Crossing the threshold, 1967-1979

Every position I took had to survive stress, genuine uncertainty, and the fact that other people in the market were operating on incentives I might not fully see. The more time I spent in that environment, the clearer it became that ego — the need to defend a prior view rather than update it — was the single biggest enemy of good trading decisions, more damaging than any specific analytical mistake.

So I began deliberately building discipline around that weakness. Write the view down before acting on it, so it can be checked later against what actually happened. Size every risk conservatively enough to survive being wrong, because you will be wrong regularly no matter how good your process is. Assume, as a default posture, that you're missing something important — and treat disagreement from someone credible not as an insult to absorb, but as a test worth taking seriously.

This period is also when I founded Bridgewater, in 1975, out of a two-bedroom apartment in New York, initially as an advisory business helping corporate clients manage currency and interest-rate risk rather than as the investment firm it would later become. The habit that formed in those early years, more than any single trade, was the shift away from relying on heat-of-the-moment instinct and toward relying on a documented system — one I could trust precisely because it had already been tested, especially in the moments when pressure made trusting my own instinct feel most urgent and least reliable.

One early lesson stayed with me for life. When President Nixon ended the dollar's convertibility into gold in August 1971, I expected stocks to fall — and they rallied hard instead. I had simply never seen a devaluation before, and the market had. Studying earlier episodes afterward showed me the move was predictable to anyone who knew that history. From then on I made a habit of asking how a situation had played out in the past, across different countries and eras, before trusting my read of the present.