Principles Ray Dalio Best Quotes

first principle: • 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 . . . . . . and do that with humility and open-mindedness so that you consider the best thinking available to you.

Time is like a river that carries us forward into encounters with reality that require us to make decisions. We can’t stop our movement down this river and we can’t avoid those encounters. We can only approach them in the best possible way.

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.

Don’t let fears of what others think of you stand in your way. You must be willing to do things in the unique ways you think are best

The best behaviors one can hope for come from leaders who can weigh the benefits of cooperation, and who have long enough time frames that they can see how the gifts they give this year may bring them benefits in the future.

Focus more on making the pie bigger than on exactly how to slice it so that you or anyone else gets the biggest piece. The best negotiations are the ones with someone in which I say, “You should take more,” and they argue back, “No you should take more!” People who operate this way with each other make the relationship better and the pie bigger—and both benefit in the long run.

I have come to realize that bad times coupled with good reflections provide some of the best lessons, and not just about business but also about relationships. One has many more supposed friends when one is up than when one is down, because most people like to be with winners and shun losers. True friends are the opposite.

you’re looking for the best answer, not simply the best answer that you can come up with yourself.

Logic, reason, and common sense are your best tools for synthesizing reality and understanding what to do about it.

Sincerely believe that you might not know the best possible path and recognize that your ability to deal well with “not knowing” is more important than whatever it is you do know.

If you choose the right people with the right values and remain in sync with them, you will play beautiful jazz together. If you choose the wrong people, you will all go over the waterfall together. Steve Jobs, who everyone thought was the secret to Apple’s success, said, “The secret to my success is that we’ve gone to exceptional lengths to hire the best people in the world.” I explain this concept in the next chapter, Remember That the WHO Is More Important than the WHAT. Anyone who runs a successful organization will tell you the same.

Don’t worry about whether or not your people like you and don’t look to them to tell you what you should do. Just worry about making the best decisions possible,

If you continue doing what you think is best when all the evidence and believable people are against you, you’re being dangerously arrogant.

The best way to make great decisions is to know how to triangulate with other, more knowledgeable people.

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.

Sincerely believe that you might not know the best possible path and recognize that your ability to deal well with "not knowing" is more important than whatever it is you do know

The most effective leaders work to 1) open-mindedly seek out the best answers and 2) bring others along as part of that discovery process

I have come to realize that bad times coupled with good reflections provide some of the best lessons, and not just about business but also about relationships.

Don’t let fears of what others think of you stand in your way. You must be willing to do things in the unique ways you think are best—

clearing your head can be the best way to make progress.

I read Charles Duhigg’s best-selling book The Power of Habit, which really opened my eyes.

Some decisions are best made after acquiring more information; some are best made immediately.

I had grown up in an era of high volatility and had learned that the best way to play it was to get a hold of a big move and ride it.

The most effective leaders work to 1) open-mindedly seek out the best answers and 2) bring others along as part of that discovery process.

While it may seem counterintuitive, clearing your head can be the best way to make progress.

People interested in making the best possible decisions are rarely confident that they have the best answers.

Power should lie in the reasoning, not the position, of the individual. The best ideas win no matter who they come from.

so it’s always best to assume you’re missing something.

you can never be sure of anything: 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.

Sincerely believe that you might not know the best possible path and recognize that your ability to deal well with “not knowing” is more important than whatever it is you do know. Most people make bad decisions because they are so certain that they’re right that they don’t allow themselves to see the better alternatives that exist. Radically open-minded people know that coming up with the right questions and asking other smart people what they think is as important as having all the answers. They understand that you can’t make a great decision without swimming for a while in a state of “not knowing.” That is because what exists within the area of “not knowing” is so much greater and more exciting than anything any one of us knows.

The best way to make great decisions is to know how to triangulate with other, more knowledgeable people. So be discerning about whom you triangulate with and skilled in the way you do it.

people who have common sense, imagination, and determination, who know what they value and what they want, and who also use computers, math, and game theory, are the best decision makers there are.

By developing a partnership with your computer alter ego in which you teach each other and each do what you do best, you will be much more powerful than if you went about your decision making alone.

