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Bridgewater’s Rebecca Patterson: Fed risks credibility in inflation fight

By Jennifer Ablan
August 25, 2022

Rebecca Patterson, chief investment strategist at Bridgewater Associates, the world's largest hedge fund, sat down with Pensions & Investments for its relaunch of Face to Face, the brand's popular Q&A interview, featuring the best minds on Wall Street.

In an exclusive discussion at Ms. Patterson's Manhattan home (with her cat Thor making a guest appearance), she talked about her "humbling" first 2 1/2 years at Bridgewater, known for its culture of radical transparency famously infused by billionaire founder Ray Dalio.

Since its founding, Bridgewater has grown to about $150 billion in discretionary client assets as of Dec. 31.

Ms. Patterson, one of the most powerful women on Wall Street, said Bridgewater's institutional investors are bracing for a prolonged stagflationary period — an economic condition marked by slowing growth and high inflation — and are looking to protect their portfolios in the event of "sustained bear markets."

That has given risk-mitigating and macro strategies and the hedge funds, such as Bridgewater, that employ them a boost in capital inflows from big institutional investors that want to capitalize on market volatility and generate so-called alpha.

Bridgewater, she said, is bullish on inflation-linked securities and gold, to name a few investments in this environment, as well as Chinese equities, whose valuations she calls "attractive" and "a way to get diversification in a portfolio." Bridgewater is "bearish on equities broadly, including the United States, including Europe," Ms. Patterson said.

Ahead of Federal Reserve Chairman Jerome Powell's Jackson Hole speech on Friday, Ms. Patterson said it is premature to presume that Mr. Powell will pivot into a dovish stance, given commodities and housing have seen some cooling. "The Fed's in a really unenviable place, if they tighten too much, they risk exacerbating the recession," she said. "If they don't tighten enough, they're not going to get inflation where they want it and they could risk their credibility."

She added that Fed officials, so far, are going to raise interest rates until they get inflation to its target, which suggests a big downside risk to growth "that I don't think is reflected in markets."

For more of Ms. Patterson's views and opinions, please read on for the first of two installments of this Face to Face. Questions and answers have been edited for style, clarity and conciseness:

Q: The Fed is expected to stay with its hawkish rate hikes until data figures show further slowing inflation. And we're actually seeing some softening in a couple of inflationary figures. How do you and Bridgewater see the Fed's approach? Where are we in the cycle?

A: Inflation most likely has peaked and it isn't that surprising given that we've had commodity prices coming down for some time, we have supply chains starting to normalize so goods prices are starting to come down some and things like used car prices — that's likely to continue.

However, I think some investors over anchor to those components and forget that there's a lot more to it. And the two pieces of inflation we would focus on that we think are going to be a lot stickier are rents and housing.

So wages, what we're really thinking about is the service sector of the economy, which frankly is much bigger than goods anyway. And right now we're still seeing companies saying, "I can't find enough qualified workers." Fifty percent of companies say they can't find the labor force they need. So the job market is incredibly tight and that means they have to keep raising wages to attract those workers they need. And so we think wage inflation, particularly with the service sector, is likely to be sticky. That's about 30% of the CPI basket.

Now housing, you have to walk through it. We've already seen housing activity slow as mortgage rates have gone up and as houses have gotten less affordable. But what that does is it pushes households out and they rent instead of buy. Rents reset more gradually. And so rent inflation tends to last longer; it's kind of the sticky tail of the housing cycle, if you will. And so between a slower rent inflation cycle and the wage inflation, the two of those together make up 60% of the CPI basket.

We think it's unlikely you're going to get inflation cooling to 2%, 2.5% quickly. It's just going to take longer or it's going to take the Fed tightening a lot more and really undermining demand. So that's the first leg of the stool.

Q: We talked about the backdrop for inflation, what about growth?

