Bridgewater Down Slightly, Faces First Negative Year Since 2000

Dec 17 2012 | 12:06pm ET

The only thing between Bridgewater Associates and its first down year in more than a decade is December.

The world's largest hedge fund's largest hedge fund is down 0.5% through the first 11 months of the year. Unless it can make some gains this month, Pure Alpha II will suffer its first losing year since 2000, following two years in which it posted double-digit gains.

Much of the $120 billion firm's troubles stem from its early-year faith in the U.S. dollar, which, despite Bridgewater's bullish bet, lost ground against both the euro and the Japanes yen.

Perhaps unsurprisingly, given his fondness for transcendental meditation, Bridgewater founder Ray Dalio was philosophical about the turn in his fortune, telling a conference last week, that he was "probably due." He also paraphrased former U.S. Treasury Sec. Edgar Fiedler, saying, "He who lives by the crystal ball is destined to eat ground glass."

No matter what happens this month, however, Dalio's crystal ball says next year should be better, the New York Post reports.

Bridgewater will bet that interest rates will rise in late 2013. "The biggest opportunity will be shorting bond markets around the world," he said.

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