Principles: Life and Work

by Ray Dalio

When we are born our brains are preprogrammed with learning accumulated over hundreds of millions of years. For example, researchers at the University of Virginia have shown that while many people have an instinctual fear of snakes, no one has an instinctual fear of flowers. The brains that we were born with had learned that snakes are dangerous and flowers are not. There’s a reason for that.

Meaningful work and meaningful relationships aren’t just nice things we chose for ourselves—they are genetically programmed into us.

Neuroscientists, psychologists, and evolutionists agree the human brain comes pre-programmed with the need for and enjoyment of social cooperation. Our brains want it and develop better when we have it. The meaningful relationships we get from social cooperation make us happier, healthier, and more productive; social cooperation is also integral to effective work. It is one of the defining characteristics of being human.

Leonard Mlodinow, in his excellent book Subliminal, writes, “We usually assume that what distinguishes us [from other species] is IQ. But it is our social IQ that ought to b...

Wilson explains that man is perpetually suspended between the two extreme forces that created us: “Individual selection [which] prompted sin and group selection [which] promoted virtue.”

A few years ago, I had a conversation with the Dalai Lama in which I explained to him the contemporary neuroscience view that all of our thinking and feeling is due to physiology (in other words, the chemicals, electricity, and biology in our brains working like a machine). This implied that spirituality is due to these physiological mechanics rather than something coming from above, so I asked him what he thought about that. Without hesitation, he responded “Absolutely!”

I recommended to him a book I’d read on the subject called The Spiritual Brain (which I also recommend to you). In our conversation, we went on to discuss the similarities and differences between spirituality and religion. His view was that prayer and meditation seemed to have similar effects on the brain in producing feelings of spirituality (the rising above oneself to feel a greater connection to the whole) but that each religion adds its own different superstitions on top of that common feeling of spirituality.

Realize that the conscious mind is in a battle with the subconscious mind.

While I had always assumed that logical conversation is the best way for people to get at what is true, armed with this new knowledge about the brain, I came to understand that there are large parts of our brains that don’t do what is logical. For example, I learned that when people refer to their “feelings”—such as saying “I feel that you were unfair with me”—they are typically referring to messages that originate in the emotional, subconscious parts of their brains.

I also came to understand that while some subconscious parts of our brains are dangerously animalistic, others are smarter and quicker than our conscious minds. Our greatest moments of inspiration often “pop” up from our subconscious. We experience these creative breakthroughs when we are relaxed and not trying to access the part of the brain in which they reside, which is generally the neocortex. When you say, “I just thought of something,” you noticed your subconscious mind telling your conscious mind something.

Many people only see the conscious mind and aren’t aware of the benefits of connecting it to the subconscious. They believe that the way to accomplish more is to cram more into the conscious mind and make it work harder, but this is often counterproductive. While it may seem counterintuitive, clearing your head can be the best way to make progress. Knowing this, I now understand why creativity comes to me when I relax (like when I’m in the shower) and how meditation helps open this connection. Because it is physiological, I ca...

When thoughts and instructions come to me from my subconscious, rather than acting on them immediately, I have gotten into the habit of examining them with my conscious, logical mind. I have found that in addition to helping me figure out which thoughts are valid and why I am reacting to them as I do, do...

Know that the most constant struggle is between feeling and thinking.

There are no greater battles than those between our feelings (most importantly controlled by our amygdala, which operates subconsciously) and our rational thinking (most importantly controlled by our prefrontal cortex, which operates consciously).

Reconcile your feelings and your thinking.

While the amygdala’s reactions come in spurts and then subside, reactions from the prefrontal cortex are more gradual and constant. The biggest difference between people who guide their own personal evolution and achieve their goals and those who don’t is that those who make progress reflect on what causes their amygdala hijackings.

Choose your habi...

Habit is probably the most powerful tool in your brain’s toolbox. It is driven by a golf-ball-sized lump of tissue called the basal ganglia at the base of the cerebrum. It is so deep-seated and instinctual that we...

If you do just about anything frequently enough over time, you will form a habit that will control you. Good habits are those that get you to do what your “upper-level you” wants, and bad habits are those that are controlled by your “lower-level you” and...

Research suggests that if you stick with a behavior for approximately eighteen months, you will build a strong tendency to stick to it nearly forever.

Duhigg’s core idea is the role of the three-step “habit loop.” The first step is a cue—some “trigger that tells your brain to go into automatic mode and which habit to use,” according to Duhigg. Step two is the routine, “which can be physical or mental or emotional.” Finally, there is a reward, which helps your brain figure out if this particular loop is “worth remembering for the future.” Repetition reinforces this loop until over time it becomes automatic.

