Principles: Life and Work

by Ray Dalio

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.

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

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

d. Realize that you can’t put out without taking in.

e. Recognize that to gain the perspective that comes from seeing things through another’s eyes, you must suspend judgment for a time—only by empathizing can you properly evaluate another point of view.

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

g. Be clear on whether you are arguing or seeking to understand, and think about which is most appropriate based on your and others’ believability.

a. Plan for the worst-case scenario to make it as good as possible.

Closed-minded people lack a deep sense of humility. Humility typically comes from an experience of crashing, which leads to an enlightened focus on knowing what one doesn’t know. Open-minded people approach everything with a deep-seated fear that they may be wrong.

d. If a number of different believable people say you are doing something wrong and you are the only one who doesn’t see it that way, assume that you are probably biased. Be objective! While it is possible that you are right and they are wrong, you should switch from a fighting mode to an “asking questions” mode, compare your believability with theirs, and if necessary agree to bring in a neutral party you all respect to break the deadlock.

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

I recommend that you write down your three most harmful habits. Do that right now. Now pick one of those habits and be committed to breaking it. Can you do that? That would be extraordinarily impactful. If you break all three, you will radically improve the trajectory of your life. Or you can pick habits that you want to acquire and then acquire them.

e. 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.

The best way to change is through doing mental exercises. As with physical exercise, this can be painful unless you enlist the habit loop discussed earlier to connect the rewards to the actions, “rewiring” your brain to love learning and beneficial change.

Remember that accepting your weaknesses is contrary to the instincts of those parts of your brain that want to hold on to the illusion that you are perfect. Doing the things that will reduce your instinctual defensiveness takes practice, and requires operating in an environment that reinforces open-mindedness.

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.

h. Shapers are people who can go from visualization to actualization. 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.

While there is no one best way to make decisions, there are some universal rules for good decision making. They start with: 5.1 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).