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A thread on things I took/learnt from @RayDalio's book "Principles" (~150 things)
1- Line 2 of book - “I’m a ‘dumb shit’ who doesn’t know much relative to what I need to know. Whatever success ive had in life has had more to do with my knowing how to deal with my not knowing anything I know”
2- “The most important thing I learned is an approach to life based on principles that help me find out whats true and what to do about it”
3- Dalio wrote the book because he is at the stage of his life where he cares more about helping others become successful than being more successful himself.
4- Principles are fundamental truths that serve as the foundations for behaviour that gets you what you want out of life. They can be reapplied again in similar situations to help you achieve goals.
5- Dalio hopes that he can help set the framework for people to discover their own principles through the book, he says “ideally write them down”
6- “if you can think for yourself while being open-minded in a clearheaded way to find out what is best for you to do, and if you can summon up the courage to do it, you will make the most of your life”
7- Think for yourself to decide 1) what you want 2) what is true and 3) what you should do to achieve 1) in light of 2)
8- “I learned my principles over a lifetime of making a lot of mistakes and spending a lot of time reflecting on them”
9- How to find principles: have audacious goals – failure – learning principles – improving – more audacious goals (thus repeats the cycle of improvement)
10- three things to do: make believability-weighted decisions (how do I know I’m right? Vs I know I’m right), operate by principles and systemize your decision making
11- The whole book is three parts: 1 – “where I’m coming from” – life story ish, 2 – “life principles” how Dalio approaches life overall, 3 – “work principles” how Bridgewater works. (this thread is only parts 1 and 2)
12- After reading this book + one more which will cover economic and investment principles (not out), Dalio will have no advice left to give
13- To help reader understand where he is coming from, Dalio gives reader unvarnished account of his life – good, bad and everything in between
14- “I’ve always been an independent thinker inclined to take risks in search of rewards, not just in markets, but in most everything.”
15- “I also feared boredom and mediocrity much more than failure” Great > terrible > mediocre, terrible at least gives life meaning.
16- Dalio liked transcendental meditation, benefitted him hugely throughout his life – produces calm open-mindedness for clearer and more creative thinking
17- Dalio was too wild for job at Shearson Org, hired a stripper for Cali Grain and Feed assoc annual convention, also punched boss in face. He got fired lol
18- The most painful lesson that was repeatedly learned was that you can never be sure of ANYTHING. He attributes this lesson to much of his success
19- Dalio is a legend as he helped engineer supply deal that led to Mcdonalds introducing Mcnuggets in 1983
20- After 8 years of being successful, in 1981 Dalio bet for a recession worse than 1930s – he was publicly very wrong
21- Being so publicly wrong lead to him to have to let go of ALL his employees, even had to borrow $4k from dad + sell car. Note - everyone fucks up, even the best
22- “I just want to be right, I don’t care if the answer comes from me” good attitude, many got too big an ego to accept though
23- To be open minded: 1- seek out smart people who disagree and understand why, 2-know when to not have opinion, 3-develop,test and systemize principles, 4-balance risks and minimise downside
24- If you work hard and creatively you can have just about anything you want, but not everything you want. Dalio had to shut his Chinese private equity firm bcoz couldn’t do it + bridgewater properly together
25- From his travels, he learned that judging people before really seeing through their eyes stands in the way of understanding their circumstances + isn’t smart.
26- Mid 1980s Bridgewater was a small community of friends who worked hard and party hard, Dalio’s kids would walk around as office was connected to his house.
27- Organisations have two types of people, those who work for the mission and those who work for a pay check.
28- When he thinks someone did something stupid he said so, and expected others to do so too. Any other way is unproductive and unethical
29- One has more supposed friends when one is up than when one is down, bcoz most like to be with winners and shun losers. True friends are the opposite.
30- Most people are more emotional than logical
31- Wise people stick with sound fundamentals through the ups and downs (in investing and relationships)
32- Having a few good uncorrelated return streams of income is better than just having one. whether u a Hotel, run a tech company or investor you should apply this.
33- 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
34- Embrace mistakes, make it unacceptable to not work to fix them, long term you will be far better off
35- Dalio made a mistake log: If you made a mistake and logged it then you were okay, if you didn’t log it you were in serious trouble.
