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Ray Dalio- BZ-ENG Flipbook PDF
Ray Dalio- BZ-ENG
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“LISTEN TO THE PERSON WHO DOES NOT ACCEPT YOU” RAY DALIO 1
Ray Dalio -- Background & bio Ray Dalio was born in Jackson Heights, in the borough of Queens, New York City. An only child, his mother was a homemaker, his father a jazz musician who played clarinet and saxophone in night clubs such as Manhattan’s Copacabana. When Ray was eight, the family moved farther out on Long Island to the suburban community of Manhasset. The young Ray Dalio enjoyed sports and playing with his friends, but disliked the routine of school, particularly rote memorization. He was far from lazy, however. For spending money, he held down a paper route, mowed his neighbors’ lawns and shoveled snow from their driveways. From age 12, he worked as a caddy at the Links Golf Club, an exclusive course where his customers included the Duke of Windsor (formerly King Edward VIII of England) and the former vice president (soon-to-be president) Richard Nixon, as well as many Wall Street investors.
In the boom years of the 1960s, talk on the golf links centered on the surging stock market and Ray Dalio was intrigued. With $300 he had saved from his caddy earnings, he bought shares of Northeast Airlines. At five dollars a share, it was the only major company whose stock he could afford. As it happened, Northeast became the object of a merger effort, and the 12-year-old caddy quickly tripled his investment. Ray Dalio was hooked. He read the annual reports of major companies, and engaged older investors in conversation. By trial and error, he learned principles he has continued to apply in his investing career. He found that even careful research can result in mistakes, and that mistakes can be expensive. He also learned that the only way to beat the market is to be right when others are wrong. When he formed an opinion of the prospects of a given stock, he asked the smartest investors he knew to critique his reasoning. By the time he graduated from high school, he had assembled a stock portfolio worth several thousand dollars, a significant amount for a teenager in the late ’60s. Given his unexceptional academic performance in high school, Ray Dalio had some difficulty finding a college. He eventually enrolled at C. W. Post College, a campus of Long Island University in nearby Brookeville. Although he continued to buy and sell stocks in college, Dalio
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also became interested in commodity futures. The low margin requirements attracted him to this sector, where he saw an opportunity to earn a considerable profit on a minimal investment. The summer between Dalio’s two years at Harvard was spent trading commodities at Merrill Lynch. When he returned to Cambridge, his formerly obscure specialty had become a hot topic. Dalio and some Harvard friends set up a small company they called Bridgewater Associates to trade in commodities. Little resulted from this first venture, but Dalio retained the Bridgewater name for later use. With commodity prices — especially oil — rising dramatically, the Federal Reserve raised interest rates to rein in inflation, the stock market plummeted, and investors rushed towards commodities. When Ray Dalio arrived in the troubled Wall Street of 1973, he was a rare creature, a Harvard MBA with expertise in commodities trading. Dalio spent a year at Dominick & Dominick, LLC, before joining Shearson Hayden Stone as a trader. At the time, Shearson was headed by Sanford Weil, soon to become a Wall Street legend as architect of the merger that created CitiGroup. By his own account, Dalio chafed under the hierarchical structure of Shearson, and matters came to a head at a New Year’s Eve party when he came to blows with his department head. Despite this altercation, a number of his trading clients retained their faith in him, and he left Shearson to trade independently for his remaining clients. Operating out of his own two-bedroom apartment, at age 26 he re-launched Bridgewater Associates as a small trading firm. Independence in business coincided with a newfound stability in his personal life when Ray Dalio met and married Barbara Gabaldoni.
