Principles: Life and Work

by Ray Dalio

Matt’s passion is to bring inexpensive, effective computing to the developing world as a way of expanding and improving education and health care.

A community in which you always have the right and obligation to make sense of things and a process for working yourselves through disagreements—i.e., a real, functioning idea meritocracy. I want you to think, not follow—while recognizing that you can be wrong and that you have weaknesses—and I want to help you get the most likely best answers, even if you personally don’t believe that they’re the best answers. I want to give you radical open-mindedness and an idea meritocracy that will take you from being trapped in your own heads to having access to the best minds in the world to help you make the best decisions for you and for our community. I want to help you all struggle well and evolve to get the most out of life.

what’s most important is to know one’s own nature and operate consistently with it.

Disagreements like these were expected, as we always want everyone to think independently and argue for what they view as best. That is why we have principles and processes for resolving them.

Simply put, governance is the system of checks and balances ensuring that an organization will be stronger than whoever happens to be leading it at any one time.

Watching the same things happen again and again, I began to see reality as a gorgeous perpetual motion machine, in which causes become effects that become causes of new effects, and so on.

Instead of feeling frustrated or overwhelmed, I saw pain as nature’s reminder that there is something important for me to learn.

In my early years, I looked up to extraordinarily successful people, thinking that they were successful because they were extraordinary. After I got to know such people personally, I realized that all of them—like me, like everyone—make mistakes, struggle with their weaknesses, and don’t feel that they are particularly special or great. They are no happier than the rest of us, and they struggle just as much or more than average folks. Even after they surpass their wildest dreams, they still experience more struggle than glory.

Since life brings both ups and downs, struggling well doesn’t just make your ups better; it makes your downs less bad. I’m still struggling and I will until I die, because even if I try to avoid the struggles, they will find me.

I have experienced the full range, from having nothing to having an enormous amount, and from being a nobody to being a somebody, so I know the differences.

Having the basics—a good bed to sleep in, good relationships, good food, and good sex—is most important, and those things don’t get much better when you have a lot of money or much worse when you have less.

And the people one meets at the top aren’t necessarily more special than those one meets at the bottom or in between.

being strong is better than being weak, and that struggling gives one strength.

What I have seen is that the happiest people discover their own nature and match their life to it.

It’s now clear to me that my purpose, your purpose, and the purpose of everything else is to evolve and to contribute to evolution in some small way.

I realized that passing on knowledge is like passing on DNA—it is more important than the individual, because it lives way beyond the individual’s life. This is my attempt to help you succeed by passing along to you what I learned about how to struggle well—or, at the very least, to help you get the most out of each unit of effort you put in.

I believe that everything that happens comes about because of cause-effect relationships that repeat and evolve over time.

Individually, we are machines made up of different machines—our circulatory systems, our nervous systems, and so on—that produce our thoughts, our dreams, our emotions, and every other aspect of our distinct personalities. All these machines are evolving together to produce the reality we encounter every day.

I have found it helpful to think of my life as if it were a game in which each problem I face is a puzzle I need to solve. By solving the puzzle, I get a gem in the form of a principle that helps me avoid the same sort of problem in the future.

Collecting these gems continually improves my decision making, so I am able to ascend to higher and higher levels of play in which the game gets harder and the stakes become ever greater.

If I can reconcile my emotions with my logic and only act when they are aligned, I make better decisions.

people who create great things aren’t idle dreamers: They are totally grounded in reality. Being hyperrealistic will help you choose your dreams wisely and then achieve them.

Some people want to change the world and others want to operate in simple harmony with it and savor life. Neither is better. Each of us needs to decide what we value most and choose the paths we take to achieve it.

Radical open-mindedness and radical transparency are invaluable for rapid learning and effective change.

Don’t let fears of what others think of you stand in your way.

Learning to be radically transparent is like learning to speak in public: While it’s initially awkward, the more you do it, the more comfortable you will be with it.

Embracing radical truth and radical transparency will bring more meaningful work and more meaningful relationships.

Man’s most distinctive quality is our singular ability to look down on reality from a higher perspective and synthesize an understanding of it.

This is because the evolution of the brain gave man a much more developed neocortex, which gives us the power to think abstractly and logically.

Top down: By trying to find the one code/law that drives them all. For example, in the case of markets, one could study universal laws like supply and demand that affect all economies and markets. In the case of species, one could focus on learning how the genetic code (DNA) works for all species.

Bottom up: By studying each specific case and the codes/laws that are true for them, for example, the codes or laws particular to the market for wheat or the DNA sequences that make ducks different from other species.

For example, the male/female sexual reproduction process, using two eyes to provide depth perception, and many other systems are shared by many species in the animal kingdom.

Man is just one of ten million species and just one of the billions of manifestations of the forces that bring together and take apart atoms through time. Yet most people are like ants focused only on themselves and their own anthill; they believe the universe revolves around people and don’t pay attention to the universal laws that are true for all species.

We are incapable of designing and building a mosquito, let alone all the species and most of the other things in the universe. So I start from the premise that nature is smarter than I am and try to let nature teach me how reality works.

Don’t get hung up on your views of how things “should” be because you will miss out on learning how they really are.

I now realize that nature optimizes for the whole, not for the individual, but most people judge good and bad based only on how it affects them. What I had seen was the process of nature at work, which is much more effective at furthering the improvement of the whole than any process man has ever invented.

Typically, people’s conflicting beliefs or conflicting interests make them unable to see things through another’s eyes.

While I could understand people liking something that helps them and disliking things that hurt them, it doesn’t make sense to call something good or bad in an absolute sense based only on how it affects individuals.

To be “good” something must operate consistently with the laws of reality and contribute to the evolution of the whole; that is what is most rewarded.

Evolution is the single greatest force in the universe; it is the only thing that is permanent and it drives everything.

Knowledge, for example, is like DNA in that it is passed from generation to generation and evolves; its impact on people over many generations can be as great or greater than that of the genetic code.

Evolution is good because it is the process of adaptation that generally moves things toward improvement.

From this perspective, we can see that perfection doesn’t exist; it is a goal that fuels a never-ending process of adaptation.

Organisms, organizations, and individual people are always highly imperfect but capable of improving. 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.

Evolve or die.

The key is to fail, learn, and improve quickly. If you’re constantly learning and improving, your evolutionary process will look like the one that’s ascending. Do it poorly and it will look like what you see on the left, or worse.

Evolving is life’s greatest accomplishment and its greatest reward.

History has shown that all species will either go extinct or evolve into other species, though with our limited time window that is hard for us to see.

But we do know that what we call mankind was simply the result of DNA evolving into a new form about two hundred thousand years ago, and we know that mankind will certainly either go extinct or evolve into a higher state.

I wonder how many centuries it will take for us to evolve into a higher-level species that will be much closer to omniscience than we are now—if we don’t destroy ourselves first.