A: Right. So that's the second leg of the stool. So in the case of growth, again, it's very bifurcated. We're seeing manufacturing slowing, we're seeing housing activities slowing, but we're seeing consumers well supported. They've run down their excess savings, but now they're just tapping their credit cards. So spending is staying relatively well supported so far and the labor market is incredibly tight.

As long as people have rising wages and strong incomes, they're going to keep spending. And so we need to see that leg of the stool, the consumer, start to roll over before the economy slows quickly. But there are some indications that that point is coming soon. We're starting to see delinquency rates on credit cards tick higher, for example, and we're seeing confidence surveys fall considerably. So we think we're going to see growth slowing, most likely more than discounted.

In fact, our estimates suggest that we could have a modest contraction in 2023. So our growth estimate is below what's priced in, our inflation estimate is above what's priced in. So then what does the Fed do with that? And the Fed's in a really unenviable place, if they tighten too much, they risk exacerbating the recession.

If they don't tighten enough, they're not going to get inflation where they want it and they could risk their credibility. How this plays out in the coming year is really going to depend on how the Fed proceeds. But what they're saying so far is they're going to tighten until they get inflation to target, which suggests a big downside risk to growth that I don't think is reflected in markets.

Q: That is interesting given the fact that we have been seeing the markets rally. Some people have also talked about rate cuts in 2023. It sounds to me that you think we're getting ahead of ourselves?

A.Yes. The markets are already reflecting that the Fed's pivoted and the Fed isn't close to pivoting. In fact, the equity rally that we've seen over the last six weeks or so actually makes it harder for the Fed, they have to tighten even more. And that's another piece. The Fed doesn't target market conditions, but the Fed does look at markets as an input. So if you have stronger equity markets, it creates wealth, it creates confidence and confidence leads to activity.

And so the higher stock markets go, the easier financial conditions get, the more the Fed has to tighten. So this reflection in the markets that the Fed may already have pivoted actually is likely to lead to the Fed tightening even more.

Q: How is Bridgewater counseling clients in this market? This is an unusual slowdown/stagflationary environment.

A: Exactly. I think there are a couple big concerns that our investors have today. And again, our job at Bridgewater is to hopefully generate very attractive returns for our clients, but then also help them solve their biggest challenges. And you just called one of them, which is stagflation.

We're defining it broadly, we're just saying slowing growth and higher than expected inflation. But let's say we're in this environment, how do investors balance their portfolios? Because we saw what happened in the first six months of the year. The returns were horrible because you had declining growth, rising inflation, rising discount rates, rising risk premiums. And if we're in that world where those forces are continuing, albeit to different degrees, it could be really difficult for a traditional, call it 60/40 portfolio (approximately 60% stocks, 40% bonds).

In the case of stagflation, we've gone back and looked at 100 years of economic scenarios and asset performance. And what we found is in periods where you had falling growth — or growth falling more than expected — inflation higher than expected, the average annual return was around -3%. Contrast that with a scenario where you have growth and inflation, more or less in line with expectations, average annual return, a positive 8%. Obviously a wide variation around those numbers, but directionally you get the idea, stagflation is going to kill you.

So what can you do about it? In those environments, again, looking at 100 years of market performance, the assets that did best in those stagflationary periods tended to be inflation-linked bonds, gold and broad commodities.

What did worse was equities. Equities were the ones that really got hurt from the falling growth, rising inflation dynamic. And then you think, well how likely is this right? Do I really think that stagflation is going to be here in three to five years or is this just a one-off? Maybe it's already behind us. And our view is that we're not sure where inflation settles in three to five years, but the risks are higher today that we have that outcome than we've seen in decades. Mainly for structural reasons, if you think about what's pushing inflation, it's not just the cyclical things we talked about, but there's also huge structural changes in the global economy that, again, we just didn't have.

Globalization, over the last few decades this was a major disinflationary force; today we're in a world with tensions with China, the Russian invasion of Ukraine, the pandemic, all these things have led companies to say, "I need to make sure my supply chains are resilient, not just low-cost."

