Principles: Life and Work

by Ray Dalio

To make money in the markets, one needs to be an independent thinker who bets against the consensus and is right. That’s because the consensus view is baked into the price. One

write down my decision-making criteria whenever I made a decision,

decision-making systems—especially when believability weighted—are incredibly powerful and

we aren’t born with decision-making skills. We learn them from our encounters with reality.

She died when I was nineteen. At the time, I couldn’t imagine ever laughing again. Now when I think of her I smile.

I both liked and loved him.

psychology of the 1960s U.S. was aspirational and inspirational—to achieve great and noble goals. It was like nothing I have seen since.

Being “liberal” meant being committed to moving forward in a fast and fair way,

I might have been naive but I wasn’t alone.

feared boredom and mediocrity much more than I feared failure.

My failure to anticipate this, I realized, was due to my being surprised by something that hadn’t happened in my lifetime, though it had happened many times before.

It’s senseless to have making money as your goal as money has no intrinsic value

There are anxious times in every investor’s career when your expectations of what should be happening aren’t aligned with what is happening and you don’t know if you’re looking at great opportunities or catastrophic mistakes.

1979–82. It was one of the most pivotal times in the last hundred years. The political pendulum throughout the world swung to the right, bringing Margaret Thatcher, Ronald Reagan, and Helmut Kohl to power. “Liberal” had ceased to mean being in favor of progress and had come to mean “paying people not to work.”

You can stay safe where you are and have an ordinary life, or you can risk crossing the jungle to have a terrific life. How would you approach that choice? Take a moment to think about it because it is the sort of choice that, in one form or another, we all have to make.

Seek out the smartest people who disagreed with me so I could try to understand their reasoning. 2. Know when not to have an opinion.

learned to go slowly when faced with the choice between two things that you need that are seemingly at odds.

Policymakers come from environments that nurture consensus, not dissent, that train them to react to things that have already occurred, and that prepare them for negotiations, not placing bets.

Even the most clear-sighted and capable policymakers must constantly divert their attention from the immediate problems they are dealing with to fight the objections of other policymakers, and the political systems they must navigate are often dysfunctional.

New hires typically go through an acclimation period of about eighteen to twenty-four months before becoming comfortable with the truthfulness and transparency

life consists of three phases. In the first, we are dependent on others and we learn. In the second, others depend on us and we work. And in the third and last, when others no longer depend on us and we no longer have to work, we are free to savor life.

I was no longer as excited about being successful as I was excited about having the people I cared about be successful without me.

decided I would stay on as a mentor. That meant I would either not speak at all or speak last, but always be available

Joseph Campbell’s great book The Hero with a Thousand Faces, because he is a classic hero and I thought it might help him. I also gave him The Lessons of History, a 104-page distillation of the major forces through history by Will and Ariel Durant, and River Out of Eden by the insightful Richard Dawkins,

Georgi Plekhanov’s classic On the Role of the Individual in History. All

If conflicts got resolved before they became acute, there wouldn’t be any heroes.” His

In fact, it’s hard to see the logic for choosing this hero role, if one were to choose. But

I came to appreciate what a tiny and short-lived part of that remarkable system I am, and how it’s both good for me and good for the system for me to know how to interact with it well.

While our higher-level thinking makes us unique among species, it can also make us uniquely confused.

While mankind is very intelligent in relation to other species, we have the intelligence of moss growing on a rock compared to nature as a whole. We are incapable of designing and building a mosquito, let

nature optimizes for the whole, not for the individual, but most people judge good and bad based only on how it affects them.

Reality is optimizing for the whole—not for you.

used to think that memory-based, conscious learning was the most powerful, but I’ve since come to understand that it produces less rapid progress than experimentation and adaptation.

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.

As Freud put it, “Love and work are the cornerstones of our humanness.”

If you can develop a reflexive reaction to psychic pain that causes you to reflect on it rather than avoid it, it will lead to your rapid learning/evolving.

become comfortable always operating with some level of pain, you will evolve at a faster pace.

I’ve come to see that people who overweigh the first-order consequences of their decisions and ignore the effects of second- and subsequent-order consequences rarely reach their goals.

For example, the first-order consequences of exercise (pain and time spent) are commonly considered undesirable, while the second-order consequences (better health and more attractive appearance) are desirable.

Distinguish between you as the designer of your machine and you as a worker with your machine. One

Most people remain stuck in the perspective of being a worker within the machine.

it is much more important that you are a good designer/manager of your life than a good worker in it,

Choosing a goal often means rejecting some things you want in order to get other things that you want or need even more.

good diagnosis typically takes between fifteen minutes and an hour, depending on how well it’s done and how complex the issue is. It

Root causes run much deeper and they are typically described with adjectives

Remember that there are typically many paths to achieving your goals. You only need to find one that works.

when two people reach opposite conclusions, someone must be wrong. Shouldn’t you want to make sure that someone isn’t you?

Open-mindedness doesn’t mean going along with what you don’t believe in; it means considering the reasoning of others instead

It doesn’t pay to be open-minded with everyone. Instead, spend your time exploring ideas with the most believable people you have access to.