In a nutshell, I was looking for meaningful work and meaningful relationships. I quickly learned that the best way to do that was to have great partnerships with great people. To me, great partnerships come from sharing common values and interests, having similar approaches to pursuing them, and being reasonable with, and having consideration for, each other. At the same time, partners must be willing to hold each other to high standards and work through their disagreements. The main test of a great partnership is not whether the partners ever disagree—people in all healthy relationships disagree—but whether they can bring their disagreements to the surface and get through them well. Having clear processes for resolving disagreements efficiently and clearly is essential for business partnerships, marriages, and all other forms of partnership

People who are one way on the inside and another way on the outside become conflicted and often lose touch with their own values. It’s difficult for them to be happy and almost impossible for them to be their best.

To be radically open-minded you must: a. Sincerely believe that you might not know the best possible path and recognize that your ability to deal well with “not knowing” is more important than whatever it is you do know.

I cannot say that having an intense life filled with accomplishments is better than having a relaxed life filled with savoring, though I can say that being strong is better than being weak, and that struggling gives one strength. My nature being what it is, I would not have changed my life, but I can’t tell you what is best for you. That is for you to choose. What I have seen is that the happiest people discover their own nature and match their life to it.

Don’t let fears of what others think of you stand in your way. You must be willing to do things in the unique ways you think are best—and to open-mindedly reflect on the feedback that comes inevitably as a result of being that way.

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 . . . . . . and do that with humility and open-mindedness so that you consider the best thinking available to you.

Our returns in 2010 were the best ever—nearly 45 and 28 percent in our two Pure Alpha funds and close to 18 percent in All Weather—almost exclusively because the systems we had programmed to take in information and process it were doing it superbly.

The most painful lesson that was repeatedly hammered home is that you can never be sure of anything: 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.

Learning how to make decisions in the best possible way and learning to have the courage to make them comes from a) going after what you want, b) failing and reflecting well through radical open-mindedness, and c) changing/evolving to become ever more capable and less fearful. In the final chapter of this section, Learn How to Make Decisions Effectively, I shared some more granular principles for how to do all of the above and weigh your options in specific situations to determine the right path to follow.

the best decisions are made by an idea meritocracy with believability-weighted decision making, in which the most capable people work through their disagreements with other capable people who have thought independently about what is true and what to do about it.

In retrospect, my crash was one of the best things that ever happened to me because it gave me the humility I needed to balance my aggressiveness. I learned a great fear of being wrong that shifted my mind-set from thinking “I’m right” to asking myself “How do I know I’m right?

Logic, reason, and common sense are your best tools for synthesizing reality and understanding what to do about it. Be wary of relying on anything else. Unfortunately, numerous tests by psychologists show that the majority of people follow the lower-level path most of the time, which leads to inferior decisions without their realizing it. As Carl Jung put it, “Until you make the unconscious conscious, it will direct your life and you will call it fate.” It’s even more important that decision making be evidence-based and logical when groups of people are working together. If it’s not, the process will inevitably be dominated by the most powerful rather than the most insightful participants, which is not only unfair but suboptimal. Successful organizations have cultures in which evidence-based decision making is the norm rather than the exception.

nobody sees the full range of what they need to see in order to be exceptionally successful, though some see a wider range than others. Those that do best both see a wide range themselves while triangulating well with other brilliant people who see things in different, complementary ways.

1. Remember the goal. 2. Give the goal to people who can achieve it (which is best) or tell them what to do to achieve it (which is micromanaging and therefore less good). 3. Hold them accountable. 4. If they still can’t do the job after you’ve trained them and given them time to learn, get rid of them.

I’ve often thought that parents and schools overemphasize the value of having the right answers all the time. It seems to me that the best students in school tend to be the worst at learning from their mistakes, because they have been conditioned to associate mistakes with failure instead of opportunity.