And that means bringing production home or to nearby countries. That's inflationary and that is a change from what we had in the past. The other thing that's a structural shift is the green transition, climate transition. Which again, it's going to take years and that process is inflationary as we have carbon pricing, which is going to push up the cost of dirtier energy. And as we push and reduce the supply of dirtier energy, it's going to limit that supply, which is going to increase the price.

Both of these things are creating more structural, longer-lasting inflationary pressures that just didn't exist before. So those supports have to be taken into consideration along with the cyclical factors, which makes us think that stagflation is a real risk and people need to take a step back, look at their portfolios and say, "Do I have enough in my portfolio that if that scenario plays out, I'm not going to be vulnerable?"

Q: I love that you brought up gold. Do you have any targets on gold, any price level targets there?

A: We don't, as a rule, have price targets, we're mainly trying to do the best job we can measuring the economic forces that would make an asset price go up or down. And in the case of gold, what's been really interesting is that even with inflation at these high levels, gold has appreciated since we saw a reaction to the pandemic in 2020, but it hasn't moved as much as I think some folks might expect.

I think there's a couple reasons for that. Gold has benefited from the environment, but there have been some offsetting forces. So we've seen yields rise quite significantly over the last year or so, especially the first six months of this year. And gold has no yield so there's an opportunity cost. If interest rates are coming down, that opportunity cost is falling away and that makes gold more attractive.

There's also the jewelry dynamic, (as) 50% of gold demand is jewelry. And the biggest sources of demand for jewelry come from China and India. China's economy has been much more sluggish than folks expected this year, in part because of their COVID-zero policy. India also has had some challenges. So that has been softer than normal, also affecting the price of gold. So I think the interest-rate factor, the jewelry factor and then finally I'd just say inflation expectations.

People want gold as a hedge against inflation, to a degree, that's not the only reason they buy it, but it's a major one. And inflation expectations have risen, but they haven't become unanchored yet, they're really holding three- to five-year expectations at around 3%. And so there is some demand to buy gold as that hedge, but I think it would be much higher if you started to see some of those expectations surveys tick higher. If people thought the Fed was going to lose control of inflation, that would be the environment where I would expect gold would, pardon the pun, really shine.

Q: Innovation is key to the foundation of Bridgewater, any new strategies in the works?

A: As I said earlier, we're always trying to help our clients solve their biggest problems. Stagflation is certainly a challenge they're fearing today and looking ahead. And so we're trying to think about what are different portfolio strategies that they could include or even use as overlays to help them navigate through that.

One of the biggest challenges our clients are trying to figure out how to navigate is the potential for a prolonged stagflationary period. And we've been working in partnership with some of our key clients to help them create bespoke strategies to navigate through that. Something that we think additional clients might benefit from.

Another thing that our clients definitely worry about is just protecting their portfolios if we have sustained bear markets. When you think about the last decade, as bond yields got less and less attractive, people had to add more equity risk to portfolios to meet their return targets, private and public. And now the amount of private equity means they have less room for maneuver and their total equity exposure is so large, you can't get in and out of it easily if we have a bear market.

So what do you do? How do you protect your downside? And there are plenty of tail-risk strategies out there, options strategies. The challenge with those is that in good times, you're paying a premium, it's like an insurance policy. And if you have to go eight years out of 10 where stock markets are going up and you're bleeding money, that premium every year, sometimes that doesn't go down so well with your boards of directors or your stakeholders.

What we've tried to do is say, can we build a strategy that's going to protect our clients in a down market significantly, but also not have that insurance premium the rest of the time? So that's something else we've been working with our clients on.

And then I guess the last thing that comes up again and again and again is sustainability. How do you build a sustainable portfolio? How can you manage return, risk, but also sustainability? So instead of two dimensions, you're really thinking in three dimensions.

