Principles: Life and Work

by Ray Dalio

Don’t mistake opinions for facts.

it is smarter to choose the great over the new.

Everything important in your life needs to be on a trajectory to be above the bar and headed toward excellent at an appropriate pace.

“When you ask someone whether something is true and they tell you that it’s not totally true, it’s probably by-and-large true.”

The 80/20 Rule states that you get 80 percent of the value out of something from 20 percent of the information or effort.

b. Remember that decisions need to be made at the appropriate level, but they should also be consistent across levels.

It’s even more important that decision making be evidence-based and logical when groups of people are working together.

a. Raising the probability of being right is valuable no matter what your probability of being right already is.

b. Knowing when not to bet is as important as knowing what bets are probably worth making.

c. Don’t mistake possibilities for probabilities.

Get rid of irrelevant details so that the essential things and the relationships between them stand out.

“Any damn fool can make it complex. It takes a genius to make it simple.”

triangulating with highly believable people who are willing to have thoughtful disagreements has never failed to enhance my learning and sharpen the quality of my decision making.

the value of a widely known insight disappears over time.

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

your life is affected by the people around you and how you interact with each other.

people who make up an organization determine the kind of culture it has, and the culture of the organization determines the kinds of people who fit in.

a. A great organization has both great people and a great culture.

nothing is more important or more difficult than to get the culture and the people right.

Conflict in the pursuit of excellence is a terrific thing. There should be no hierarchy based on age or seniority. Power should lie in the reasoning, not the position, of the individual. The best ideas win no matter who they come from.

bad behavior because bad behavior is more likely to take place behind closed doors than out in the open.

• Make your passion and your work one and the same and do it with people you want to be with.

I believe that great cultures, like great people, recognize that making mistakes is part of the process of learning, and that continuous learning is what allows an organization to evolve successfully over time.

It is a fundamental law of nature that you get stronger only by doing difficult things.

concealing the truth might make people happier in the short run, it won’t make them smarter or more trusting in the long run.

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

1.1 Realize that you have nothing to fear from knowing the truth.

1.2 Have integrity and demand it from others.

a. Never say anything about someone that you wouldn’t say to them directly and don’t try people without accusing them to their faces.

those who face their challenges have the most admirable character;

1.3 Create an environment in which everyone has the right to understand what makes sense and no one has the right to hold a critical opinion without speaking up.

a. Speak up, own it, or get out.

Dishonest people are dangerous, so keeping them around isn’t smart.

1.5 Meaningful relationships and meaningful work are mutually reinforcing, especially when supported by radical truth and radical transparency.

The most meaningful relationships are achieved when you and others can speak openly to each other about everything that’s important, learn together, and understand the need to hold each other accountable to be as excellent as you can be.

It is important to be clear.

Being considerate means allowing other people to mostly do what they want, so long as it is consistent with our principles, policies, and the law. It also means being willing to put others ahead of your own desires.

Fairness and generosity are different things.

Generosity is good and entitlement is bad, and they can easily be confused, so be crystal clear on which is which.

If you want to have a community of people who have both high-quality, long-term relationships and a high sense of personal responsibility, you can’t allow a sense of entitlement to creep in.

2.4 Remember that most people will pretend to operate in your interest while operating in their own.

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

Everyone makes mistakes. The main difference is that successful people learn from them and unsuccessful people don’t.

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

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

3.2 Don’t worry about looking good—worry about achieving your goals.

Everyone has weaknesses and they are generally revealed in the patterns of mistakes they make.

Start by writing down your mistakes and connecting the dots between them. Then write down your “one big challenge,” the weakness that stands the most in the way of your getting what you want. Everyone has at least one big challenge. You may in fact have several, but don’t go beyond your “big three.”

By avoiding conflicts one avoids resolving differences. People who suppress minor conflicts tend to have much bigger conflicts later on, which can lead to separation, while people who address their mini-conflicts head on tend to have the best and the longest-lasting relationships.

Many complaints either fail to take into account the full picture or reflect a closed-minded point of view. They are what I call “chirping,” and are generally best ignored. But constructive complaints may lead to important discoveries.