Dear Steemians,
I finally was able to finish Ray Dalio's Principles: Life and Work. For those who are not aware of Ray Dalio, I have provided a Wikipedia link to his biography. He is the founder of Bridgewater Associates, which is one of the largest hedge funds in the world. He must have done something right to go from 0 dollars under management to over 150 billion dollars under management.
I got to reading his book, and though idealistic to a certain degree, were many takeaways I could try to apply to myself and Althea. If you have a chance, you should definitely take the time and read this book! Here is a collection of the best quotations I got from this book from my first read of it.
"Principles are fundamental truths that serve as the foundations for behavior that gets you what you want out of life. They can be applied again and again in similar situations to help you achieve your goals."
"To be principled means to consistently operate with principles that can be clearly explained. Unfortunately, most people can’t do that. And it’s very rare for people to write their principles down and share them."
"I believe that the key to success lies in knowing how to both strive for a lot and fail well. By failing well, I mean being able to experience painful failures that provide big learnings without failing badly enough to get knocked out of the game."
"Experience taught me how invaluable it is to reflect on and write down my decision-making criteria whenever I made a decision, so I got in the habit of doing that."
"I also learned that for every action (such as easy money and credit) there is a consequence (in this case, higher inflation) roughly proportionate to that action, which causes an approximately equal and opposite reaction (tightening of money and credit) and market reversals."
"If you are not aggressive, you are not going to make money, and if you are not defensive, you are not going to keep money."
"Actually, I restarted it. Just after I graduated from HBS and went to work in commodities at Dominick & Dominick, I’d set up a little business with Bob Scott, a friend from HBS."
"Looking back on getting fired from Apple in 1985, Steve Jobs said, “It was awful-tasting medicine, but I guess the patient needed it. Sometimes life hits you in the head with a brick. Don’t lose faith. I’m convinced that the only thing that kept me going was that I loved what I did.” I saw that to do exceptionally well you have to push your limits and that, if you push your limits, you will crash and it will hurt a lot. You will think you have failed—but that won’t be true unless you give up. Believe it or not, your pain will fade and you will have many other opportunities ahead of you, though you might not see them at the time. The most important thing you can do is to gather the lessons these failures provide and gain humility and radical open-mindedness in order to increase your chances of success. Then you press on. My final lesson was perhaps the most important one, because it has applied again and again throughout my life. At first, it seemed to me that I faced an all-or-nothing choice: I could either take on a lot of risk in pursuit of high returns (and occasionally find myself ruined) or I could lower my risk and settle for lower returns. But I needed to have both low risk and high returns, and by setting out on a mission to discover how I could, I learned to go slowly when faced with the choice between two things that you need that are seemingly at odds. That way you can figure out how to have as much of both as possible. There is almost always a good path that you just haven’t discovered yet, so look for it until you find it rather than settle for the choice that is then apparent to you."
"Maturity is the ability to reject good alternatives in order to pursue even better ones."
"All great investors and investment approaches have bad patches; losing faith in them at such times is as common a mistake as getting too enamored of them when they do well. Because most people are more emotional than logical, they tend to overreact to short-term results; they give up and sell low when times are bad and buy too high when times are good. I find this is just as true for relationships as it is for investments—wise people stick with sound fundamentals through the ups and downs, while flighty people react emotionally to how things feel, jumping into things when they’re hot and abandoning them when they’re not."
"Of course we continued to make mistakes, though they were all within our range of expectations. What was great is that we made the most of our mistakes because we got in the habit of viewing them as opportunities to learn and improve."
"It was a terrible and costly error, and I could’ve done something dramatic like fire Ross to set a tone that mistakes would not be tolerated. But since mistakes happen all the time, that would have only encouraged other people to hide theirs, which would have led to even bigger and more costly errors. I believed strongly that we should bring problems and disagreements to the surface to learn what should be done to make things better."
"For that reason I insisted that an issue log be adopted throughout Bridgewater. My rule was simple: If something went badly, you had to put it in the log, characterize its severity, and make clear who was responsible for it. If a mistake happened and you logged it, you were okay."
"What does Ray do well? He is very bright and innovative. He understands markets and money management. He is intense and energetic. He has very high standards and passes these to others around him. He has good intentions about teamwork, building group ownership, providing flexible work conditions to employees, and compensating people well."