Reading Duhigg’s book taught me that if you really want to change, the best thing you can do is choose which habits to acquire and which to get rid of and then go about doing that.

The most valuable habit I’ve acquired is using pain to trigger quality reflections. If you can acquire this habit yourself, you will learn what causes your pain and what you can do about it, and it will have an enormous impact on your effectiveness.

Train your “lower-level you” with kindness and persistence to build the right habits.

I used to think that the upper-level you needed to fight with the lower-level you to gain control, but over time I’ve learned that it is more effective to train that subconscious, emotional you the same way you would teach a child to behave the way you would like him or her to behave—with loving kindness and persistence so that the right habits are acquired.

Understand the differences between right-brained and left...

In a nutshell: 1. The left hemisphere reasons sequentially, analyzes details, and excels at linear analysis. “Left-brained” or “linear” thinkers who are analytically strong are often called “bright.” 2. The right hemisphere thinks across categories, recognizes themes, and synthesizes the big picture. “Right-brained” or “lateral” thinkers with more street smarts are often called “smart.”

Our experience has been that left-brained folks tend to see right-brained folks as “spacey” or “abstract,” while right-brained thinkers tend to find left-brained thinkers “literal” or “narrow.” I have seen wonderful results occur when people know where their own and others’ inclinations lie, realize that both ways of thinking are invaluable, and assign responsibilities accordingly.

Understand how much the brain can and cannot change.

Brain plasticity is what allows your brain to change its “softwiring.” For a long time, scientists believed that after a certain critical period in childhood, most of our brain’s neurological connections were fixed and highly unlikely to change. But recent research has suggested that a wide variety of practices—from physical exercise to studying to meditation—can lead to physical and physiological changes in our brains that affect our abilities to think and form memories.

In a study of Buddhist monks who had practiced more than ten thousand hours of meditation, researchers at the University of Wisconsin measured significantly higher levels of gamma waves in their brains; these waves are associated with perception and problem solving.

The four main assessments we use are the Myers-Briggs Type Indicator (MBTI), the Workplace Personality Inventory, the Team Dimensions Profile, and Stratified Systems Theory.

Introverts focus on the inner world and get their energy from ideas, memories, and experiences while extroverts are externally focused and get their energy from being with people. Introversion and extroversion are also linked to differences in communication styles. If you have a friend who loves to “talk out” ideas (and even has trouble thinking through something if there isn’t someone around to work it through with), he or she is likely an extrovert. Introverts will usually find such conversations painful, preferring to think privately and share only after they’ve worked things out on their own.

Some people see big pictures (forests) and others see details (trees). In the Myers-Briggs framework, these ways of seeing are best represented by the continuum from intuiting to sensing. You can get an idea of people’s preferences by observing what they focus on. For example, when reading, a sensing person who focuses on details can be thrown off by typos such as “there” instead of “their,” while intuitive thinkers won’t even notice the mistake. That is because the intuitive thinker’s attention is focused on the context first and the details second.

Some people make decisions based on logical analysis of objective facts, considering all the known, provable factors important to a given situation and using logic to determine the best course of action. This approach is an indicator of a preference for thinking and is how you’d hope your doctor thinks when he makes a diagnosis. Other people—who prefer feeling—focus on harmony between people. They are better suited to roles that require lots of empathy, interpersonal contact, and relationship building, for example HR and customer service.

Planners (or “Judgers” in Myers-Briggs terms) like to focus on a plan and stick with it, while perceivers are prone to focus on what’s happening around them and adapt to it. Perceivers work from the outside in; they see things happening and work backward to understand the cause and how to respond; they also see many possibilities that they compare and choose from—often so many that they are confused by them. In contrast, planners work from the inside out, first figuring out what they want to achieve and then how things should unfold.

At Bridgewater, we use a test called the “Team Dimensions Profile” (TDP) to connect people with their preferred role. The five types identified by the TDP are Creators, Refiners, Advancers, Executors, and Flexors. • Creators generate new ideas and original concepts. They prefer unstructured and abstract activities and thrive on innovation and unconventional practices. • Advancers communicate these new ideas and carry them forward. They relish feelings and relationships and manage the human factors. They are excellent at generating enthusiasm for work. • Refiners challenge ideas. They analyze projects for flaws, then refine them with a focus on objectivity and analysis. They love facts and theories and working with a systematic approach. • Executors can also be thought of as Implementers. They ensure that important activities are carried out and goals accomplished; they are focused on details and the bottom line. • Flexors are a combination of all four types. They can adapt their styles to fit certain needs and are able to look at a problem from a variety of perspectives.

