Principles: Life and Work

by Ray Dalio

In those days, Fortune magazine had a little tear-out coupon you could mail in to get free annual reports from Fortune 500 companies. I ordered them all. I can still remember watching the mailman unhappily lugging all those reports to our door, and I dug into every one of them. That was how I began building an investment library.

Over the decades since, I’ve repeatedly seen policymakers deliver such assurances immediately before currency devaluations, so I learned not to believe government policymakers when they assure you that they won’t let a currency devaluation happen.

The more strongly they make those assurances, the more desperate the situation probably is, so the more likely it is that a devaluation will take place.

Making money in the markets is tough. The brilliant trader and investor Bernard Baruch put it well when he said, “If you are ready to give up everything else and study the whole history and background of the market and all principal companies whose stocks are on the board as carefully as a medical student studies anatomy—if you can do all that and in addition you have the cool nerves of a gambler, the sixth sense of a clairvoyant and the courage of a lion, you have a ghost of a chance.”

Seek out the smartest people who disagreed with me so I could try to understand their reasoning.

Know when not to have an opinion.

Develop, test, and systemize timeless and unive...

Balance risks in ways that keep the big upside while redu...

if there was a computer that could hold all of the world’s facts and if it was perfectly programmed to mathematically express all of the relationships between all of the world’s parts, the future could be perfectly foretold.”

I would start out with my intuitions as I always did, but I would express them logically, as decision-making criteria, and capture them in a systematic way, creating a mental map of what I would do in each particular situation. Then I would run historical data through the systems to see how my decision would have performed in the past and, depending upon the results, modify the decision rules appropriately.

learned that if you work hard and creatively, you can have just about anything you want, but not everything you want.

Maturity is the ability to reject good alternatives in order to pursue even better ones.

I urge you to be curious enough to want to understand how the people who see things differently from you came to see them that way. You will find that interesting and invaluable, and the richer perspective you gain will help you decide what you should do.

Making a handful of good uncorrelated bets that are balanced and leveraged well is the surest way of having a lot of upside without being exposed to unacceptable downside.

Myers-Briggs Type Indicator

When faced with a choice between achieving their goal or pleasing (or not disappointing) others, they would choose achieving their goal every time.

How the Economic Machine Works,

As a result, most people who see the world through the lens of the media tend to look for who is good and who is evil rather than what the vested interests and relative powers are and how they are being played out.

dealing with them. I gave Wang a copy of 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, which explains how evolution works. He gave me Georgi Plekhanov’s classic On the Role of the Individual in History.

“Capable people are those who sit there worrying about the future. The unwise are those who worry about nothing. If

For Campbell, a “hero” isn’t a perfect person who always gets things right. Far from it. A hero is someone who “found or achieved or [did] something beyond the normal range of achievement,” and who “has given his life to something bigger than himself or other than himself.” I had met a number of such people throughout my life. What was most interesting about Campbell’s work was his description of how they got that way. Heroes don’t begin as heroes; they just become them because of the way one thing leads to another. The diagram on the following page shows the archetypal hero’s journey. They typically start out leading ordinary lives in an ordinary world and are drawn by a “call to adventure.” This leads them down a “road of trials” filled with battles, temptations, successes, and failures. Along the way, they are helped by others, often by those who are further along the journey and serve as mentors, though those who are less far along also help in various ways. They also gain allies and enemies and learn how to fight, often against convention. Along the way, they encounter temptations and have clashes and reconciliations with their fathers and their sons. They overcome their fear of fighting because of their great determination to achieve what they want, and they gain their “special powers” (i.e., skills) from both “battles” that test and teach them, and from gifts (such as advice) that they receive from others. Over time, they both succeed and fail, but they increasingly...

Figuring out how to best give away money is as complex an undertaking as figuring out how to make it. Though

Long before I had a lot of money, I had determined that I wanted my sons to have only enough to afford excellent health care, excellent education, and an initial boost to help their careers get started. My

Speaking to others in comparable positions, I discovered that even the richest people feel short of the money they need to do the things they want to do. So

I learned to love my struggles, which I suppose is a healthy perspective to have, like learning to love exercising

What I have seen is that the happiest people discover their own nature and match their life to it.