Aug 12, 2021 · 1h 2m · capital-allocators
Greg Jensen – Bridgewater Associates (Manager Meetings, EP.06)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Manager Meetings, New Zealand Superannuation Fund CIO Stephen Gilmore interviews Bridgewater Associates Co-CIO Greg Jensen to explore Bridgewater's systematic investment architecture, macroeconomic regime shifts, and the probabilistic principles governing institutional portfolio management.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 13.3% of the talking time here. How this is scored →
Ted as informed peer 4.5 Guest teaching 4.2 Guest disagreement 1.4 Ted pushing back 1.8
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 53:48 Playful Dismissal of Standard Question
When Stephen asks what question he should have asked, Greg blunts the open prompt with a blunt 'Well, not that one' before pivoting to mentorship.
Hardest push from Ted ▶ 40:10 Host Challenge on Zombie Companies and ProductivityStephen directly challenges Greg's low-rate narrative by pointing out that negative real yields keep unviable zombie firms alive and depress potential economic growth.
Biggest teaching moment ▶ 30:45 Masterclass on Macro Disinflationary ForcesGreg delivers an extensive macro breakdown of the five historical drivers of 40-year disinflation and explains how structural policy changes are shifting the regime toward inflation.
Ted holds their own ▶ 9:14 Ted's Deep Dive on Reference Portfolio FitTed demonstrates deep allocator expertise by interrogating Stephen on how Bridgewater is funded and sized against a passive 80/20 growth equity reference portfolio.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Allocator Perspectives: Stephen Gilmore on NZ Superfund's Allocation to Bridgewater | 6 | 2 | 1 | 2 | Ted Seides demonstrates strong institutional allocator knowledge by probing Stephen Gilmore on NZ Superfund's reference portfolio, sizing constraints, and Bridgewater's cultural dynamics. Gilmore collaboratively articulates how they benchmark and challenge Bridgewater. | |
| Greg Jensen's Background: Probabilities, Games, and Joining Bridgewater | 3 | 3 | 0 | 1 | Stephen Gilmore opens the interview with Greg Jensen by asking foundational questions about his background and early days at Bridgewater. Jensen shares personal anecdotes regarding probability, games, and the firm's growth from 44 people. | |
| The Architecture of Systematizing Fundamental Investment Logic | 4 | 5 | 1 | 1 | Stephen inquires about Bridgewater's systematic investment architecture and idea conversion rates. Greg provides a detailed schooling on transforming fundamental trader logic into human- and computer-readable algorithms with regular surge research cycles. | |
| Managing Hit Rates, Diversification, and Key Macro Misses | 5 | 6 | 2 | 3 | Stephen challenges the premise of hit rates and correlation breakdowns during crises. Greg openly breaks down Bridgewater's 55/45 baseline bet hit rate and admits their major miss in misjudging the speed and global synchrony of COVID lockdowns despite event-risk hedging. | |
| Macroeconomic Paradigm Shift: MP3, Nominal Growth, and Inflation Outlook | 5 | 6 | 2 | 2 | Stephen asks about policy divergence post-COVID and inflation risks. Greg educates in depth on Monetary Policy 3 (MP3), the dismantling of 40-year disinflationary forces, and how nominal GDP expansion will force higher interest rates. | |
| Sponsor Message: Ridgeline Investment Management Platform | 6 | 5 | 2 | 4 | Stephen pushes back on the impact of negative real yields, asking if prolonged low rates create zombie companies and depress productivity growth. Greg partially pushes back, noting that while zombies exist, massive demand pull and negative real yields economically justify government-led capital expenditure. | |
| All Weather Risk Parity Strategy and Regime Robustness | 5 | 5 | 2 | 3 | Stephen asks how risk parity (All Weather) performs in a stagflationary regime where real yields rise. Greg systematically walks through the four economic environments and explains how inflation-linked assets and cash shifts protect capital. | |
| Tactical Macro Opportunities in Currencies and International Equities | 4 | 4 | 1 | 1 | Stephen asks for specific tactical macro views across asset classes and time horizons. Greg outlines long positions in emerging market currencies like the Mexican peso and Brazilian real versus a short stance on the British pound, alongside favorable Japanese equity asymmetry. | |
| Intersection of Poker, Artificial Intelligence, and Team Composition | 4 | 4 | 1 | 1 | Stephen connects Greg's background in poker and AI to team dynamics and culture. Greg explains the contrast between individualistic high-stakes poker players and collaborative institutional teams, noting the necessity of cognitive diversity. | |
| Lessons from Mentors: Ray Dalio, Craig Mundie, and Systematic Execution | 3 | 3 | 2 | 1 | Stephen invites Greg to highlight unasked topics. Greg jokingly dismisses the prompt ('Well, not that one') before reflecting on crucial lessons from mentors Ray Dalio and Craig Mundie regarding steady execution and managing technologists. | |
| Concluding Reflections: Habits, Pet Peeves, Mistakes, and Life Lessons | 4 | 3 | 1 | 1 | Stephen conducts the standard closing questions covering habits, pet peeves, mistakes, and parental teachings. Greg shares candid reflections on early career arrogance, intermittent fasting, Thurman Munson baseball cards, and surrounding oneself with balanced minds. |
Statements from this episode (21)
Gilmore: Bridgewater Sits Between Discretionary Macro and Price-Signal Funds
“Other macro funds are perhaps either more discretionary or they are more reliant on the signals that come from price movements. So Bridgewater is somewhere in between.”
