Principles: Life and Work

by Ray Dalio

They are able to look objectively at what they are like—their strengths and weaknesses—and what others are like to put the right people in the right roles to achieve their goals.

If you are disappointed because you can’t be the best person to do everything yourself, you are terribly naive.

You need to get over all that and stop seeing struggling as something negative. Most of life’s greatest opportunities come out of moments of struggle; it’s up to you to make the most of these tests of creativity and character.

When encountering your weaknesses you have four choices: 1. You can deny them (which is what most people do). 2. You can accept them and work at them in order to try to convert them into strengths (which might or might not work depending on your ability to change). 3. You can accept your weaknesses and find ways around them. 4. Or, you can change what you are going after.

Asking others who are strong in areas where you are weak to help you is a great skill that you should develop no matter what, as it will help you develop guardrails that will prevent you from doing what you shouldn’t be doing. All successful people are good at this.

1. Don’t confuse what you wish were true with what is really true. 2. Don’t worry about looking good—worry instead about achieving your goals. 3. Don’t overweight first-order consequences relative to second- and third-order ones. 4. Don’t let pain stand in the way of progress. 5. Don’t blame bad outcomes on anyone but yourself.

Prioritize: While you can have virtually anything you want, you can’t have everything you want.

Don’t confuse goals with desires.

A proper goal is something that you really need to achieve. Desires are things that you want that can prevent you from reaching your goals.

Decide what you really want in life by reconciling your goals and your desires.

Never rule out a goal because you think it’s unattainable.

Remember that great expectations create great capabilities.

If you limit your goals to what you know you can achieve, you are setting the bar way too low.

Almost nothing can stop you from succeeding if you have a) flexibility and b) self-accountability. Flexibility is what allows you to accept what reality (or knowledgeable people) teaches you; self-accountability is essential because if you really believe that failing to achieve a goal is your personal failure, you will see your failing to achieve it as indicative that you haven’t been creative or flexible or determined enough to do what it takes. And you will be that much more motivated to find the way.

Knowing how to deal well with your setbacks is as important as knowing how to move forward.

View painful problems as potential improvements that are screaming at you. Though it won’t feel that way at first, each and every problem you encounter is an opportunity; for that reason, it is essential that you bring them to the surface. Most people don’t like to do this, especially if it exposes their own weaknesses or the weaknesses of someone they care about, but successful people know they have to.

Acknowledging your weaknesses is not the same as surrendering to them.

Be specific in identifying your problems. You need to be precise, because different problems have different solutions. If a problem is due to inadequate skill, additional training may be called for; if it arises from an innate weakness, you may need to seek assistance from someone else or change the role you play.

Once you identify a problem, don’t tolerate it. Tolerating a problem has the same consequences as failing to identify it. Whether you tolerate it because you believe it cannot be solved, because you don’t care enough to solve it, or because you can’t muster enough of whatever it takes to solve it, if you don’t have the will to succeed, then your situation is hopeless. You need to develop a fierce intolerance of badness of any kind, regardless of its severity.

Focus on the “what is” before deciding “what to do about it.” It is a common mistake to move in a nanosecond from identifying a tough problem to proposing a solution for it.

Like principles, root causes manifest themselves over and over again in seemingly different situations.

People almost always find it difficult to identify and accept their own mistakes and weaknesses.

Sometimes it’s because they’re blind to them, but more often it’s because their egos get in the way. Most likely your associates are equally reluctant to point out your mistakes, because they don’t want to hurt you. You all need to get over this.

Think about your problem as a set of outcomes produced by a machine. Practice higher-level thinking by looking down on your machine and thinking about how it can be changed to produce better outcomes.

Too many people make the mistake of spending virtually no time on designing because they are preoccupied with execution. Remember: Designing precedes doing!

Good work habits are vastly underrated. People who push through successfully have to-do lists that are reasonably prioritized, and they make certain each item is ticked off in order.

There are many successful, creative people who aren’t good at execution. They succeed because they forge symbiotic relationships with highly reliable task-doers.

goal setting (such as determining what you want your life to be) requires you to be good at higher-level thinking like visualization and prioritization. Identifying and not tolerating problems requires you to be perceptive and good at synthesis and maintaining high standards; diagnosis requires you to be logical, able to see multiple possibilities, and willing to have hard conversations with others; designing requires visualization and practicality; doing what you set out to do requires self-discipline, good work habits, and a results orientation.

Some people are good at knowing what to do on their own; they have good mental maps. Maybe they acquired them from being taught; maybe they were blessed with an especially large dose of common sense. Whatever the case, they have more answers inside themselves than others do. Similarly, some people are more humble and open-minded than others. Humility can be even more valuable than having good mental maps if it leads you to seek out better answers than you could come up with on your own. Having both open-mindedness and good mental maps is most powerful of all.

If you have good mental maps and low open-mindedness, that will be good but not great. You will still miss a lot that is of value.

if you have high open-mindedness but bad mental maps, you will probably have challenges picking the right people and points of view to follow.

The person who has good mental maps and a lot of open-mindedness will always beat out the pe...

The two biggest barriers to good decision making are your ego and your blind spots.

a. Understand your ego barrier. When I refer to your “ego barrier,” I’m referring to your subliminal defense mechanisms that make it hard for you to accept your mistakes and weaknesses.

For example, some people naturally see big pictures and miss small details while others naturally see details and miss big pictures; some people are linear thinkers while others think laterally, and so on.

This closed-mindedness is terribly costly; it causes you to miss out on all sorts of wonderful possibilities and dangerous threats that other people might be showing you—and it blocks criticism that could be constructive and even lifesaving.

Those who adapt do so by a) teaching their brains to work in a way that doesn’t come naturally (the creative person learns to become organized through discipline and practice, for instance), b) using compensating mechanisms (such as programmed reminders), and/or c) relying on the help of others who are strong where they are weak.

It requires you to replace your attachment to always being right with the joy of learning what’s true.

To be radically open-minded you must: a. 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 than whatever it is you do know.

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. They understand that you can’t make a great decision without swimming for a while in a state of “not knowing.”

b. Recognize that decision making is a two-step process: First take in all the relevant information, then decide.

Taking in others’ perspectives in order to consider them in no way reduces your freedom to think independently and make your own decisions. It will just broaden your perspective as you make them.

c. Don’t worry about looking good; worry about achieving your goal.

To be radically open-minded, you need to be so open to the possibility that you could be wrong that you encourage others to tell you so.

To me, it’s pointless when people get angry with each other when they disagree because most disagreements aren’t threats as much as opportunities for learning.

Closed-minded people don’t want their ideas challenged. They are typically frustrated that they can’t get the other person to agree with them instead of curious as to why the other person disagrees.

Open-minded people are more curious about why there is disagreement. They are not angry when someone disagrees.They

Open-minded people know when to make statements and when to ask questions.

Open-minded people can take in the thoughts of others without losing their ability to think well—they can hold two or more conflicting concepts in their mind and go back and forth between them to assess their relative merits.

A few good decision makers working effectively together can significantly outperform a good decision maker working alone—and even the best decision maker can significantly improve his or her decision making with the help of other excellent decision makers.