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. This way of learning and improving has been best for me because of what I’m like and because of what I do. I’ve always had a bad rote memory and didn’t like following other people’s instructions, but I loved figuring out how things work for myself. I hated school because of my bad memory but when I was twelve I fell in love with trading the markets. To make money in the markets, one needs to be an independent thinker who bets against the consensus and is right. That’s because the consensus view is baked into the price. One is inevitably going to be painfully wrong a lot, so knowing how to do that well is critical to one’s success. To be a successful entrepreneur, the same is true: One also has to be an independent thinker who correctly bets against the consensus, which means being painfully wrong a fair amount. Since I was both an investor and an entrepreneur, I developed a healthy fear of being wrong and figured out an approach to decision making that would maximize my odds of being right.

You can either fix it or you can get the help of others to deal with it well. There are two paths to success: 1) to have what you need yourself or 2) to get it from others. The second path requires you to have humility. Humility is as important, or even more important, as having the strengths yourself. Having both is best.

Life will throw you such challenges, some of which will seem devastating at the time. In bad times, your goal might be to keep what you have, to minimize your rate of loss, or simply to deal with a loss that is irrevocable. Your mission is to always make the best possible choices, knowing that you will be rewarded if you do.

He rated Angela Merkel as the best leader in the West and considered Vladimir Putin one of the best leaders worldwide. He explained that leaders must be judged within the context of the circumstances they encounter and then went on to share his view of how difficult it is to lead Russia and why he thought Putin was doing it well.

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. If you can’t do that, you should reflect on why that is, because that’s most likely your greatest impediment to getting more of what you want out of life.

Never rule out a goal because you think it’s unattainable. Be audacious. There is always a best possible path. Your job is to find it and have the courage to follow it. What you think is attainable is just a function of what you know at the moment. Once you start your pursuit you will learn a lot, especially if you triangulate with others; paths you never saw before will emerge.

Think of every decision as a bet with a probability and a reward for being right and a probability and a penalty for being wrong. Normally a winning decision is one with a positive expected value, meaning that the reward times its probability of occurring is greater than the penalty times its probability of occurring, with the best decision being the one with the highest expected value.

I believe that all organizations basically have two types of people: those who work to be part of a mission, and those who work for a paycheck. I wanted to surround myself with people who needed what I needed, which was to make sense of things for myself. I spoke frankly, and I expected those around me to speak frankly. I fought for what I thought was best, and I wanted them to do so as well.

By developing a partnership with your computer alter ego in which you teach each other and each do what you do best, you will be much more powerful than if you went about your decision making alone. The computer will also be your link to great collective decision making, which is far more powerful than individual decision making, and will almost certainly advance the evolution of our species.

An idea meritocracy requires people to do three things: 1) Put their honest thoughts on the table for everyone to see, 2) Have thoughtful disagreements where there are quality back-and-forths in which people evolve their thinking to come up with the best collective answers possible, and 3) Abide by idea-meritocratic ways of getting past the remaining disagreements (such as believability-weighted decision making).

Working through disagreements does take time but it’s just about the best way you can spend it. What’s important is that you prioritize what you spend time on and who you spend it with. There are lots of people who will disagree with you, and it would be unproductive to consider all their views. It doesn’t pay to be open-minded with everyone. Instead, spend your time exploring ideas with the most believable people you have access to.

If you are disappointed because you can’t be the best person to do everything yourself, you are terribly naive. Nobody can do everything well. Would you want to have Einstein on your basketball team? When he fails to dribble and shoot well, would you think badly of him? Should he feel humiliated? Imagine all the areas in which Einstein was incompetent, and imagine how hard he struggled to excel even in the areas in which he was the best in the world.

While there is no one best way to make decisions, there are some universal rules for good decision making. They start with: 5.1 Recognize that 1) the biggest threat to good decision making is harmful emotions, and 2) decision making is a two-step process (first learning and then deciding). Learning must come before deciding. As explained in Chapter One, your brain stores different types of learning in your subconscious, your rote memory bank, and your habits.

The most painful lesson that was repeatedly hammered home is that you can never be sure of anything: 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. This lesson changed my approach to decision making in ways that will reverberate throughout this book—and to which I attribute much of my success. But I would make many other mistakes before I fully changed my behavior.

