Ray Dalio: One of the greatest traders of our time owes his success to the “Risk-parity” concept

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Ray Dalio is an American investor, hedge fund manager, and philanthropist. He is the founder, co-chief investment officer, and co-chairman of Bridgewater Associates, a global investment management firm.

Dalio was born in Jackson Heights, Queens, New York in 1949. He started his career as a trader on the floor of the New York Stock Exchange in 1971. In 1975, he founded Bridgewater Associates, which has since become one of the largest and most successful investment management firms in the world.

Throughout his career, Dalio has been known for his innovative approach to investing and his use of data-driven decision-making. He is a pioneer of the “risk parity” investment strategy.

Risk parity

Risk parity is an investment strategy that aims to balance the risk across different asset classes in a portfolio. The goal of risk parity is to create a portfolio with a consistent level of risk, regardless of the specific assets that are included.

Here is an example of how risk parity might be implemented in practice:

1. Determine the risk budget: The first step in implementing a risk parity strategy is to determine the overall level of risk that you are willing to…