Jensen: Bridgewater changes roughly 10% of its investment processes each year
“So I'd say on the average year, kind of 10% change in our processes as a result of what we learn on an, in an average year. And we kind of measure ourselves against that.”
Jensen: Bridgewater adopts 3 to 5 new systematic research projects semiannually
“Every six months, We organize about 10 to 15 projects that we expect are the best ideas out of the things that we've been worrying about to impact our process, and of those, something like three to five come out to be good enough ideas that they become part of…”
Jensen: Bridgewater's individual trades only have a 55% win rate over 12 months
“Our ideas are generally in the 5545 range, where our positions have something like a 55 45 chance of being right at any given one in, let's say, a given 12 month period.”
Jensen: Bridgewater's Pure Alpha has made money in 80% of years
“If you look at bridge orders, Pure Alpha as an example, you know, we've made money in 80% of years.”
Jensen: Bridgewater's Trade Win Rate Fell to 37% During COVID
“We hadn't had the perfect storm of, we averaged that 55, 45, and it ranges from eighty-twenty, the best years, and forty-sixty, the worst years, and then in COVID, we were probably about 37.”
Jensen: Bond sell-off and rate rise will exceed market expectations
“I believe that's setting up a much bigger bond sell-off and interest rate rise than the markets are expecting.”
Jensen: Household wealth relative to income has reached record levels
“Wealth for households, as an example, are six times income, way beyond anything it's ever been, and wealth across the world relative to incomes are at record levels.”
Jensen: US Corporate Value Currently Equals 26 Years of Earnings
“If you took what it would take to pay off the corporate debt plus the corporate equity value in U.S. Equities, you're talking about 26 years if it was like a family business and you're trying to pay off your parents as you inherit this business, it would take …”
Jensen: Policymakers will accept inflation over a deflationary market crash
“I think policymakers are much more likely to take inflation than a deflationary crash at this point. And there's so much that can be done in society by distributing the wealth via those mechanisms. So I think you're likely to see that.”
Jensen: Negative real yields are priced into both equities and bonds
“The world is bad for investors going forward. It's been great looking backwards. So take that, but recognize going forward, the real yield priced into everything is bad. People look at the real yield in bonds and say, Why would I want a negative one, negative …”
Jensen: Nominal GDP growth will likely significantly exceed current interest rates
“The likelihood that the nominal GDP is going to be significantly higher than the current interest rate is quite high, and there are ways to isolate the companies who are likely to have profit growth and revenue growth reasonably in line with nominal GDP growth…”
Jensen: Speculative companies lacking cash flows will get hammered if rates rise
“And the companies that may not have cash flows are extremely reliant on the current levels of liquidity and really low interest rates. Where if interest rates change, that phenomenon could change quite quickly, and those companies will get hammered.”
Jensen: Negative real yields make government spending worthwhile despite poor execution
“You have a negative real yield world borrowing to do things that are good for society. You don't even have to be very good at it when the real yield is negative. You can be pretty crappy at deciding what's good for society and it's still worth it.”
Jensen: Central banks will continue making cash an unattractive asset
“And I think we're very far from that scenario today. I think they're going to continue to make cash a terrible asset and drive up The real economy through that process.”
Jensen: Mexican peso and Brazilian real face extremely bullish macro setup
“I think the Mexican peso, the Brazilian real, what you're seeing in those countries and much of the emerging world relative to the developed world is much more traditional monetary policy, traditional fiscal policy. So while you had a big push of fiscal during…”
Jensen: The British pound is in a dangerous and unattractive situation
“The pound is particularly unattractive in our minds about payment situation. The amount of money that's being printed, the long-term growth prospects are all leading to quite dangerous situation there.”
Jensen: Japanese equities offer superior risk-reward due to policy support
“I particularly like the setup in Japanese equities because more than any other country, the policy response to any downturn will be to buy equities directly. And at the same time, the prices are not nearly as expensive as in other places. So I think while they…”
Jensen: Very high chance humanity fails at superhuman AI development
“We only get one chance to develop an intelligence greater than us, and if you do it wrong, it's the end of things, and there's a very, very good chance we're going to do it wrong, just judging by how rarely we as a species get things right the first time.”
Jensen: Bridgewater hires botanists, historians, and poker players alongside economists
“If you look at Bridgewater, we hire people with a wide variety, botanists, history majors, to economics majors, to poker players, like a wide range, because looking at the world and understanding it, it's not a pure math puzzle. It's not a pure philosophy puzz…”