36- Pretending you don’t have problems doesn’t fix them, dalio makes ppl be radically truthful with each other on problems and weaknesses so they can be dealt with
37- Put honest thoughts on table, People have to be willing to shift their opinions when discussing things at work, have agreed ways of deciding (voting/authority) if disagreements remain so can move on without resentment
38- Dalio made baseball cards for all employees which show strengths/stats (from personality tests) easy way to assign relevant ppl to tasks
39- To dalio, the greatest success as a boss is to orchestrate others to do things well WITHOUT you. Step below is do things well WITH you, worst is doing poorly yourself.
40- In 2008 dalio realised he struggling to even achieve the level of people doing thing well WITH him (2nd best level)
41- People dalio admired all are extremely resilient. Because their need to achieved what they envision is stronger than the pain they experience as they struggle to achieve it #antifragile
42- Dalio + musk about spaceX, “I asked him about his background in rocketry, he told me he didn’t have one. ‘I just started reading books’ musk said.” That’s how winners act. ((all these books I read are useful right!?))
43- “He never got the praise he deserved, but he didn’t care bcoz his satisfaction came from seeing the results he produced. To me, that is a hero” Dalio on Luis de Guindos. Never do things for praise, do because they are right
44- Over time Dalio, as he matured, cared more and more macro. Family - community – people outside community – the environment
45- Dalio’s Modus operandi- try, fail, diagnose, redesign and try again. Good framework for ALL problems
46- Over time dalio could see perspective a lot better, a market drop was nothing new, that is what maturing does. Remember the world goes on
47- “I learned to love my struggles, which I suppose is a healthy perspective to have” very healthy indeed, a good perspective is better for you than swimming
48 a) - Dalio notes that all extraordinarily successful ppl he once idolized as gods aren’t that amazing. They all make mistakes, struggle with weaknesses, and don’t feel particularly special. They are no happier than average folks, even after surpassing their wildest dreams.
48 b) - Dalio says the exact same was true of him. The satisfaction of success doesn’t come from achieving your goals, but from struggling well. E.g. the child moviestar don’t end up happy unless they get excited about something else bigger and better to struggle for.
48 c) - Struggling well doesn’t just make your ups better, it makes your downs less bad. The day you stop struggling is the day you die.
49- Having the basics – a good bed to sleep in, good relationships, good food and good sex – is most important. These don’t get better regardless of how rich you are.
50- The people at the top arent necessarily more special than the people at the bottom or anywhere in between.
51- Marginal benefits of wealth fall off very quickly. being well known is probably worse than being anonymous
52- now on 'PART 2 – PRINCIPLES': good principles are effective ways of dealing with reality
53- Embrace reality and deal with it.
54- “I have largely gotten past the pain of my mistake making and instead enjoy the pleasure that comes with learning from it. I believe that with practice you can change your habits and experience the same ‘mistake learners high’”
55- “Understanding, accepting, and working with reality is both practical and beautiful. I have become so much of a hyperrealist that I’ve learned to appreciate the beauty of all realities, even harsh ones, and have come to despise impractical idealism” do this, do this
56- Truth – or, more precisely, an accurate understanding of reality - is the essential foundation for any good outcome
57- Learning to accept criticism from honest people is essential for learning
58- Don’t let fears of what others think of you stand in your way
59- Nature optimises for the whole, NOT the individual
60- You will either learn valuable lessons from our mistakes and press on, better equipped to succeed – or you won’t and you will fail. EVOLVE OR DIE
61- Evolving is life’s greatest accomplishment and its greatest reward. (just like in pokemon)
62- Reality is optimising for the whole – not for you. You have to beat the market
63- Trial and error is best way to adapt
64- You are simultaneously everything and nothing – you can decide what you want to be
65- Long term challenges lead to personal improvement, it also gives meaning to life.
66- “no pain, no gain” dalio has been motivating people at the gym
67- PAIN + REFLECTION = PROGRESS
68- If you’re not failing, you’re not pushing your limits, and if you’re not pushing your limits, you’re maximizing your potential. Think about this often.
69- Go to the pain rather than avoid. Stressors are good for you #antifragile
70- Embrace tough love - this means giving people the power to deal with reality to get what they want. This doesn’t mean doing everything for them, people need to struggle.
