Investing legend Ray Dalio runs Bridgewater Associates. He’s been making the rounds, hawking his book, Principles, and controlling the fate of his hedge fund clients’ $160 billion. Dalio practices a form of “radical transparency” at his firm, but Andy Kessler writes that the techniques Dalio uses to enforce transparency may be backfiring on him.

The core of investing is quite simple: Determine what everyone else thinks, and then figure out in which direction they are wrong. That’s it. No one tells you what they think. You’ve got to feel it. That’s why Wall Streeters say things like, “We are lowering our above consensus expectations earnings estimates.” It’s all about figuring out what is priced into a stock right now. That’s the pulse of the market, the collective mind meld aggregated into stock prices. I know from experience this is the hardest part of running a hedge fund. You can find the greatest story ever, but if everyone already knows it, there’s no money to be made.

And the pulse changes with each government statistic, each daily ringing of cash registers and satellite images taken of parking lots. That’s why stocks trade every day. Real-world inputs and the drifting pulse drive the psychotic tick of the stock market tape. Once you feel the pulse, then and only then can you figure out how everyone’s wrong about tomorrow, next month or next year. And believe me, they’re always wrong. Stocks rarely tread water.

How do you find that pulse? It’s hard enough to invest your IRA. Can you image managing $160 billion? Wall Street analysts have earnings estimates that no one trusts. There are whisper numbers and the chaos of message boards and tweets.

It’s best to survey your own people. That’s why Bridgewater has some 1,700 employees. A friend of mine learned you have to take a Myers-Briggs personality test before Bridgewater bothers to interview you. He was told he was “not right for the job.” But it turns out that only a tiny handful of employees make any of the investment decisions anyway. Clearly Mr. Dalio doesn’t trust them, so he tries to remove their biases surgically, hence the radical transparency and the illusion of a meritocracy. Mr. Dalio doesn’t care about employees’ opinions or ideas; he just wants to take their pulse to figure out what the market already knows. Or as he puts it: “The biggest mistake most people make is to not see themselves and others objectively.”

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