We launched a sustainable strategy a few years ago and we're exploring with our clients, are there other types of sustainability strategies that could help them? Those are a couple areas that we're exploring with our clients, partnering with our clients on, sustainability, equity bear markets, given the exposures they have today and trying to balance through stagflation.

Q: Now you brought up bespoke portfolio strategies. Hedge fund managers say they're seeing increased interest from asset owners, pension funds, foundations, endowments and hedge funds as portfolio diversifiers and risk-mitigating macro strategies, given current market conditions. Is Bridgewater seeing significant inflows because of this? A: Exactly. Well, when you think about what a stagflation environment means, you've got growth slower than expected, falling growth and rising or high inflation. And that is the opposite of what's going to be supportive for a traditional 60/40 portfolio (approximately 60% stocks, 40% bonds). Equities will benefit when growth is going up, discount rates, risk premiums are going down. Your bond diversifier should benefit if growth is falling and inflation is falling and central banks are easing. But the world we're in now and could be in for quite some time, again, is the opposite.

So your beta portfolio is not helping you, which pushes investors like the ones you're describing, toward alpha. And alpha could come in the form of hedge fund managers like us, it could come in the form of long-only strategies that take a lot of tracking error, that's some alpha on top of their beta. It could come through the alpha that's generated through liquid investments.

But to your point, I think in the world we're in now and again, it could continue for some time, it really is pushing more and more investors to find those sources of alpha to make up for the challenge that beta faces, which could be a sustained challenge.

Part 2: Bridgewater's Rebecca Patterson says currency risk, geopolitics are key concerns

By Jennifer Ablan
August 26, 2022

Rebecca Patterson, chief investment strategist at Bridgewater Associates, the world's largest hedge fund, sat down with Pensions & Investments for its relaunch of Face to Face, the brand's popular Q&A interview, featuring the best minds on Wall Street.

In an exclusive discussion at Ms. Patterson's Manhattan home, she talked about how the Federal Reserve's tightening cycle and global inflationary pressures are resulting in more currency volatility. "That is something we have not had for the last decade or two, really," Ms. Patterson said, adding portfolios should be considering hedging currency risk.

Since its founding by Ray Dalio, Bridgewater has grown to about $150 billion in discretionary client assets as of Dec. 31.

Ms. Patterson, one of the most powerful women on Wall Street, also discussed Bridgewater's stance on China, a country that has captured Mr. Dalio's intense interest. She said Bridgewater is staying on top of the tensions between the West and China. "When we look at what's priced into Chinese assets today, I'd say you really see (it) reflected already, the expectation for a very moderate recovery, if any, and some geopolitical risk premium, if you will."

Ms. Patterson also discussed her new life at Bridgewater and its radical transparency culture. Lastly, P&I asked for her advice for up-and-coming investors and strategists in a predominately male industry.

"I think if you have a point of view, don't wait to be perfect, speak up and say, 'Look, I'm not 100% sure, but here's how I see it.' Get yourself in the game," Ms. Patterson said.

For more of Ms. Patterson's views and opinions, please read on for the last installment of this Face to Face. Questions and answers have been edited for style, clarity and conciseness.

Q: This has been an unusual environment in financial markets and the global economy … I'd like to touch on the volatility we're seeing everywhere.

A: With a lot of uncertainty around the Fed, with high uncertainty around inflation, a lot of changes in policy, interest rates, rate differentials, it's no surprise that we're seeing more currency volatility. That is something we have not had for the last decade or two, really.

A lot of investors haven't really been thinking about, "Do I need to hedge currency risk?" I think that's back. You do need to think about hedging currency risk.

Two reasons why the volatility can hurt you. The currency you're denominated in. I know your readership is very global: Depending on your base currency, what you're denominated in, the difference in your returns just in the last 18 months could have been 30 percentage points.

In the 1970s, it was 60 percentage points. This can matter a lot, what currency you choose or what currency you hedge to can matter as much as the assets you own. That's the big deal. The second smaller deal, but still material, is how currency volatility passes through into the assets you own, primarily equities.