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At first, Bridgewater Associates advised a few corporate clients on currency exchange and interest rate risks, but as these clients benefited from his advice, his insights were sought by a wider audience of investors. McDonald’s and one of its major suppliers signed on as clients, and Bridgewater began to grow dramatically. Ray and Barbara Dalio moved to Connecticut to start a family, and in 1981, the Bridgewater offices moved with them. In 1985, Bridgewater signed the
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World Bank’s employee retirement fund as one of its clients. Kodak’s retirement system followed in 1989. Ray Dalio, the son of a jazz musician, began investing at age twelve. He bought stock shares for $300 and tripled his investment after a corporate merger was announced. Dalio went on to graduate from Harvard Business School and then worked on the floor of the New York Stock Exchange and invested in commodity futures. In 1975, Dalio founded the investment management firm, Bridgewater Associates, which forty years later, became the largest hedge fund in the world, with $160 billion in assets under management. His estimated net worth is $18 billion. In addition to his business interests, he followed music enthusiastically, and when the era’s most popular band, the Beatles, traveled to India to study meditation, Ray Dalio thought there might be something in it for him too. The Beatles’ guru, the Maharishi Mahesh Yogi, taught Transcendental Meditation (TM), a modern adaptation of an ancient Indian practice for clearing the mind of irrational feelings in order to perceive reality more clearly. Ray Dalio became a daily practitioner of TM, a discipline he has continued to find helpful throughout his life. He found that meditation improved his concentration and allowed him to think more creatively, which assisted him in his college studies. Free at last to choose his own courses and follow his own interests, Dalio blossomed academically. With his excellent academic record in college, he won admission to Harvard Business School. In the summer of 1971, between college and graduate school, he worked as a clerk on the floor of the New York Stock Exchange. There, he witnessed firsthand the effects of an international financial crisis and President Nixon’s fateful decision to sever the relationship between the dollar and the value of gold.
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This marked the end of the post-World War II Bretton-Woods agreement, under which the exchange rates of the world’s major currencies had been fixed, and the price of gold set at $35 an ounce. The day after the President’s announcement, stock prices rose by 33 percent. A period of sustained inflation was about to begin, and the prices of many commodities, not least gold, were to rise dramatically over the next decades. Ray Dalio was ahead of the curve in learning about commodity prices, but the events of 1971 also taught him the importance of currency exchange rates, and he set out to master that subject as well.
As Bridgewater’s client list grew, so did the scope of its investments. Dalio employs an investment approach called “global macro,” investing on a large scale around the world on the basis of broad systemic factors. Dalio made a careful study of market history, finding previous examples of phenomena that his competitors believed were unprecedented. He built Bridgewater by anticipating changes in currency exchange rates, commodity prices, inflation and GDP growth in the world’s economies. 6
In 1991, Bridgewater opened a hedge fund known as Pure Alpha. The name refers to the differential between the overall average returns of a given market, labeled “beta,” and those that exceed the market return, termed “alpha.” Dalio’s Bridgewater was one of the first firms to clearly identify and base a strategy on the distinction between the two classes of returns. Pure Alpha has become Bridgewater’s flagship fund, earning an average annual yield of 18 percent. Over the years, Dalio applied the insights he had gained from his study of meditation to understanding the psychological factors that influence market decisions and company management. The greatest obstacle to rational decision-making, he found, was “the ego barrier,” the desire to prove oneself right and others wrong, even in the face of evidence to the contrary. Under Dalio’s leadership, Bridgewater has adopted a management style he describes as “radical transparency.” Criticism of fellow colleagues and analysis of their mistakes are encouraged and valued, as long as they contribute to the learning process. Secrecy, gossip and behind-the-back criticism are prohibited. All meetings are videotaped and the recordings are made available to the entire organization. Dalio outlined his business management philosophy in 2005 in a 100-pluspage essay, “The Principles.” Bridgewater’s emphasis on transparency extends to investor relations as well. Clients receive a daily newsletter, monthly performance updates, a quarterly review and frequent conference-call briefings. In 2006, Bridgewater analysts calculated that total debt service in the U.S. was exceeding income, and that the economy was headed towards a major deleveraging. Bridgewater made major investments in U.S. Treasury bonds, gold and the Japanese yen. Dalio foresaw that the boom in home mortgage finance in the U.S. would come to an end in 2007, and met with the Secretary of the Treasury in Washington to warn him that the large banks which were deeply invested in mortgage-backed securities were in danger of insolvency. In the spring of 2008, Bridgewater pulled out of several large banks, including Lehman Brothers and Bear Stearns. A week later, Bear Stearns failed and panic overtook the international financial markets.