The most believable opinions are those of people who 1) have repeatedly and successfully accomplished the thing in question, and 2) have demonstrated that they can logically explain the cause-effect relationships behind their conclusions. When believability weighting is done correctly and consistently, it is the fairest and the most effective decision-making system. It not only produces the best outcomes but also preserves alignment, since even people who disagree with the decision will be able to get behind it.

Most people who haven’t had direct contact with the leadership of their own and other countries form their views based on what they learn in the media, and become quite naive and inappropriately opinionated as a result. That’s because dramatic stories and gossip draw more readers and viewers than does clinical objectivity. Also, in some cases “journalists” have their own ideological biases that they are trying to advance. As a result, most people who see the world through the lens of the media tend to look for who is good and who is evil rather than what the vested interests and relative powers are and how they are being played out. For example, people tend to embrace stories about how their own country is moral and the rival country is not, when most of the time these countries have different interests that they are trying to maximize. The best behaviors one can hope for come from leaders who can weigh the benefits of cooperation, and who have long enough time frames that they can see how the gifts they give this year may bring them benefits in the future.

Be reasonable and expect others to be reasonable. You have a responsibility to be reasonable and considerate when you are advocating for your point of view and should never let your “lower-level you” gain control, even if the other person loses his or her temper. Their bad behavior doesn’t justify yours. If either party to a disagreement is too emotional to be logical, the conversation should be deferred. Pausing a few hours or even a few days in cases where decisions do not have to be made immediately is sometimes the best approach.

realized again that what I didn’t know was much greater than what I did, in this case not knowing how to transition out of the founder-leader role. So I reached out to some of the greatest experts I could speak with for advice. Perhaps the best advice we received came from management expert Jim Collins, who told us that “to transition well, there are only two things that you need to do: Put capable CEOs in place and have a capable governance system to replace the CEOs if they’re not capable.” That was what I had failed to do and what

Never rule out a goal because you think it’s unattainable. Be audacious. There is always a best possible path. Your job is to find it and have the courage to follow it. What you think is attainable is just a function of what you know at the moment. Once you start your pursuit you will learn a lot, especially if you triangulate with others; paths you never saw before will emerge. Of course there are some impossibilities or near-impossibilities, such as playing center on a professional basketball team if you’re short, or running a four-minute mile at age seventy.

c. Don’t worry about looking good; worry about achieving your goal. People typically try to prove that they have the answer even when they don’t. Why do they behave in this unproductive way? It’s generally because they believe the senseless but common view that great people have all the answers and don’t have any weaknesses. Not only does this view not square with reality, it stands in the way of their progress. People interested in making the best possible decisions are rarely confident that they have the best answers. They recognize that they have weaknesses and blind spots, and they always seek to learn more so that they can get around them.

I believe that all organizations basically have two types of people: those who work to be part of a mission, and those who work for a paycheck. I wanted to surround myself with people who needed what I needed, which was to make sense of things for myself. I spoke frankly, and I expected those around me to speak frankly. I fought for what I thought was best, and I wanted them to do so as well. When I thought someone did something stupid, I said so and I expected them to tell me when I did something stupid. Each of us would be better for it. To me, that was what strong and productive relationships looked like. Operating any other way would be unproductive and unethical.

When countries negotiate with one another, they typically operate as if they are opponents in a chess match or merchants in a bazaar in which maximizing one’s own benefit is the sole objective. Smart leaders know their own countries’ vulnerabilities, take advantage of others’ vulnerabilities, and expect the other countries’ leaders to do the same. Most people who haven’t had direct contact with the leadership of their own and other countries form their views based on what they learn in the media, and become quite naive and inappropriately opinionated as a result. That’s because dramatic stories and gossip draw more readers and viewers than does clinical objectivity. Also, in some cases “journalists” have their own ideological biases that they are trying to advance. As a result, most people who see the world through the lens of the media tend to look for who is good and who is evil rather than what the vested interests and relative powers are and how they are being played out. For example, people tend to embrace stories about how their own country is moral and the rival country is not, when most of the time these countries have different interests that they are trying to maximize. The best behaviors one can hope for come from leaders who can weigh the benefits of cooperation, and who have long enough time frames that they can see how the gifts they give this year may bring them benefits in the future.

