“If you work hard and think creatively, you can have just about anything you want, but not everything you want.” The best thing you can do to improve your thinking is to think through your principles for making decisions, write them out in words and computer algorithms, back test them if possible, then use them on a real-time basis to run in parallel with your brain’s decision making. Then, when he closed out a trade, he could reflect on how well those criteria had worked. Balance risks in ways that keep the big upside while reducing the downsideĮarly on, Dalio wrote down the criteria he used to make a decision to take a position in the markets.Develop test, and systematize timeless and universal principles.Seek out the smartest people who disagreed with him so he could try to understand their reasoning.“There are always risks out there that can hurt you badly, even in the seemingly safest bets, so it’s always best to assume you’re missing something.”ĭalio saw the only way to succeed would be to: When everyone thinks something is a sure bet, it’s already priced in, so betting on it will likely be a mistake. One lesson Dalio learned was that he was surprised by something only because it hadn’t happened in his lifetime. The most important thing for you to do is write down your principles to clarify them.Īlmost everyone expects the future to be a slightly modified version of the present, but it’s usually very different.ĭalio is big on transcendental meditation, learned at the Maharishi Mahesh Yogi ashram. Put it in the forms of algorithms you can put in computers.
To be a successful entrepreneur, you have to bet against the consensus, which means being painfully wrong a lot. What you should do to achieve 1 in light of 2.To be principled is to consistently operate with principles that can be clearly explained.Īdopting principles without giving them much thought can expose you to the risk of acting in ways inconsistent with your goals and your nature. Principles are fundamental truths that serve as the foundations for behavior that gets you what you want out of life.
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