Principles: Life and Work
by Ray Dalio
That perspective drove me to consider the second- and third-order consequences so that I could see that the world would be worse. I now realize that nature optimizes for the whole, not for the individual, but most people judge good and bad based only on how it affects them. What I had seen was the process of nature at work, which is much more effective at furthering the improvement of the whole than any process man has ever invented. Most people call something bad if it is bad for them or bad for those they empathize with, ignoring the greater good. My failure to anticipate this, I realized, was due to my being surprised by something that hadn’t happened in my lifetime, though it had happened many times before. The message that reality was conveying to me was “You better make sense of what happened to other people in other times and other places because if you don’t you won’t know if these things can happen to you and, if they do, you won’t know how to deal with them.”
While making money was good, having meaningful work and meaningful relationships was far better. To me, meaningful work is being on a mission I become engrossed in, and meaningful relationships are those I have with people I care deeply about and who care deeply about me.
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.
When encountering your weaknesses you have four choices: 1. You can deny them (which is what most people do). 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). You can accept your weaknesses and find ways around them. Or, you can change what you are going after.
a. Dreams + Reality + Determination = A Successful Life. People who achieve success and drive progress deeply understand the cause-effect relationships that govern reality and have principles for using them to get what they want. The converse is also true: Idealists who are not well grounded in reality create problems, not progress.
Remember that multiple levels exist for all subjects. Be aware on what level you’re examining a given subject. Consciously navigate levels rather than see subjects as undifferentiated piles of facts that can be browsed randomly. Diagram the flow of your thought processes using the outline template shown on the previous page.
"That perspective drove me to consider the second- and third-order consequences so that I could see that the world would be worse. I now realize that nature optimizes for the whole, not for the individual, but most people judge good and bad based only on how it affects them. What I had seen was the process of nature at work, which is much more effective at furthering the improvement of the whole than any process man has ever invented. Most people call something bad if it is bad for them or bad for those they empathize with, ignoring the greater good."
"My failure to anticipate this, I realized, was due to my being surprised by something that hadn’t happened in my lifetime, though it had happened many times before. The message that reality was conveying to me was “You better make sense of what happened to other people in other times and other places because if you don’t you won’t know if these things can happen to you and, if they do, you won’t know how to deal with them.”"
"While making money was good, having meaningful work and meaningful relationships was far better. To me, meaningful work is being on a mission I become engrossed in, and meaningful relationships are those I have with people I care deeply about and who care deeply about me."
"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."
"When encountering your weaknesses you have four choices: 1. You can deny them (which is what most people do). 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). You can accept your weaknesses and find ways around them. Or, you can change what you are going after."
"a. Dreams + Reality + Determination = A Successful Life. People who achieve success and drive progress deeply understand the cause-effect relationships that govern reality and have principles for using them to get what they want. The converse is also true: Idealists who are not well grounded in reality create problems, not progress."
"Remember that multiple levels exist for all subjects. Be aware on what level you’re examining a given subject. Consciously navigate levels rather than see subjects as undifferentiated piles of facts that can be browsed randomly. Diagram the flow of your thought processes using the outline template shown on the previous page."
- →Don’t confuse what you wish were true with what is really true. Don’t worry about looking good—worry instead about achieving your goals. Don’t overweight first-order consequences relative to second- and third-order ones. Don’t let pain stand in the way of progress. Don’t blame bad outcomes on anyone but yourself.
- →I believe one of the most valuable things you can do to improve your decision making is to think through your principles for making decisions, write them out in both words and computer algorithms, back-test them if possible, and use them on a real-time basis to run in parallel with your brain’s decision making.
- →Have clear goals. Identify and don’t tolerate the problems that stand in the way of your achieving those goals. Accurately diagnose the problems to get at their root causes. Design plans that will get you around them. Do what’s necessary to push these designs through to results.
- →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 universal principles. Balance risks in ways that keep the big upside while reducing the downside.
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