Principles – by Ray Dalio

Over the course of our lives we make millions of decisions, essentially bets, some large and some small. It pays to develop Principles and think about how we make them because they are ultimately determine the quality of our lives.

Ray’s hope is that reading this book will prompt you and others to discover your own Principles from wherever you think is best and ideally write them down. Doing that will allow you and others to be clear about what your principles are and understand each other better. It will allow you to refine them as you encounter more experiences and to reflect on them, which will help you make better decisions and be better understood.

This book is about Ray’s Principles, taken from his journey to be the billionaire investor, philanthropist and founder of Bridgewater Associates, one of the world’s largest hedge funds.

Be radically open minded

Radical open mindedness is motivated by the genuine worry that you might not be seeing your choices optimally. It is the ability to effectively explore different points of view and different possibilities without letting your ego or your blind spots get in your way.

Sincerely believe that you might not know the best possible path and recognize that your ability to deal well with not knowing is more important that whatever it is you don’t know. Most people make bad decisions because they are so certain that they’re right that they don’t allow themselves to see better alternatives exist. Radically open minded people know that coming up with the right questions and asking other smart people what they think is as important as having all the answers.

Principles like radical open mindedness and radical transparency are invaluable for rapid learning and effective change.

This accelerates the learning process. It can be difficult because being radically transparent rather than more guarded exposes one to criticism: naturally we fear that. Yet if you don’t put yourself out there with radical transparency, you won’t learn

Don’t worry about looking good, worry about achieving your goal

People usually try to prove that they have the answer even when they don’t. Why do they behave in this unproductive way? Its generally because they believe the senseless but common view that great people have all the answers and don’t have any weaknesses.

It not only stands against reality, but progress also. You’re looking for the best answer, not the best one you can come up with yourself.

Embrace Reality and Deal With It

There is nothing more important than understanding how reality works and how to deal with it. The state of mind you bring to this process makes all of the difference. It is helpful to think of life as a game in which each problem you face is a puzzle you need to solve. By solving a puzzle you get a gem in the form of a principle that helps you avoid the problem in the future. Collecting these gems can improve decision making.

Be a hyper-realist

A) dreams + reality + determination = a successful life

What does a successful life look like? Some people want to change the world and others don’t, some people want to sit on the couch, some want to be the master of the universe, who cares. Neither is better. Each of us need to decide what we value most and choose the paths we take.

Over time, getting more out of life isn’t just a matter of working harder. It is a matter of working effectively, because effective working can increase your capacity by 100 times.

Look to nature to learn how reality works

Evolution is the greatest single force in the universe, it is the only thing that is permanent and drives everything. Evolution consists of adaptions/inventions that provide spurts of benefits that decline in value. That painful decline leads either to new adaptions and new inventions that bring new products, people, human capabilities, etc, or decline and death.

Think of any product organization, or person and you will see that it is true. The world is littered with once great things that deteriorated and failed, only a rare few have kept reinventing themselves to the height of greatness. All machines eventually break down and decompose. From this perspective we see perfection doesn’t exist.

It is a goal that fuels never ending process of adaption. So rather than getting stuck hiding our mistakes and pretending we’re perfect, it makes sense to find our imperfections and deal with them. You will either learn valuable lessons from your mistakes and press on, better equipped to succeed; or you won’t and you will fail.

Understand Nature’s practical lessons

We have the ability to allow us to reflect on ourselves and direct our own evolution because we are capable of conscious, memory based learning, we can evolve faster and faster than any other species, changing not just in generations but our own life times. The constant drive towards learning and improvement makes getting better innately enjoyable and getting better fast exhilarating.

We think we’re going after things, like toys, houses, money etc, but these don’t supply long term satisfaction.

Once we get them, we rarely remain satisfied for long. These things are just the bait; chasing these things is what forces us to evolve. The work we have doesn’t necessarily have to be a job. It can be any kind of long term challenge that leads to personal improvement. Meaningful work is connected to man’s innate desire to improve.

Remember no pain, no gain

While we don’t like pain, everything that nature made has a purpose, so nature gave us pain for a purpose. It is a fundamental law of nature that in order to gain strength one has to push one’s limits, which is painful

Pain + reflection = progress

Ray’s Principles include the idea that there is no avoiding pain, especially if you’re going after ambitious goals. Most people have a tough time reflecting when they are in pain and they pay attention to other things when pain passes, so they miss out on the reflections and lessons. Though this process of pushing your limits, of sometimes failing and sometimes breaking through – and deriving from benefits from failures and successes – is not for everyone – if it is for you it can be thrilling and addictive. If you choose to push through this painful process of personal evolution, you will naturally ascend higher and higher. As you climb above the blizzard of things that surround you, you will realise they seem bigger than they really are. The higher you ascend the more effective you become at working with reality to shape outcomes for your goals.

Last of Ray’s Principles: Understand that people are wired differently

It is obvious to all of us that we are born with different strengths and weaknesses in areas such as common sense, creativity, memory, synthesis, attention to detail and so forth. Examining these difference objectively makes even most scientists uncomfortable. Organizing people to complement their strengths and compensate for their weaknesses is like conducting an orchestra. It can be magnificent if done well and terrible if done poorly.

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