Principles: Life and Work

by Ray Dalio

Idealists who are not well grounded in reality create problems, not progress.

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. Whenever I observe something in nature that I (or mankind) think is wrong, I assume that I’m wrong and try to figure out why what nature is doing makes sense.

1. Have clear goals. 2. Identify and don’t tolerate the problems that stand in the way of your achieving those goals. 3. Accurately diagnose the problems to get at their root causes. 4. Design plans that will get you around them. 5. Do what’s necessary to push these designs through to results.

When you are diagnosing problems, don’t think about how you will solve them—just diagnose them. Blurring the steps leads to suboptimal outcomes because it interferes with uncovering the true problems.

If you are too proud of what you know or of how good you are at something you will learn less, make inferior decisions, and fall short of your potential.

To be radically open-minded you must: 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.

Taking in others’ perspectives in order to consider them in no way reduces your freedom to think independently and make your own decisions. It will just broaden your perspective as you make them.

Regularly use pain as your guide toward quality reflection. Mental pain often comes from being too attached to an idea when a person or an event comes along to challenge it. This is especially true when what is being pointed out to you involves a weakness on your part. This kind of mental pain is a clue that you are potentially wrong and that you need to think about the question in a quality way. To do this, first calm yourself down. This can be difficult: You will probably feel your amygdala kicking in through a tightening in your head, tension in your body, or an emerging sense of annoyance, anger, or irritability. Note these feelings when they arise in you. By being aware of such signals of closed-mindedness, you can use them as cues to control your behavior and guide yourself toward open-mindedness. Doing this regularly will strengthen your ability to keep your “higher-level you” in control. The more you do it, the stronger you will become.

Principles themselves are a form of leverage—they’re a way to compound your understanding of situations so that you don’t need to exert the same effort each time you encounter a problem.