71- Prefer that people around you are honest with you rather than keeping their negative thoughts to themselves, leads to quicker improvement
72- Be yourself, this means you don’t have to pretend you are strong when you are weak. Just be honest and improve.
73- The quality of your life will depend on the choices you make at those painful moments. The faster one appropriately adapts, the better.
74- For the most part, life gives you so many decisions to make and so many opportunities to recover from your mistakes that, if you handle them well, you can have a terrific life.
75- Think of yourself as a machine operating within a machine and know that you have the ability to alter your machines to produce better outcomes. A la war of art look at yourself as a business
76- By comparing your outcomes with your goals, you can determine how to modify your machine
77- People struggle repeatedly to see themselves objectively. Its very easy to make up a bs narrative
78- Successful people can take in the perspectives of others instead of being trapped in their own head and their own biases.
79- 4 options upon encountering a weakness: 1-deny them (most people do this), 2-accept and try to convert them into strengths, 3-accept your weaknesses and work around them, 4-change what you are going after
80- Asking experts in other areas for mentoring is very good as they can guide you a lot quicker, make sure they have skin in the game though
81- It is difficult to see oneself objectively so you must take input from others
82- If you are open minded enough and determined you can get virtually anything you want
83- Most people lack the courage to confront their own weaknesses and to make the hard choices to fix them.
84 a) - 5 steps to improve: 1- don’t confuse what you wish were true with what is really true, 2- don’t worry about looking good – worry instead about achieving your goals, 3-don’t overweight first-order consequences relative to second and third-order ones
84 b) - 4) don’t let pain stand in the way of progress, 5) don’t blame bad outcomes on anyone but yourself.
85- “But I’ll fail 50 times first before succeeding” is one way of looking at a problem, “I’ll set out and achieve my goal eventually” is another. One is good, one is bad
86 a) - The 5 step process to get what you want out of life. 1- have CLEAR goals, 2- identify and DO NOT tolerate the problems that stand in the way of achieving those goals, 3- accurately diagnose the problems to get at their root causes,
86 b) - 4) design plans that will get you around them, 5- do whats necessary to push these designs through to results
87- Choosing one goal means rejecting another thing you may want. You have to prioritise as you cannot do everything.
88- Almost nothing can stop you from succeeding if you have a) flexibility and b) self-accountability
89- Acknowledging your weaknesses is not the same as surrendering to them
90- Don’t mistake a cause of a problem with the real problem. Get to the root of the problem to solve it
91- Once you identify a problem, do not tolerate it. Tolerating a problem has the same consequences as failing to identify it
92- Most people find it difficult to identify and accept their own mistakes and weaknesses. Getting over this is one of the best ways to live up to your potential
93- Great planners who don’t execute go nowhere
94- Establish clear metrics to make certain that you are following your plan (although as Taleb says, be careful of gameable metrics)
95- WEAKNESSES DON’T MATTER IF YOU FIND SOLUTIONS
96- Two biggest barriers to good decision making are your ego and your blind spots
97- People who crave praise and respond to criticism as an attack will never go far
98- Your emotional brain often disagrees with your logical brain (I should eat cake vs you’ll get fat), be careful of this
99- Seek out information NOT affirmation
100- Don’t get attached to a theory, just look for all the information then decide
101- Decision making is a two step process: 1- take in all the relevant information, then decide.
102- Great people do not have all the answers, nor do they have no weaknesses.
103- Most people are keener to put out, than to take in. Only put out when you have taken in a lot first.
104- You need to constantly be open to the idea you are totally wrong, encourage others to tell you if they think so.
105- You are looking for the best answer. Not the best answer you can come up with yourself. Best X > Best X you can come up with
106- Be clear on whether you are arguing to seek to understand. If not then you are wasting your time, shut up and listen sometimes.
107- It’s pointless when people get angry with each other when they disagree because most disagreements aren’t threats as much as opportunities for learning. GOOD attitude to have
108- Thoughtfully disagreeing is a very valuable skill to develop
109- Triangulate your view from knowledgable people. Reading three threads of Dalio notes will leave you far better off than just reading this one
110- Dalio had cancer scare in 2013. Over 48 hours he went from going to die to he’ll be okay with a small procedure. 4 experts gave 4 opinions so you must triangulate, to get best answer
111- Do not be angry when someone disagrees, always believe you can be wrong, feel compelled to see things through others eyes, listen more than you speak + be able to entertain multiple ideas at once.
