It would be confusing to say that a billionaire like Ray Dalio was closely related to the creation of McNuggets. However, without Ray's influence, we would never be able to enjoy this rich, crispy dish. So what did Ray do to get this dish on the McDonald's menu? Let's learn about his biography as well as his lifelong successes with Coin68.
Who is Ray Dalio? Biography of the "father" of McDonald's McNuggets
Who is Ray Dalio?
Raymond Dalio was born in 1949 in Queens (New York, USA). His family was one of the model families of American society at the time. His father was a saxophonist at jazz clubs at the time, and his mother was a sincere, gentle and responsible housewife. Although Dalio's childhood was not rich, his parents still provided Ray with a fairly adequate life.
However, "peaceful" has never been the lifestyle that Ray Dalio pursues, since childhood, he has considered part-time jobs that his age can handle. By delivering newspapers to families in the neighborhood. However, unlike other children who always spend money on meaningless toys and ice cream sticks, Ray accumulates that money and waits for the right opportunity. When this amount reached 300 USD, Ray immediately bought shares of Northeast Airlines, that year the boy Ray Dalio was only 12 years old, so he had to buy these shares under the identity of his father.
Portrait of Ray Dalio
This time, fortune smiled on Ray Dalio, in 1968, because of poor business results, the airline had to sell itself to rival Delta Air Lines. And the people who benefit the most from this M&A deal are retail investors. Ray's initial $300 Capital has now grown to $1,500. Then, feeling that the job of delivering newspapers did not bring him anything but money, Ray decided to apply for a job at a nearby golf club. Here, Ray learned a lot about stocks, stocks and more about how money works.
Ray Dalio's career
Thanks to his academic achievements as well as his efforts, Ray was accepted to study at Longing Island and then Harvard, which has the largest concentration of children of politicians, officials and billionaires in the world. And so, while other students work part-time at restaurants or grocery stores, college student Ray earns pocket money by managing assets for other students.
In 1973, after graduating from Harvard with an MBA, Ray Dalio founded the stock brokerage firm Bridgewater Associates two years later. During this period, the political situation of Mexico as well as Latin American countries is unstable and in danger of collapse at any time. As soon as he smelled the money from this, Ray decided to take part in the biggest "gamble" in history. Realizing, in the uncertain situation of the Mexican government, the bonds of this country will be abundant and the price will be cheap. Ray has urged many investors to buy into Mexican government bonds. Because, if Mexico defaults, as soon as it is revived, bondholders will be the beneficiaries of preferential interest payments. And Ray Dalio was right, in 1982 Mexican Finance Minister Jesus Silva Herzog declared that the country could no longer afford their loans. And Ray and his investors have kept their hands on cheap bonds and will receive large profits in the future.
Bridgewater Associates Headquarters
But every fun has its end, in Ray's gamble, the fun ends as quickly as it started. After the statement of the Mexican Finance Minister, fearing that this country's fall will drag other Latin American countries, potential "debtors" of the US, so the Fed, IMF and major US banks Specifically, these financial entities have allied with each other to rescue Mexico with policies of reducing interest rates, opening the economy, preferential loans and rescue packages. As a result, Mexico's economy and financial health recovered rapidly, the interest on bonds that Ray predicted earlier had suddenly "evaporated". As a result, Ray was forced to return the money to investors and Bridgewater Associates had to sell all of its assets to fulfill its payroll obligations to employees.
The Story of Ray Dalio and the Chicken McNuggets
After the failure of the "gamble" above, Ray and Bridgewater Associates had a hard time and had to type out each company to sell the right market research package for those companies. Then, to revive the company, Ray entered the field of hedge fund management and business consulting. From here, the famous deal called McNuggets of Ray and McDonald's was born.
McDonald's math problem
One of Ray's first clients in that business consulting business was McDonald's. This giant fried chicken brought a problem that was considered quite difficult to solve at the time. Specifically, McDonald's wants to launch a new dish called McNuggets, in which small, mouth-watering and crispy chicken pieces will capture the love of customers. Moreover, the low price of this dish is expected to bring a competitive advantage in market share with Kentucky Fried Chicken.
But the problem here is that the price of finished chicken is not expensive but also unstable, so if McDonald's imposes a specific price on McNuggets, they will take a big risk if the price of chicken spikes. Besides, the hugeness of McDonald's is also a barrier to this pricing strategy because each importation of this giant's product is worth several billion dollars and the sales pressure is also enormous.
Ray Dalio's explanation
Initially, the strategy that McDonald's brought to Ray was that they planned to use the poultry price hedge method in case if the chicken price went up, McDonald's would also make a profit from the Buy position to compensate. their available Sell positions. The fixed loss from the sale of McNuggets will be recouped after the price of chicken falls and McDonald's receives a profit. The problem with this strategy, however, is that no market is open to hedge chickens. And Ray's answer is simple but extremely intelligent.
When it came to Ray, he redefined the price of a chicken expressed as follows:
Finished chicken price = chicken price (constant) + feed cost (changes in price) + livestock cost (constant)
So according to the above formula, the only thing that strongly affects the price of chicken would be the cost of feed, so instead of Hedge the price of chicken (which has no market) Ray asked McDonald's to Hedge the price of the foods used. chicken feed. From that proposal, McDonald's worked with suppliers to hedge the prices of the foods they feed their chickens to reduce the cost disparity of the chickens. And so, McDonald's has solved its big "price slip" problem.
Ray Dalio's view on cryptocurrencies
As for Ray Dalio, if in general about the crypto market, he himself considers it very potential in storage as well as other aspects related to technology. However, when asked specifically about Bitcoin, he expressed a very strong opinion about this cryptocurrency. Specifically, Dalio thinks that Bitcoin has too high a price range and won't be able to do what it was made to do. Besides, he also thinks that the Capital of BTC is too low and if considered for use in global payments, this will be the biggest barrier. Because, low Capital means that it is easy to be priced by large funds.
" #Bitcoin has no relation to anything. It's a tiny thing that gets disproportionate attention," says @RayDalio on #crypto . "The value of $BTC is less than 1/3 of $MSFT stock. It's not an effective store of wealth. But we are in a world where money as we know it is in jeopardy." pic.twitter.com/Cc7o2TwkxG
— Squawk Box (@SquawkCNBC) February 2, 2023
However, that does not mean that Ray does not invest in BTC or ETH. In the past, he was wary of BTC because he thought it was a bubble but after a period of observation, he also changed his mind. In an interview with Yahoo Finance, Ray shared that he himself bought some BTC and ETH to diversify his portfolio.
“I will not provide the exact amount of Bitcoin and Ethereum I am investing in, because I do not own too much.”
summary
Above is interesting information about Ray Dalio, who once lost money because he believed in himself and also because he believed in himself to make a remarkable career. Without his insightful and strategic analysis, we would not have been able to enjoy McDonald's famous McNuggets.