We've seen, for example, with the dollar strength over the last several months, a bigger and bigger hit to U.S. multinationals and we have seen them underperform more domestically oriented companies. Thinking about, what exposures do I have within the assets I own? Which equity markets? What types of companies, etc.? Do I need to hedge any of that out or do any kind of currency overlay? And then bigger picture for your total portfolio, what's my base currency? Do I need to be hedging some or all of that back to a different currency over the coming period? So strategic currency hedging, I think is back on top of our concern list for our clients and something we're talking to them about a lot.

Q: What are you exposed to and what are you avoiding?

A: In our Pure Alpha strategy today, we are positioned for an environment where growth slows more than expected and inflation moderates, but not as fast as what's discounted. In that environment, I think the asset class, in my opinion, that's most exposed is equities. I understand, last six weeks or so, we've had a really nice equity rally, our view is that it is a bear market rally or is likely a bear market rally and we've seen those many times before in bear markets.

If the Fed wants to get to its inflation goal, it's going to have to tighten enough to truly slow demand. If we slow demand, we're going to have to see earnings expectations come down. That hasn't happened yet. If earnings expectations come down, earnings growth slows, equities are going to have another leg lower. That's what we think is likely ahead of us. So we're bearish on equities broadly, including the United States, including Europe.

We do see some opportunities in markets that are facing less inflation risk and where valuations are less aggressive and where positioning is less aggressive and that would include places like China, but also Japan. That would be one tilt in our portfolios today.

I'd say we've gotten more neutral on the dollar. We have been more exposed to dollar strength and now we think there's increasing vulnerabilities around the dollar. We're not bearish per se, it tends to be currency-specific, but when you think about the dollar, the financing needs the U.S. has, our current account deficit, our timely estimates have that around 5% of GDP. That's big.

At the same time, the dollar has increased in value a lot on a trade-weight basis, so it's expensive. On a positioning point of view, foreign investors' exposures to the U.S. today are the highest we've seen in a few decades.

To fund this current account deficit, to get the capital flows in to meet the current account hole, you need foreign investors to continue adding to already very large exposures and it's possible, but it seems like that's getting less and less likely. It's just a vulnerability that we want to keep an eye on and make sure we're thinking through with our individual positions. Volatility isn't always just dollar strength, it can be the dollar swinging around both ways. I think investors need to be prepared for that in the coming months and quarters.

Q: You've brought up China several times during our conversation. The biggest China bull on Wall Street is Mr. Dalio. Have escalating tensions between the U.S. and China affected Bridgewater's investments in China?

A: We look at geopolitical and political risk across every position we have in our portfolio. Political risks in the United States, political risks in Britain, in Europe, in China. And I'm not trying to diminish what's happening in China. I'm just saying it's something that's part of our process that we're going to do every day with every position we have. Obviously, we are trying to stay on top of the tensions between the West and China. And when we look at what's priced into Chinese assets today, I'd say you really see reflected already the expectation for a very moderate recovery, if any, and some geopolitical risk premium, if you will.

And when we think about Chinese equities, we are seeing more and more stimulus from the government. In fact, just recently a rate cut. But in addition to that, a greater push on infrastructure spending, trying to provide some level of support to the property market without flooding the market. We think we are going to get probably more of a recovery than is expected, albeit a moderate one.

Even with that risk premium, we think that Chinese equity valuations today are attractive. So we think that this is a way to get diversification in a portfolio, we like having a position in Chinese equities, but do we manage that risk? We do, as we do with every other position in our portfolio.

Q: A follow-up to that, how should U.S. investors consider China as an investment given that it's a huge market, but with many ESG troubles? How do you reconcile that?

A: I think this is a question that depends, if you're looking at your portfolio in two dimensions, risk, return, or in three with sustainability. If you're looking at it from a two-dimensional point of view, I think China is a very additive allocation in a portfolio. Their cycle is so different from most of the developed world where we're seeing the Fed tightening, central banks tightening, we have growth starting to slow, very high inflation rates. They have a very nascent recovery, low inflation and they're stimulating.