A community in which you always have the right and obligation to make sense of things and a process for working yourselves through disagreements—i.e., a real, functioning idea meritocracy. I want you to think, not follow—while recognizing that you can be wrong and that you have weaknesses—and I want to help you get the most likely best answers, even if you personally don’t believe that they’re the best answers. I want to give you radical open-mindedness and an idea meritocracy that will take you from being trapped in your own heads to having access to the best minds in the world to help you make the best decisions for you and for our community. I want to help you all struggle well and evolve to get the most out of life.

Reading Duhigg’s book taught me that if you really want to change, the best thing you can do is choose which habits to acquire and which to get rid of and then go about doing that. To help you, I recommend that you write down your three most harmful habits. Do that right now. Now pick one of those habits and be committed to breaking it. Can you do that? That would be extraordinarily impactful. If you break all three, you will radically improve the trajectory of your life. Or you can pick habits that you want to acquire and then acquire them. The most valuable habit I’ve acquired is using pain to trigger quality reflections. If you can acquire this habit yourself, you will learn what causes your pain and what you can do about it, and it will have an enormous impact on your effectiveness.

Truth be known, forecasts aren’t worth very much, and most people who make them don’t make money in the markets. . . . This is because nothing is certain and when one overlays the probabilities of all of the various things that affect the future in order to make a forecast, one gets a wide array of possibilities with varying probabilities, not one highly probable outcome. . . . We believe that market movements reflect economic movements. Economic movements are reflected in economic statistics. By studying the relationships between economic statistics and market movements, we’ve developed precise rules for identifying important shifts in the economic/market environment and in turn our positions. In other words, rather than forecasting changes in the economic environment and shifting positions in anticipation of them, we pick up these changes as they’re occurring and move our money around to keep in those markets which perform best in that environment.

Which solution you choose will be critically important to the direction of your life. The worst path you can take is the first. Denial can only lead to your constantly banging up against your weaknesses, having pain, and not getting anywhere. The second—accepting your weaknesses while trying to turn them into strengths—is probably the best path if it works. But some things you will never be good at and it takes a lot of time and effort to change. The best single clue as to whether you should go down this path is whether the thing you are trying to do is consistent with your nature (i.e., your natural abilities). The third path—accepting your weaknesses while trying to find ways around them—is the easiest and typically the most viable path, yet it is the one least followed. The fourth path, changing what you are going after, is also a great path, though it requires flexibility on your part to get past your preconceptions and enjoy the good fit when you find it.

It is a great paradox that individually we are simultaneously everything and nothing. Through our own eyes, we are everything—e.g., when we die, the whole world disappears. So to most people (and to other species) dying is the worst thing possible, and it is of paramount importance that we have the best life possible. However, when we look down on ourselves through the eyes of nature we are of absolutely no significance. It is a reality that each one of us is only one of about seven billion of our species alive today and that our species is only one of about ten million species on our planet. Earth is just one of about 100 billion planets in our galaxy, which is just one of about two trillion galaxies in the universe. And our lifetimes are only about 1/3,000 of humanity’s existence, which itself is only 1/20,000 of the Earth’s existence. In other words, we are unbelievably tiny and short-lived and no matter what we accomplish, our impact will be insignificant. At the same time, we instinctually want to matter and to evolve, and we can matter a tiny bit—and it’s all those tiny bits that add up to drive the evolution of the universe.

3.2 Practice radical open-mindedness. a. Sincerely believe that you might not know the best possible path and recognize that your ability to deal well with “not knowing” is more important than whatever it is you do know. b. Recognize that decision making is a two-step process: First take in all the relevant information, then decide. c. Don’t worry about looking good; worry about achieving your goal. d. Realize that you can’t put out without taking in. e. Recognize that to gain the perspective that comes from seeing things through another’s eyes, you must suspend judgment for a time—only by empathizing can you properly evaluate another point of view. 3.2 Practice radical open-mindedness. a. Sincerely believe that you might not know the best possible path and recognize that your ability to deal well with “not knowing” is more important than whatever it is you do know. b. Recognize that decision making is a two-step process: First take in all the relevant information, then decide. c. Don’t worry about looking good; worry about achieving your goal. d. Realize that you can’t put out without taking in. e. Recognize that to gain the perspective that comes from seeing things through another’s eyes, you must suspend judgment for a time—only by empathizing can you properly evaluate another point of view.