"What Ray doesn’t do as well: Ray sometimes says or does things to employees which makes them feel incompetent, unnecessary, humiliated, overwhelmed, belittled, oppressed, or otherwise bad. The odds of this happening rise when Ray is under stress. At these times, his words and actions toward others create animosity toward him and leave a lasting impression. The impact of this is that people are demotivated rather than motivated. This reduces productivity and the quality of the environment. The effect reaches far beyond the single employee. The smallness of the company and the openness of communication means that everyone is affected when one person is demotivated, treated badly, not given due respect. The future success of the company is highly dependent on Ray’s ability to manage people as well as money. If he doesn’t manage people well, growth will be stunted and we will all be affected."
"1. Put our honest thoughts out on the table, 2. Have thoughtful disagreements in which people are willing to shift their opinions as they learn, and 3. Have agreed-upon ways of deciding (e.g., voting, having clear authorities) if disagreements remain so that we can move beyond them without resentments."
"To me, the greatest success you can have as the person in charge is to orchestrate others to do things well without you. A step below that is doing things well yourself, and worst of all is doing things poorly yourself."
"It seems to me that life consists of three phases. In the first, we are dependent on others and we learn. In the second, others depend on us and we work. And in the third and last, when others no longer depend on us and we no longer have to work, we are free to savor life."
"It turns out they have a lot in common. They are all independent thinkers who do not let anything or anyone stand in the way of achieving their audacious goals. They have very strong mental maps of how things should be done, and at the same time a willingness to test those mental maps in the world of reality and change the ways they do things to make them work better. They are extremely resilient, because their need to achieve what they envision is stronger than the pain they experience as they struggle to achieve it. Perhaps most interesting, they have a wider range of vision than most people, either because they have that vision themselves or because they know how to get it from others who can see what they can’t. All are able to see both big pictures and granular details (and levels in between) and synthesize the perspectives they gain at those different levels, whereas most people see just one or the other. They are simultaneously creative, systematic, and practical. They are assertive and open-minded at the same time. Above all, they are passionate about what they are doing, intolerant of people who work for them who aren’t excellent at what they do, and want to have a big, beneficial impact on the world."
"'The Path Out: Systemizing Good Management': It is now clear to me that the main difference behind why the investment management part of Bridgewater is likely to continue to do well and most of the other parts of Bridgewater are unlikely to do as well (if we don’t change how we are operating) is that the decision-making processes for investment management have been so systemized that it’s hard for people to screw them up (because they are largely following the systems’ instructions) while the other areas of Bridgewater are much more dependent on the quality of the people and their decision making. Think about that. Imagine how Bridgewater’s investment decision making would work if it operated the same as Bridgewater’s management decision making (i.e., dependent on the people we hired and how they collectively made decisions in their own ways). It would be a mess. The way the investment decision-making process works is that a small group of investment managers who created these systems see the systems’ conclusions and the reasoning of the systems while we make our own conclusions and explore our reasoning on our own. . . . The machine does most of the work and we interact with it in a quality way. . . . [And] we are not dependent on much more faulty people. Think about how different management is. While we have principles, we don’t have decision-making systems. In other words, I believe that the investment decision-making process is effective because the investment principles have been put into decision rules that make decisions that people then follow while the management decision-making process is less effective because the management principles have not been put into decision rules that people can follow to make management decisions. It doesn’t have to be that way. Having built the investment systems (with the help of others) and knowing about both investment decision making and management decision making, I am confident that it can be the same. The only questions are whether it can happen fast enough and what will happen in the meantime. I am working with Greg (and others) to develop these management systems in the same way I worked with Greg and others (Bob, etc.) on the investment systems. You are seeing this happen via the development of the Baseball Cards, Dot Collector, Pain Button, testing, job specing, etc. Because I have a limited time to do this, we need to move fast. At the same time we will have to fight the battles in the trenches, with hand-to-hand combat, to clean out those who are incapable and bring in or promote those who are excellent."
"He never got the praise he deserved, but he didn’t care because his satisfaction came from seeing the results he produced. To me, that is a hero."
"Most are highly principled people who are forced to operate in unprincipled environments."
"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. All these books showed how the same things happened over and over again throughout history."
"While I spend most of my time studying the realities that affect me most directly—those that drive economies, the markets, and the people I deal with—I also spend time in nature and can’t help reflecting on how it works by observing, reading, and speaking with some of the greatest specialists on the subject. I’ve found it both interesting and valuable to observe which laws we humans have in common with the rest of nature and which differentiate us. Doing that has had a big impact on my approach to life."