So you're getting very different trends in the asset markets and so having both in a portfolio can get you a better risk-adjusted return. So that is a good thing. If you are a sustainability-focused investor, then I think it's going to come down to how you're approaching it. We use the United Nations Sustainable Development Goals, SDGs. We're looking for companies that are meeting those goals or are on a firm path to meeting those goals. And that's how we're trying to approach it. We'll look across every country to see where we can find opportunities that are in line with those principles.

Q: In terms of China, do you have conversations with Ray on the global economy and on China? How have you both conferred on that front?

A: Ray Dalio has transitioned to more of a CIO, mentor, for us at the firm. We still enjoy having conversations with him, hearing his perceptions about the world, getting his perspective, running our thoughts by him. We're so grateful to have him there for that. But with that transition, we wanted to make sure we had the next generation of CIOs ready to drive our portfolios forward.

Obviously we're lucky to have Greg Jensen and Bob Prince, who have been with the firm for a very long time at the wheel. But we also have now an investment committee of senior investors, myself included, who are meeting regularly to talk about positions in our portfolio, to talk about new insights we have about the economy, questioning things, debating things.

We have some incredibly lively debates. That is my very diplomatic way of putting it. But that's one of the things I love about Bridgewater is that it is a meritocracy, it is radical transparency. We have to push back on each other, we have to question everything to make sure we get to the best answer, regardless of who has the answer.

Q: Well, you don't want an echo chamber.

A: Absolutely not. That is not how you get great performance. The investment committee has been, I think, a really great evolution for the company with Ray moving into a new place in his life and a new place in his career and his relationship with Bridgewater. I think it's allowing us to continue to have a really sound, robust thought process and debate to try and get to the best outcomes for our portfolio. And even then, we know we're going to get it wrong plenty.

Q: You've been with Bridgewater since 2020, how's it going?

A: It's a great question. Look, I went there for a reason. When Ray asked me to consider joining Bridgewater, I thought, "OK, that's going to be a challenge." I went in eyes wide open. But that's exactly why I went. I love trying to understand the world, I love researching, I love digging deep into things and I know the reputation of this company, that it would be challenging, that I would grow as a researcher, as an investor and almost three years in, I am not disappointed. Sometimes it can be very humbling when you've had a long career like I have and then suddenly you feel like you're back at square one, proving yourself. But it does make you think more deeply and not assume things too quickly and I'm grateful for that. No, it's wonderful.

Q: Why is it humbling? If you can just elaborate on that.

A: Things you think you're good at, sometimes people will say, "Yeah, that was all right. That was at the bar."

And you have to take a step back and say, "OK, do I agree with that feedback? Is there something I could be doing better or differently?" And you don't have to agree with it, but often after you have a little time to process, you realize there's a kernel of truth and there is something you can get out of that feedback to improve on and get better. I think as long as you can trust your colleagues, that they're sharing that kind of feedback because they care about you and they want you to be better, it's so much easier to accept it. If you work somewhere where you can't trust your colleagues and you don't know if they're telling you what they really think or want to help you, it's a lot harder to engage in that kind of environment. But I truly believe that my colleagues, when they give me constructive feedback, it's because they want me to be the best I can be.

Q: What has surprised you the most about this cycle and just about what has happened over the last three years?

A: It's a fascinating question, there's so much that surprised us over the last three years. The thing that surprised me in a happy way over the last three years is the technology and innovation. Think about it, after the pandemic hit, within days, not even weeks, my entire company was spread all over the world and we were on Zoom and nothing changed. We continued to do our jobs and talk to each other and keep our community strong. We had vaccines within quarters, not years, that's extraordinary. I think that's a really positive surprise vs. what might have happened.

