Principles: Life and Work

by Ray Dalio

Eventually, for people who get used to it, living in a culture of radical transparency is more comfortable than living in the fog of not knowing what’s going on and not knowing what people really think. And it is incredibly effective.

Meaningful relationships are invaluable for building and sustaining a culture of excellence, because they create the trust and support that people need to push each other to do great things.

Relationships have to be genuine, not forced;

Mistakes will cause you pain, but you shouldn’t try to shield yourself or others from it. Pain is a message that something is wrong and it’s an effective teacher that one shouldn’t do that wrong thing again.

After the dust settled, Ross and I worked together to build an error log (we now call it the Issue Log), in which traders recorded all their mistakes and bad outcomes so we could track them and address them systematically. It has become one of the most powerful tools we have at Bridgewater.

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

If you don’t mind being wrong on the way to being right you’ll learn a lot—and increase your effectiveness.

You must not let your need to be right be more important than your need to find out what’s true.

If you want to evolve, you need to go where the problems and the pain are.

The harder the pain and the challenge, the better.

When there is pain, the animal instinct is flight-or-fight. Calm yourself down and reflect instead.

Self-reflectiveness is the quality that most differentiates those who evolve quickly from those who don’t. Remember: Pain + Reflection = Progress.

We do this by making it clear that one of the worst mistakes anyone can make is not facing up to their mistakes.

at Bridgewater we try to attain alignment consciously, continually, and systematically. We call this process of finding alignment “getting in sync,”

By avoiding conflicts one avoids resolving differences. People who suppress minor conflicts tend to have much bigger conflicts later on,

Thoughtful disagreement—the process of having a quality back-and-forth in an open-minded and assertive way so as to see things through each other’s eyes—is powerful, because it helps both parties see things they’ve been blind to.

everyone must understand the most fundamental principle for getting in sync, which is that people must be open-minded and assertive at the same time.

Management Committee.

The key is in knowing how to move from disagreement to decision making.

It is never acceptable to get upset if the idea meritocracy doesn’t produce the decision that you personally wanted.

Distinguish between idle complaints and complaints meant to lead to improvement. 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.

Remember that every story has another side.

I have found that most people have problems being assertive and open-minded at the same time.

It also helps to remind people that those who change their minds are the biggest winners because they learned something,

closed-minded people will waste your time. If you must deal with them, recognize that there can be no helping them until they open their minds.

You have a responsibility to be reasonable and considerate when you are advocating for your point of view and should never let your “lower-level you” gain control, even if the other person loses his or her temper.

Yet I often see people react to constructive questions as if they were accusations. That is a mistake.

If it is your meeting to run, manage the conversation.

There are many reasons why meetings go poorly, but frequently it is because of a lack of clarity about the topic or the level at which things are being discussed

Make it clear who is directing the meeting and whom it is meant to serve. Every

For example, people will sometimes say, “I feel like (something is true)” and proceed as though it’s a fact, when other people may interpret the same situation differently. Ask them, “Is it true?” to ground the conversation in reality.

When there is an exchange of ideas, it is important to end it by stating the conclusions. If there is agreement, say it; if not, say that.

Where further action has been decided, get those tasks on a to-do list, assign people to do them, and specify due dates.

Ranger School Tasks to Subs

sending around videotapes or audio recordings of key meetings. (I call such approaches “leverage.”)

1+1=3. Two people who collaborate well will be about three times as effective as each of them operating independently, because each will see what the other might miss—plus

Three to five smart, conceptual people seeking the right answers in an open-minded way will generally lead to the best answers.

A lack of common values will lead to a lot of pain and other harmful consequences and may ultimately drive you apart.

At Bridgewater everyone’s believability is tracked and measured systematically, using tools such as Baseball Cards

Simply look down on yourself and your team when a decision needs to be made and consider who is most likely to be right.

Treating all people equally is more likely to lead away from truth than toward it.

Opinions are easy to produce; everyone has plenty of them and most people are eager to share them—even to fight for them. Unfortunately many are worthless or even harmful, including a lot of your own.

Having open-minded conversations with believable people who disagree with you is the quickest way to get an education and to increase your probability of being right.

The best way to make great decisions is to know how to triangulate with other, more knowledgeable people.

Don’t pay as much attention to people’s conclusions as to the reasoning that led them to their conclusions.

It’s important to get the balance between your assertiveness and your open-mindedness right, based on your relative levels of understanding of the subject.

All parties should remember that the purpose of debate is to get at truth, not to prove that someone is right or wrong,

Our brains work like computers: They input data and process it in accordance with their wiring and programming.

Dealing with raw opinions will get you and everyone else confused;

Beware of statements that begin with “I think that . . .” Just because someone thinks something doesn’t mean it’s true. Be especially skeptical of statements that begin with “I think that I . . .” since most people can’t accurately assess themselves.