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Ray Dalio: Bridgewater Bridgewater manages approximately $169 billion in global investments for a wide array of institutional clients, including foreign governments and central banks, corporate and public
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pension funds, university endowments and charitable foundations. Approximately 1,500 people work at Bridgewater, which is based in Westport, Connecticut. Founded in 1975 out of a two-bedroom apartment, Bridgewater remains an independent, employee-run organization. Throughout its 40-year history, Bridgewater has been recognized as a top-performing manager and an industry innovator. Bridgewater was one of the few firms to have positive performance during the 2008 financial crisis. The firm has received over 50 industry awards and various recognitions in the past 10 years; including awards for industry innovation, performance, quality of research, client service and client satisfaction, quality of operations and operational infrastructure. Additionally, in 2014 Bridgewater received industry recognitions for: Best in Institutional Portfolio Management, Best in Risk Budgeting, Top Workplaces, Best Client Service, Investment Company of the Year, Overall Excellence, and multiple awards for Innovation and Performance. Its clients and employees routinely give Bridgewater top satisfaction ratings in annual surveys. Bridgewater's unique results are a product of its unique culture. Truth and excellence are valued above all else. In order to be excellent we need to know what's true, especially those things that we would rather not be true, so that we can decide how best to deal with them. We want logic and reason to be the basis for making decisions. It is through this striving to be excellent by being radically truthful and transparent that we build meaningful work and meaningful relationships. In 2011, Bridgewater reported returns of roughly 23 percent, while the average hedge fund was losing four percent or more. It was estimated that Ray Dalio earned $3.9 billion that year, placing his net worth in the neighborhood of $11 billion. In July 2011, Ray Dalio officially relinquished his title as CEO of Bridgewater Associates, and assumed the title “Mentor.” He continues to serve as Co-Chief Investment Officer. By 2013, Bridgewater Associates had grown to 1,400 employees, managing approximately $150 billion for its investors. While most hedge funds cater to high-net-worth individuals as well as institutional clients, Bridgewater’s client base consists almost entirely of institutional investors, including foreign governments and central banks, pension funds, university endowments and charitable foundations. Roughly a third of these are public pension funds, such California’s state employee retirement fund (CalPERS) and the Pennsylvania Public School Employees’ Retirement Find; another third are corporate pension funds such as those of Nabisco, McDonald’s and General 9
Motors, and perhaps a quarter are government-run sovereign wealth funds, such as that of Singapore. In both 2012 and 2013, Bridgewater was recognized for having earned its clients more than any other hedge fund in the history of the industry. (Энэ хэсэгт түүний байгуулсан хедж сангийн ерөнхий мэдээлэл байна.)