112- Regularly use pain as your guide toward quality reflection
113- If a number of believable people say you are doing something, you are probably doing something wrong.
114- Use evidence based decision making tools aka develop your own heuristics
115- Dalio forces employees to rank all their peers on traits like creativity, determination to create baseball cards
116- Neuroscientists agree that we are programmed for social cooperation and enjoyment
117- Your subconscious can both harm and help you, by consciously reflecting on what comes out of it, you can become happier and more effective
118- The most constant struggle is between feeling and thinking. Type 1 brain vs type 2, thinking fast + slow.
119- Take comfort in the fact whatever psychological pain you are experiencing will go away before long
120- Write down your 3 most harmful habits. Now pick one and commit to breaking it, commit to breaking all 3 and you will be FAR better off in life
121- Treat your emotional brain with kindness, don’t be too harsh on yourself
122- Accepting your weaknesses puts your emotional brain in a calmer state, you will get worked up less easily
123- Acknowledge weaknesses and create explicit guardrails against them. Fast and high probability path to success
124- Four main assessments bridgewater uses is: Myers brigg test, workplace personality inventory, team dimensions profile and stratified systems theory.
125- Introversion vs extroversion; intuiting vs sensing; thinking vs feeling; planning vs perceiving; creators vs refiners vs advancers vs executors vs flexors. Some personality groups
126- These personality tests are not perfect however can be very useful for creating teams
127- Everyone has strengths and weaknesses. Everyone has an important role in life. The courage that is needed most is not which that makes you prevail over others, it is that which allows you to be your truest self.
128- The biggest threat to good decision making is harmful emotions
129- Failing to consider second and third order consequences is the cause of A LOT of painfully bad decisions, especially when the first inferior option confirms your biases
130- No sensible person should reject a believable person’s views without fear of being wrong
131- Be careful of whom you ask questions of. Make sure they have skin in the game
132- Don’t believe everything you hear. Opinions are not facts
133- Everything looks bigger up close. Today seems important and last week doesn’t, yet last week today didn’t seem important and last week did
134- New is overvalued relative to great. LINDY EFFECT
135- Determine an acceptable rate of improvement. Anything less than that is failure (even if you are improving)
136- Be an imperfectionist, the perfect is the enemy of the good, 80/20 rule. Diminishing returns to thinking more about a decision
137- The micro creates the macro. eg “I want meaningful work that’s full of learning” < I want to be a doctor < I need to go to med school < I need to study science and get A’s < I need to study tonight. Never forget the chain
138- Like dalio solving the mcnugget chain, you should always consider the micro>macro chains which cause your problems/successes
139- Decision making in a team has to be evidence based and logical, otherwise most powerful rather than insightful will win the process. Relates to Taleb’s intolerant minority rule
140- Raising the probability of being right is valuable no matter your probability of being right already is. That’s why should stress test your thinking
141- Knowing when not to bet is as useful as knowing when to bet
142- The best choices have more pros than cons. Not the choices that have no cons at all
143- All your “must do” problems should be solved before your “like to dos” in business and in life
144- Don’t mistake possibilities for probabilities. I agree, except when it comes to systemic risks – then risk is never worth it.
145- Creating principles for dealing with problems will save you thinking, and reduce the number of decisions you have to make hugely
146- Principles are rules of thumb for largely similar situations to save you wasting time thinking, if constantly refined you will save a lot of time
147- Converting you principles into algorithms is what Dalio did. E.g. instead of thinking what shall I eat for breakfast, if Mon-Fri eat cereal. Over time these rules add up + save you a lot of pointless thinking
148- Thinking -> principles -> algorithms -> great decisions. Helps reduce the emotion of the situation and help you act rationally
149- Dalio thinks humans + machines wonderful. It’s not humans vs AI. It will be humans + AI
150- wanted to end on a round number. the end xxx
68*- If you’re not failing, you’re not pushing your limits, and if you’re not pushing your limits, you’re not maximizing your potential. Think about this often.
this link is actually a far better summary than mine, thanks to @karimdaghari for linking me to it
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