Despite our relatively poor investment performance, 1988 was a great year for Bridgewater, because by reflecting on and learning from our poor performance, we made systematic improvements. I have come to realize that bad times coupled with good reflections provide some of the best lessons, and not just about business but also about relationships. One has many more supposed friends when one is up than when one is down, because most people like to be with winners and shun losers. True friends are the opposite. I got a lot out of my bad times, not just because they gave me mistakes to learn from but also because they helped me find out who my real friends were—the friends who would be with me through thick and thin.

History has shown that we shouldn’t rely on governments to protect us financially. On the contrary, we should expect most governments to abuse their privileged positions as the creators and users of money and credit for the same reasons that you might commit those abuses if you were in their shoes. That is because no one policy maker owns the whole cycle. Each comes in at one or another part of it and does what is in their interest to do given their circumstances at the time and what they believe is best (including breaking promises, even though the way they collectively handle the whole cycle is bad).

In 1931, Japan went broke—i.e., it was forced to draw down its gold reserves, abandon the gold standard, and float its currency, which depreciated it so greatly that Japan ran out of buying power. These terrible conditions and large wealth gaps led to fighting between the left and the right. By 1932, there was a massive upsurge in right-wing nationalism and militarism, in the hope that order and economic stability could be forcibly restored. Japan set out to get the natural resources (e.g., oil, iron, coal, and rubber) and human resources (i.e., slave labor) it needed by seizing them from other countries, invading Manchuria in 1931 and spreading out through China and Asia. As with Germany, it could be argued that Japan’s path of military aggression to get needed resources was more cost-effective than relying on classic trading and economic practices. In 1934, there was severe famine in parts of Japan, causing even more political turbulence and reinforcing the right-wing, militaristic, nationalistic, and expansionistic movement. In the years that followed, Japan’s top-down fascist command economy grew stronger, building a military-industrial complex to protect its existing bases in East Asia and northern China and support its excursions into other countries. As was also the case in Germany, while most Japanese companies remained privately held, their production was controlled by the government. What is fascism? Consider the following three big choices that a country has to make when selecting its approach to governance: 1) bottom-up (democratic) or top-down (autocratic) decision making, 2) capitalist or communist (with socialist in the middle) ownership of production, and 3) individualistic (which treats the well-being of the individual with paramount importance) or collectivist (which treats the well-being of the whole with paramount importance). Pick the one from each category that you believe is optimal for your nation’s values and ambitions and you have your preferred approach. Fascism is autocratic, capitalist, and collectivist. Fascists believe that top-down autocratic leadership, in which the government directs the production of privately held companies such that individual gratification is subordinated to national success, is the best way to make the country and its people wealthier and more powerful.

To be radically open-minded you must: a. Sincerely believe that you might not know the best possible path and recognize that your ability to deal well with “not knowing” is more important than whatever it is you do know. Most people make bad decisions because they are so certain that they’re right that they don’t allow themselves to see the better alternatives that exist. Radically open-minded people know that

Never rule out a goal because you think it’s unattainable. Be audacious. There is always a best possible path. Your job is to find it and have the courage to follow it. What you think is attainable is just a function of what you know at the moment.

The most painful lesson, that was repeatedly hammered home, is that you can never be sure of anything. There are always risks out there that can hurt you badly, even the seemingly safest best, so it’s always best to assume that you’re missing something.