"Most people call something bad if it is bad for them or bad for those they empathize with, ignoring the greater good."
"As Carl Jung put it, “Man needs difficulties. They are necessary for health.” Yet most people instinctually avoid pain. This is true whether we are talking about building the body (e.g., weight lifting) or the mind (e.g., frustration, mental struggle, embarrassment, shame)—and especially true when people confront the harsh reality of their own imperfections."
"So don’t worry about whether you like your situation or not. Life doesn’t give a damn about what you like. It’s up to you to connect what you want with what you need to do to get it and then find the courage to carry it through."
"When encountering your weaknesses you have four choices: 1. You can deny them (which is what most people do). 2. You can accept them and work at them in order to try to convert them into strengths (which might or might not work depending on your ability to change). 3. You can accept your weaknesses and find ways around them. 4. Or, you can change what you are going after."
"Let’s look at what tends to happen when someone disagrees with you and asks you to explain your thinking. Because you are programmed to view such challenges as attacks, you get angry, even though it would be more logical for you to be interested in the other person’s perspective, especially if they are intelligent. When you try to explain your behavior, your explanations don’t make any sense. That’s because your lower-level you is trying to speak through your upper-level you. Your deep-seated, hidden motivations are in control, so it is impossible for you to logically explain what “you” are doing."
"When trying to figure things out, most people spin in their own heads instead of taking in all the wonderful thinking available to them. As a result, they continually run toward what they see and keep crashing into what they are blind to until the crashing leads them to adapt. Those who adapt do so by a) teaching their brains to work in a way that doesn’t come naturally (the creative person learns to become organized through discipline and practice, for instance), b) using compensating mechanisms (such as programmed reminders), and/or c) relying on the help of others who are strong where they are weak."
"I felt fortunate because this prognosis gave me enough time to ensure that the people I cared most about would be okay without me, and to savor life with them in the years I had left. I would have time to get to know my first grandson, who had just been born, but not so much time that I could take it for granted."
"Closed-minded people don’t want their ideas challenged. ... Closed-minded people are more likely to make statements than ask questions. ... Closed-minded people focus much more on being understood than on understanding others. ... Closed-minded people say things like “I could be wrong . . . but here’s my opinion.” ... Closed-minded people block others from speaking. ... Closed-minded people have trouble holding two thoughts simultaneously in their minds. ... Closed-minded people lack a deep sense of humility."
"Regularly use pain as your guide toward quality reflection."
"I practice Transcendental Meditation and believe that it has enhanced my open-mindedness, higher-level perspective, equanimity, and creativity. It helps slow things down so that I can act calmly even in the face of chaos, just like a ninja in a street fight. I’m not saying that you have to meditate in order to develop this perspective; I’m just passing along that it has helped me and many other people and I recommend that you seriously consider exploring it."
"In order to have the best life possible, you have to: 1) know what the best decisions are and 2) have the courage to make them."
"You have to work in a culture that suits you. That’s fundamental to your happiness and your effectiveness. You also must work in a culture that is effective in producing great outcomes, because if you don’t, you won’t get the psychic and material rewards that keep you motivated."
"Generosity is good and entitlement is bad, and they can easily be confused, so be crystal clear on which is which."
"Most people will operate in a way that maximizes the amount of money they will get and that minimizes the amount of work they have to do to get it."
"Create a Culture in Which It Is Okay to Make Mistakes and Unacceptable Not to Learn from Them"
"Remember that for an organization to be effective, the people who make it up must be aligned on many levels—from what their shared mission is, to how they will treat each other, to a more practical picture of who will do what when to achieve their goals."
"Many people mistakenly believe that papering over differences is the easiest way to keep the peace. They couldn’t be more wrong. By avoiding conflicts one avoids resolving differences. People who suppress minor conflicts tend to have much bigger conflicts later on, which can lead to separation, while people who address their mini-conflicts head on tend to have the best and the longest-lasting relationships."
"Remember that every story has another side. Wisdom is the ability to see both sides and weigh them appropriately."
Wow, there were a ton of stuff that I got out of this book. Thanks for taking the time out of your day to read this long post. Hopefully there were some stuff in here that got to you as well.
Have a wonderful weekend everyone!
Chris
Images Sources:
http://fortune.com/2017/09/13/ray-dalio-bridgewater-associates-book/
