Principles: Life and Work

by Ray Dalio

I learned a great fear of being wrong that shifted my mind-set from thinking “I’m right” to asking myself “How do I know I’m right?”

I have come to realize that bad times coupled with good reflections provide some of the best lessons, and not just about business but also about relationships.

To me, the greatest success you can have as the person in charge is to orchestrate others to do things well without you.

Pain + Reflection = Progress.

You need to develop a fierce intolerance of badness of any kind, regardless of its severity.

b. Distinguish proximate causes from root causes. Proximate causes are typically the actions (or lack of actions) that lead to problems, so they are described with verbs (I missed the train because I didn’t check the train schedule). Root causes run much deeper and they are typically described with adjectives (I didn’t check the train schedule because I am forgetful). You can only truly solve your problems by removing their root causes, and to do that, you must distinguish the symptoms from the disease.

The most valuable habit I’ve acquired is using pain to trigger quality reflections.

5.1 Recognize that 1) the biggest threat to good decision making is harmful emotions, and 2) decision making is a two-step process (first learning and then deciding).

For me, getting an accurate picture of reality ultimately comes down to two things: being able to synthesize accurately and knowing how to navigate levels.

To synthesize well, you must 1) synthesize the situation at hand, 2) synthesize the situation through time, and 3) navigate levels effectively.

Think of every decision as a bet with a probability and a reward for being right and a probability and a penalty for being wrong.