Notes Books Principles by Ray Dalio

Principles by Ray Dalio

Notes for the book, Principles by Ray Dalio.

Principled

Principles are fundamental truths that serve as the foundations for behavior that gets you what you want out of life. **Must be consciously chosen/written down.

To be principled is to consistently operate with principles that can be clearly explained.

Be a student of history because everything that has happened will happen again. Must connect the dots.

Creating Your Own Principles:

  1. Write down every kind of encounter you have and how you have, and should have, handled it. Update these as you get more data and stress-test your assumptions.

  2. Record why you made certain decisions, then check in on that reasoning later.

Decision Making

Systematize your decision making. Put it in the forms of algorithms you can put in computers. ** Human combined w/ machine yields best decisions

Test your decision making algorithm against the past.

Investing

With fifteen to twenty good, uncorrelated return streams, you can dramatically reduce your risks without reducing your expected returns. The “Holy Grail of Investing.”

Goal Achieving Process

  1. Have clear goals.

  2. Identify and don’t tolerate the problems that stand in the way of you achieving those goals.

  3. Accurately diagnose the problems to get at their root causes.

  4. Design plans that will get you around them.

  5. Do what’s necessary to push these designs through to results.

Other Interesting Thoughts

Evolving is life’s greatest accomplishment and its greatest reward.

Decision making is a two-step process: First take in all the relevant information, then decide. 

** Pain + Reflection = Progress

Weigh second and third-order consequences. Often the first order consequences are the temptations that cost us what we really want, and can be the barriers that stand in our way.

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.

Distinguish between you as the designer of your machine and you as a worker with your machine.