On a less positive note, is the polarization we've seen in the U.S. I started my career as a journalist and my first job was in Washington covering Capitol Hill. I remember clearly back then the saying that stuck with me that, "It's the economy, stupid." If people have money in their wallets, they tend to vote for the incumbent. And here we are and we get the biggest fiscal and monetary stimulus since World War II and it doesn't really bring the country together at all. It wasn't the economy, it was something else. And then I think about, well, what do you do with that? If we're in a different paradigm, how do you bring the country together? That's something that surprised me and worries me.

I'd say on a similar vein, a land war in Europe in our lifetimes was a huge, unfortunate surprise. I think about that, not just in terms of the structural and cyclical implications for Europe, but what it means for multilateralism. Forget the G-8, which was the G-7 plus Russia, that's dead. I'm not even sure how effective today with the different factions forming around the world, if a G-20 or a G-7 will even really be as functional as they used to be. What does that mean for shared global challenges? So that's a worry.

The last surprise I had, which is less of a worry, more of an observation is that I think China has moved into a new policy paradigm that perhaps investors don't adequately appreciate yet. In the last several decades, the standard procedure was if you hit a road bump, China would open the taps, flood the system with liquidity and growth would pop back. It's been very clear during the pandemic that they said, "No, we want quality growth, we don't want to flood the system." And that means they're going to accept relatively more modest rates of growth over longer periods of time. That's important to think about for China assets, but it's also important to think about for all the second and third derivative impacts it has for global assets and economies that are tied to China. I think it's a pretty big deal.

Q: You are one of the most important women in finance and I wanted to ask you if you have any advice for up-and-coming investors and strategists, especially since we are in a male-dominated industry.

A: For men and women both, read, read, read, read. I read aggregators, I read blogs, I read newspapers, I read a ton of books, especially history. I don't think history repeats, but it rhymes and you can learn a heck of a lot by understanding how the past unfolded and why it unfolded the way it did. Publications like yours are important to stay on top of industry trends. The Economist magazine is a good one-stop shop for a global macro. But anytime I get this question, that's always my first response.

I think for women, in particular, there's no reason to approach it any differently, being a woman than a man, you do your homework, you know your content and then you use your voice. I think the challenge that I still see is women worry that unless they have understood the question from every single angle and they're 120% sure of the answer, they don't always speak up. I'm generalizing obviously, but I don't see that happen as frequently with men. And I think if you have a point of view, don't wait to be perfect, speak up and say, "Look, I'm not 100% sure, but here's how I see it." Get yourself in the game.

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This material is for informational and educational purposes only and is not an offer to sell or the solicitation of an offer to buy the securities or other instruments mentioned. Any such offering will be made pursuant to a definitive offering memorandum. This material does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors which are necessary considerations before making any investment decision. Investors should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, where appropriate, seek professional advice, including legal, tax, accounting, investment or other advice.

The information provided herein is not intended to provide a sufficient basis on which to make an investment decision and investment decisions should not be based on simulated, hypothetical or illustrative information that have inherent limitations. Unlike an actual performance record, simulated or hypothetical results do not represent actual trading or the actual costs of management and may have under or over compensated for the impact of certain market risk factors. Bridgewater makes no representation that any account will or is likely to achieve returns similar to those shown. The price and value of the investments referred to in this research and the income therefrom may fluctuate.

Every investment involves risk and in volatile or uncertain market conditions, significant variations in the value or return on that investment may occur. Investments in hedge funds are complex, speculative and carry a high degree of risk, including the risk of a complete loss of an investor’s entire investment. Past performance is not a guide to future performance, future returns are not guaranteed, and a complete loss of original capital may occur. Certain transactions, including those involving leverage, futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors. Fluctuations in exchange rates could have material adverse effects on the value or price of, or income derived from, certain investments.

This information is not directed at or intended for distribution to or use by any person or entity located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Bridgewater to any registration or licensing requirements within such jurisdiction.

No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of Bridgewater ® Associates, LP.

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