…Our overriding objective is excellence, or more precisely, constant improvement - A superb, constantly improving company in all respects. Conflict in the pursuit of excellence is a terrific thing. There should be no hierarchy based on age or seniority: Power should lie in the reasoning, not the position of the individual. The best ideas win, no matter who they come from. Criticism is an essential ingredient in the improvement process, yet, if handled incorrectly, can be destructive. It should be handled objectively. There should be no hierarchy in the giving or receiving of criticism. Teamwork and spirit are essential, including intolerance of substandard performance. This is referring to two things: First, one’s recognition of the responsibilities one has to help the team achieve it’s common goal, and second, the willingness to help others work within a group toward these common goals. Our fates are intertwined. One should know that others can be relied on to help. As a corollary, substandard performance cannot be tolerated anywhere, because it would hurt everyone. …Long-term relationships are both intrinsically gratifying and efficient, and should be intentionally built.

The most painful lesson, that was repeatedly hammered home, is that you can never be sure of anything. There are always risks out there that can hurt you badly, even the seemingly safest bets, so it’s always best to assume that you’re missing something.

To have peaceful coexistence Americans must understand that the Chinese believe that their values and their approaches to living out these values are best, as much as Americans believe their American values and their ways of living them out are best.

As a result of personal losses and the losses of clients, I had to let everyone in my fledgling company Bridgewater Associates go, and was so broke, I had to borrow $4000 from my dad to help pay my family’s bills. At the same time, this was one of the best things that ever happened to me, because it changed my whole approach to decision-making.

Recognize that it is far better to find a few smart people and give them the best technology than to have a greater number of ordinary people who are less well equipped.

It seems that the best students in school tend to be the worst at learning from their mistakes because they have been conditioned to associate mistakes with failure instead of opportunity.

18. The Political Left/Right Cycle. Capitalists (i.e., those of the right) and socialists (i.e., those of the left) don’t just have different self-interests—they have different deep-seated ideological beliefs that they are willing to fight for. The typical perspective of the rightist/capitalist is that self-sufficiency, hard work, productivity, limited government interference, allowing people to keep what they make, and individual choice are morally good and good for society. They also believe that the private sector works better than the public sector, that capitalism works best for most people, and that self-made billionaires are the biggest contributors to society. Capitalists are typically driven crazy by financial supports for people who lack productivity and profitability. To them, making money = being productive = getting what one deserves. They don’t pay much attention to whether the economic machine is producing opportunity and prosperity for most people. They can also overlook the fact that their form of profit making is suboptimal when it comes to achieving the goals of most people. For example, in a purely capitalist system, the provision of excellent public education—which is clearly a leading cause of higher productivity and greater wealth across a society—is not a high priority. The typical perspective of the leftist/socialist is that helping each other, having the government support people, and sharing wealth and opportunity are morally good and good for society. They believe that the private sector is by and large run by capitalists who are greedy, while common workers, such as teachers, firefighters, and laborers, contribute more to society. Socialists and communists tend to focus on dividing the pie well and typically aren’t very good at increasing its size. They favor more government intervention, believing those in government will be fairer than capitalists, who are simply trying to exploit people to make more money. I’ve had exposure to all kinds of economic systems all over the world and have seen why the ability to make money, save it, and put it into capital (i.e., capitalism) is an effective motivator of people and allocator of resources that raises people’s living standards. But capitalism is also a source of wealth and opportunity gaps that are unfair, can be counterproductive, are highly cyclical, and can be destabilizing. In my opinion, the greatest challenge for policy makers is to engineer a capitalist economic system that raises productivity and living standards without worsening inequities and instabilities. 21.

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Then I read Charles Duhigg’s best-selling book The Power of Habit, which really opened my eyes.

Reading Duhigg’s book taught me that if you really want to change, the best thing you can do is choose which habits to acquire and which to get rid of and then go about doing that. To help you, I recommend that you write down your three most harmful habits. Do that right now. Now pick one of those habits and be committed to breaking it. Can you do that? That would be extraordinarily impactful. If you break all three, you will radically improve the trajectory of your life. Or you can pick habits that you want to acquire and then acquire them.

It seems to me that the best students in school tend to be the worst at learning from their mistakes, because they have been conditioned to associate mistakes with failure instead of opportunity. This is a major impediment to their progress.