Those who tend to focus on goals and “visualize” best can see the big pictures over time and are also more likely to make meaningful changes and anticipate future events. These goal-oriented people can step back from the day-to-day and reflect on what and how they’re doing. They are the most suitable for creating new things (organizations, projects, etc.) and managing organizations that have lots of change. They typically make the most visionary leaders because of their ability to take a broad view and see the whole picture. In contrast, those who tend to focus on daily tasks are better at managing things that don’t change much or that require processes to be completed reliably. Task-oriented people tend to make incremental changes that reference what already exists. They are slower to depart from the status quo and more likely to be blindsided by sudden events. On the other hand, they’re typically more reliable. Although it may seem that their focus is narrower than higher-level thinkers, the roles they play are no less critical.

Certain attributes combine frequently to produce recognizable archetypes. If you think about it, you can probably come up with a handful of archetypal people you meet over and over again in life: the spacey, impractical Artist; the tidy Perfectionist; the Crusher who runs through brick walls to get things done; the Visionary who pulls amazing big ideas seemingly out of the air. Over time I came up with a list of others, including Shaper, Chirper, Tweaker, and Open-Minded Learner, as well as Advancer, Creator, Cat-Herder, Gossiper, Loyal Doer, Wise Judge, and others.

I wrote a lot about the people I call “shapers” in the first part of this book. I use the word to mean someone who comes up with unique and valuable visions and builds them out beautifully, typically over the doubts of others. Shapers get both the big picture and the details right. To me, it seems that Shaper = Visionary + Practical Thinker + Determined.

I’ve found that shapers tend to share attributes such as intense curiosity and a compulsive need to make sense of things, independent thinking that verges on rebelliousness, a need to dream big and unconventionally, a practicality and determination to push through all obstacles to achieve their goals, and a knowledge of their own and others’ weaknesses and strengths so they can orchestrate teams to achieve them. Perhaps even more importantly, they can hold conflicting thoughts simultaneously and look at them from different angles. They typically love to knock things around with other really smart people and can easily navigate back and forth between the big picture and the granular details, counting both as equally important.

Knowing how one is wired is a necessary first step on any life journey. It doesn’t matter what you do with your life, as long as you are doing what is consistent with your nature and your aspirations.

If you’ve learned anything from this book I hope it’s that everyone has strengths and weaknesses, and everyone has an important role to play in life. Nature made everything and everyone for a purpose. The courage that’s needed the most isn’t the kind that drives you to prevail over others, but the kind that allows you to be true to your truest self, no matter what other people want you to be.

Getting the right people in the right roles in support of your goal is the key to succeeding at whatever you choose to accomplish.

In managing others, the analogy that comes to mind is a great orchestra. The person in charge is the shaper-conductor who doesn’t “do” (e.g., doesn’t play an instrument, though he or she knows a lot about instruments) as much as visualize the outcome and sees to it that each member of the orchestra helps achieve it. The conductor makes sure each member of the orchestra knows what he or she is good at and what they’re not good at, and what their responsibilities are. Each must not only perform at their personal best but work together so the orchestra becomes more than the sum of its parts. One of the conductor’s hardest and most thankless jobs is getting rid of people who consistently don’t play well individually or with others. Most importantly, the conductor ensures that the score is executed exactly as he or she hears it in his or her head. “The music needs to sound this way,” she says, and then she makes sure it does. “Bass players, bring out the structure. Here are the connections, here’s the spirit.” Each section of the orchestra has its own leaders—the concertmaster, the first chairs—who also help bring out the composer’s and the conductor’s visions.

Lots of data show that relationships are the greatest reward—that they’re more important to your health and happiness than anything else. For example, as Robert Waldinger, director of Harvard’s seventy-five-year Grant and Glueck study of adult males from a variety of socioeconomic backgrounds, puts it, “You could have all the money you’ve ever wanted, a successful career, and be in good physical health, but without loving relationships, you won’t be happy . . . The good life is built with good relationships.”

A brain-imaging study by Harvard-affiliated researchers at Massachusetts General Hospital found physical changes in the brain after an eight-week meditation course. Researchers identified increased activity in parts of the brain associated with learning, memory, self-awareness, compassion, and introspection, as well as decreased activity in the amygdala.

Recognize that 1) the biggest threat to good decision making is harmful emotions, and 2) decision making is a two-step process (first learning and then deciding).

Never seize on the first available option, no matter how good it seems, before you’ve asked questions and explored. To prevent myself from falling into this trap, I used to literally ask myself questions: Am I learning? Have I learned enough yet that it’s time for deciding?

Synthesis is the process of converting a lot of data into an accurate picture. The quality of your synthesis will determine the quality of your decision making. This is why it always pays to triangulate your views with people who you know synthesize well.