline of the American Empire

December 13, 1986

This Observations is the first in which Bridgewater begins to lay out how the longer-term debt cycle works relative to the shorter-term debt cycle. It may have been a bit early to call the end of the American empire, but our understanding of the mechanics of how the economic machine works with relation to debt, productivity, and sustainable growth was beginning to take shape.

Bubble or Boom?

January 12, 2000

This BDO, published in January 2000, Co-CIO Bob Prince on how we were processing “whether the US economy is in a speculative bubble or a productivity boom.” The new frameworks and concepts developed in this series will eventually produce what we call our “bubble framework.”

What a Bubble Looks Like

April 21, 2005

This BDO is an early examination by Co-CIO Greg Jensen on the unsustainable dynamics of the housing boom through the lens of homebuilders. Greg explores the massive increase in debt and inventories as homebuilders bet on the boom continuing for years, which helped sow the seeds of the housing bust.

The Really Big Picture; Not Just a Normal Recession

January 31, 2008

Written in January 2008, this BDO lays out how we see the difference between a recession and a depression, the lessons we learned from our study of the Great Depression, and why those lessons suggested we were heading into a dangerous time for economies and markets. This BDO is also an example of how our Observations give real-time transparency into how our thinking is evolving through time.

We Agree!

May 7, 2009

In this BDO, we shared our excitement that government stress tests of the banking system matched our own, giving us confidence regulators understood the full scale of the crisis. This Observations also holds an important place in Bridgewater’s history. In his book Stress Test: Reflections on Financial Crises, former Treasury Secretary Timothy Geithner describes walking into President Obama’s office and handing the president this BDO to show him that we were processing things in a similar way.

Gold is a Currency

March 10, 2010

Ray Dalio describes how gold is a currency more than it is a commodity or investment asset. He also writes that a portion of investors’ cash portfolio should be allocated to gold for strategic asset allocation reasons due to its unique diversification properties. This Observations feels even more relevant now than when it was written in 2010. In the world we live in today, where the US dollar has increasingly been used as a tool of foreign policy, it’s worth reiterating that saving in someone else’s fiat currency remains a risky proposition.

What Monetary Policy 3 (MP3) Will Look Like

February 12, 2016

When this BDO was written in February 2016, rates across the world were near zero, and we were concerned how the next downturn would be managed with so little fuel in the tank. We discuss how Monetary Policy 1 (interest rates) and Monetary Policy 2 (quantitative easing) have nearly run their course and describe what Monetary policy 3 could potentially look like. The description of what MP3 would become (i.e., a coordinated fiscal/monetary response) proved to be right—though it didn't really materialize until COVID made it necessary.

Distinguishing Equity Market Corrections from Bear Markets

October 15, 2018

Co-CIO Bob Prince walks through a historical case study to systematically examine the differences between a correction and a bear market. As Bob shows, these two different types of equity drawdowns have very different causes and very different implications for investors. This Observations is another example of how historical case studies inform our thinking and support our investment process.

It’s Mostly a Demand Shock, Not a Supply Shock, and It’s Everywhere

October 19, 2021

In October 2021, there was a real question as to how transitory inflation would be—and there was a widespread belief that this was a transitory supply shock. But in this Observations, Greg describes how the Monetary Policy 3 response (i.e., the massive combined monetary and fiscal stimulus) actually created a self-reinforcing demand explosion that supply was having a hard time keeping up with and that the inflation shock from the pandemic was likely to be more durable.

The Big Picture: Back to the Future

January 3, 2024

Co-CIO Karen Karniol-Tambour describes how the secular investment picture looks like something we haven’t seen for decades: interest rates regained primacy as the most important lever of monetary policy, inflation is a feature of the economic landscape, geopolitical tensions are creating new risks, and the government is playing a more active role in the economy. Since we published these Observations, we have entered a new modern mercantilist paradigm that has further enhanced many of these dynamics.

Is an AI Bubble Ahead of Us or Behind Us?

September 10, 2024

Co-CIO Greg Jensen writes that he believes the AI bubble is ahead of us, not behind us. He says that the greatest bubbles need a truly transformational technology and a ripe macro and monetary environment—and we now have both elements. Greg also discusses using AI in our investment process through AIA Labs. Since we published this BDO, we’ve seen AI investment continue to expand and be an important pressure for growth.

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We’re All Mercantilists Now

November 25, 2024

There are times when big shifts happen and the right framework is crucial for understanding how to process the smaller pieces that make up that big shift. This BDO, from November 2024, captures a dynamic we dubbed modern mercantilism, which had been occurring for some time but was accelerated by the election of President Trump. In this Observations, Co-CIO Greg Jensen walks through his early thinking on how to model the effects of mercantilism.

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50 Years of the Bridgewater Daily Observations

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