Ray Dalio’s Bridgewater Associates topped most other hedge funds last year when its flagship Pure Alpha strategy posted a 14.6 percent gain. The 2018 return not only marked the strategy’s best performance since 2011: It also resulted in a mega-payday for Dalio, who personally netted a cool $2 billion, according to preliminary estimates from Institutional Investor. As a result, Dalio — who founded Westport, Connecticut-based Bridgewater, the world’s largest hedge fund firm, in 1975 — is likely to rank at or near the top of this year’s Rich List, Institutional Investor’s 18th-annual ranking of the 25 highest-earning hedge fund managers. Bridgewater declined to comment. The full Rich List ranking won’t become official for a couple of months. However, last year’s stellar performance means Dalio is guaranteed to qualify for the ranking for the sixteenth time. He earned $1.3 billion in 2017 and $1.4 billion in 2016 The estimated $2 billion Dalio appears to have earned last year works out to about $5.5 million per day — or $228,310 per hour if he worked 24/7 without sleep. Dalio’s haul came from three sources: gains generated by the substantial amount of personal capital he has invested in his funds, his share of the firm’s management fees, and his share of the performance fee. This is the reward for the macro maven’s well-publicized bearishness and concerns about what he has described as an ever-widening wealth gap. For over a year, Dalio – who recently published a new book, Principles for Navigating Big Debt Crises – has been warning that we are past the top in the bond market and are in the “late cycle” phase of the short-term debt/business cycle. Late last 10
year, Dalio publicly asserted that the current debt tightening cycle at this point “looks a lot like 1937,” adding, “we are in the late stages of both the short-term and long-term debt cycles.” “We don’t know exactly how far we are from the top in the stock market and then the economy,” Dalio wrote nearly a year ago on LinkedIn, his favorite forum for communicating publicly. His concerns have not wavered – and perhaps have intensified since then. “A lot of optimism about future earnings growth has been baked into equity valuations,” Bridgewater co-chief investment officer Bob Prince told the Financial Times in October. “But we are at a potential inflection point where the economy is moving from hot to mediocre.”
In the wake of Donald Trump’s election as president, Dalio also warned about the dangers of populism, asserting that it was at its highest level since the 1930s Bridgewater’s Pure Alpha strategy has generated an annualized return of 12 percent 11
since its inception in December 1991. But it posted a long streak of mediocre returns from 2012 through 2017, producing gains in the low-single-digits each year. Even so, Pure Alpha has made money in each of the past 18 years and only lost money in three years of its existence. “Bridgewater’s significant positive returns in a year when most asset markets and most managers had negative returns is consistent with its style of management,” the firm recently told investors, according to a person who has seen the communication. The Pure Alpha strategy invests in more than 150 markets and is prepared to go long or short in each of the markets. Meanwhile, Bridgewater’s risk parity strategy, All Weather, lost a little over 6 percent last year, according to a private database.
Although Dalio has hauled home huge sums of money, he has done the same for his longtime investors. Last year, LCH Investments – a London-based fund-of-funds firm – said Bridgewater had generated $49.7 billion in total net gains since the firm’s inception, more than any other hedge fund firm. This was before the nearly 15 percent gain Bridgewater’s flagship strategy generated in 2018. Dalio has drawn considerable media scrutiny and public criticism for the corporate culture he has built at Bridgewater, which espouses the philosophy of radical truth.
In September 2017 Dalio
published Principles: Life and Work, a 500-page-plus version of the “Principles” document that he famously published on his firm’s website in 2011, offering rare insight into the firm’s unusual culture. The New York Times described it as “surprisingly moving.” Dalio is also philanthropic. According to the website daliophilanthropies.net, the Dalio family’s foundation and private giving span a wide array of causes that include education, ocean exploration and awareness, environmental protection, meditation, mental health and wellness, healthcare, financial inclusion, child welfare and capacity building in China, and community activities and the arts. Dalio, who enjoys music, hunting, and fishing, is a director emeritus of Grameen America, which helps boost women out of poverty. Last year, OceanX – founded by Dalio and Michael 12
Bloomberg – announced a $185 million partnership aimed at supporting ocean protection and exploration. (Энэ хэсэгт түүний байгуулсан хедж сан хэрхэн амжилттай яваа вэ? Гэсэн асуултын хариулт гарч ирнэ)
PRINCIPLE BY RAY DALIO
Book One LIFE PRINCIPLES The first book tells the story of Dalio’s career and explains his overarching approach to life using principles that affect everything he does—most importantly, how he pursues meaningful work and meaningful relationships.
