Principles: Life and Work

by Ray Dalio

My painful mistakes shifted me from having a perspective of “I know I’m right” to having one of “How do I know I’m right?” They gave me the humility I needed to balance my audacity.

I also feared boredom and mediocrity much more than I feared failure. For me, great is better than terrible, and terrible is better than mediocre, because terrible at least gives life flavor.

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

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

a. Don’t get hung up on your views of how things “should” be because you will miss out on learning how they really are. It’s important not to let our biases stand in the way of our objectivity. To get good results, we need to be analytical rather than emotional.

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

Reality is optimizing for the whole—not for you. Contribute to the whole and you will likely be rewarded.

Realize that you are simultaneously everything and nothing—and decide what you want to be.

The question is how we matter and evolve. Do we matter to others (who also don’t matter in the grand scope of things) or in some greater sense that we will never actually achieve? Or does it not matter if we matter so we should forget about the question and just enjoy our lives while they last?

What you will be will depend on the perspective you have. Where you go in life will depend on how you see things and who and what you feel connected to (your family, your community, your country, mankind, the whole ecosystem, everything). You will have to decide to what extent you will put the interests of others above your own, and which others you will choose to do so for.

With time, I learned that my initial reaction was because I hadn’t put whatever I was reacting to in the context of the fact that reality is built to optimize for the whole rather than for me.

Remember “no pain, no gain.” Realizing that we innately want to evolve—and that the other stuff we are going after, while nice, won’t sustain our happiness—has helped me focus on my goals of evolving and contributing to evolution in my own infinitely small way.

There is no avoiding pain, especially if you’re going after ambitious goals. Believe it or not, you are lucky to feel that kind of pain if you approach it correctly, because it is a signal that you need to find solutions so you can progress.

If you’re not failing, you’re not pushing your limits, and if you’re not pushing your limits, you’re not maximizing your potential.

Every time you confront something painful, you are at a potentially important juncture in your life—you have the opportunity to choose healthy and painful truth or unhealthy but comfortable delusion.

By contrast, people who choose what they really want, and avoid the temptations and get over the pains that drive them away from what they really want, are much more likely to have successful lives.

d. The biggest mistake most people make is to not see themselves and others objectively, which leads them to bump into their own and others’ weaknesses again and again.

Watching people struggle and having others watch you struggle can elicit all kinds of ego-driven emotions such as sympathy, pity, embarrassment, anger, or defensiveness. 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.

Color-blind people eventually find out that they are color-blind, whereas most people never see or understand the ways in which their ways of thinking make them blind.

If you’re like most people, you have no clue how other people see things and aren’t good at seeking to understand what they are thinking, because you’re too preoccupied with telling them what you yourself think is correct.

In other words, you are closed-minded; you presume too much. 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. The

Differences in thinking can be symbiotic and complementary instead of disruptive.

In my opinion, these two barriers—ego and blind spots—are the fatal flaws that keep intelligent, hardworking people from living up to their potential.

Remember that you’re looking for the best answer, not simply the best answer that you can come up with yourself.

is invaluable to know what you don’t know. Ask yourself: Am I seeing this just through my own eyes? If so, then you should know that you’re terribly handicapped.

Open-minded people always feel compelled to see things through others’ eyes.

Open-minded people are always more interested in listening than in speaking; they encourage others to voice their views.

Once you can sort out open-minded from closed-minded people, you’ll find that you want to surround yourself with open-minded ones.

Get to know your blind spots. When you are closed-minded and form an opinion in an area where you have a blind spot, it can be deadly.

So take some time to record the circumstances in which you’ve consistently made bad decisions because you failed to see what others saw.

practice Transcendental Meditation and believe that it has enhanced my open-mindedness, higher-level perspective, equanimity, and creativity. It helps slow things down so that I can act calmly even in the face of chaos, just like a ninja in a street fight. I’m

Be evidence-based and encourage others to be the same. Most people do not look thoughtfully at the facts and draw their conclusions by objectively weighing the evidence.

One way to do this is by asking questions like “Would you rather I be open with my thoughts and questions or keep them to myself?”; “Are we going to try to convince each other that we are right or are we going to open-mindedly hear each other’s perspectives to try to figure out what’s true and what to do about it?”; or “Are you arguing with me or seeking to understand my perspective?” 27

So if you want to know what is true and what to do about it, you must understand your own brain.

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Listening to uninformed people is worse than having no answers at all.

b. Be imprecise. Understand the concept of “by-and-large” and use approximations. Because our educational system is hung up on precision, the art of being good at approximations is insufficiently valued.

you need to constantly connect and reconcile the data you’re gathering at different levels in order to draw a complete picture of what’s going on. Like synthesizing in general, some people are naturally better at this than others, but anyone can learn to do this to one degree or another.

As Carl Jung put it, “Until you make the unconscious conscious, it will direct your life and you will call it fate.”

Before too long, you will be able to tap the highest-quality thinking on nearly every issue you face and get the guidance of a computerized system that weighs different points of view. For example, you will be able to ask what lifestyle or career you should choose given what you’re like, or how to best interact with specific people based on what they’re like.

To acquire principles that work, it’s essential that you embrace reality and deal with it well.

Don’t fall into the common trap of wishing that reality worked differently than it does or that your own realities were different. Instead, embrace your realities and deal with them effectively.

We all need others to help us triangulate and get to the best possible decisions—and to help us see our weaknesses objectively and compensate for them.

“There is no worse course in leadership than to hold out false hopes soon to be swept away.”

basic law of justice is that the punishment should fit the crime.

Treasure honorable people who are capable and will treat you well even when you’re not looking.

As Thomas Edison once said, “I have not failed. I’ve just found ten thousand ways that do not work.”

seems to me that if you look back on yourself a year ago and aren’t shocked by how stupid you were, you haven’t learned much.

Of course, in managing others who make mistakes, it is important to know the difference between 1) capable people who made mistakes and are self-reflective and open to learning from them, and 2) incapable people, or capable people who aren’t able to embrace their mistakes and learn from them.

Intelligent people who embrace their mistakes and weaknesses substantially outperform their peers who have the same abilities but bigger ego barriers.