Book Two WORK PRINCIPLES The second book explains the unusual way Dalio ran Bridgewater Associates for over 40 years, and how the firm’s unique approach to working together led to its unique results
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Ray Dalio: Quotes 1. "I believe that one of the best ways of getting at truth is reflecting with others who have opposing views and who share your interest in finding the truth rather than being proven right" 2. "There is giant untapped potential in disagreement, especially if the disagreement is between two or more thoughtful people" 3. "Be wary of the arrogant intellectual who comments from the stands without having played on the field." 4. "The pain of problems is a call to find solutions rather than a reason for unhappiness and inaction, so it's silly, pointless, and harmful to be upset at the problems and choices that come at you." 5. "Don't worry about looking good - worry about achieving your goals."
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6. "The best advice I can give you is to ask yourself what do you want, then ask 'what is true' — and then ask yourself 'what should be done about it.' I believe that if you do this you will move much faster towards what you want to get out of life than if you don't!" 7. "More than anything else, what differentiates people who live up to their potential from those who don't is a willingness to look at themselves and others objectively" 8. "I believe that understanding what is good is obtained by looking at the way the world works and figuring out how to operate in harmony with it to help it evolve." 9. "Life is like a game where you seek to overcome the obstacles that stand in the way of achieving your goals. You get better at this game through practice. The game consists of a series of choices that have consequences. You can't stop the problems and choices from coming at you, so it’s better to learn how to deal with them." 10. "I believe that for the most part, achieving success — whatever that is for you — is mostly a matter of personal choice and that, initially, making the right choices can be difficult." 11. "If you can stare hard at your problems, they almost always shrink or disappear, because you almost always find a better way of dealing with them than if you don't face them head on. The more difficult the problem, the more important it is that you stare at it and deal with it. 12. "Unlike in school, in life you don't have to come up with all the right answers. You can ask the people around you for help — or even ask them to do the things you don't do well. In other words, there is almost no reason not to succeed if you take the attitude of One: total flexibility — good answers can come from anyone or anywhere. Two: Total accountability. Regardless of where the good answers come from, it's your job to find them." 13. "Watch out for people who think it's embarrassing not to know." 14. "By and large, life will give you what you deserve and it doesn't give a damn what you like. So it is up to you to take full responsibility to connect what you want with what you need to do to get it, and then to do those things." 15. "Once you accept that playing the game will be uncomfortable, and you do it for a while, it will become much easier (like it does when getting fit). When you excel at it, you will find your ability to get what you want thrilling." 16. "You'll see that excuses like "That's not easy" are of no value and that it pays to "push through it" at a pace you can handle. Like getting physically fit, the most important thing 15
is that you keep moving forward at whatever pace you choose, recognizing the consequences of your actions." 17. "Life is like a giant smorgasbord of more delicious alternatives than you can ever hope to taste. So you have to reject having some things you want in order to get other things you want more." 18. "People who worry about looking good typically hide what they don't know and hide their weaknesses, so they never learn how to properly deal with them and these weaknesses remain impediments in the future." 19. "People who confuse what they wish were true with what is really true create distorted pictures of reality that make it impossible for them to make the best choices." 20. "People who acquire things beyond their usefulness not only will derive little or no marginal gains from these acquisitions, but they also will experience negative consequences, as with any form of gluttony." 21. "Since the only way you are going to find solutions to painful problems is by thinking deeply about them — i.e., reflecting — if you can develop a knee-jerk reaction to pain that is to reflect rather than to fight or flee, it will lead to your rapid learning/evolving." 22. "There is an excellent correlation between giving society what it wants and making money, and almost no correlation between the desire to make money and how much money one makes." "I have found that by looking at what is rewarded and punished, and why, universally — i.e., in nature as well as in humanity — I have been able to learn more about what is "good" and "bad" than by listening to most people's views about good and bad." "I believe that we all get rewarded and punished according to whether we operate in harmony or in conflict with nature's laws, and that all societies will succeed or fail in the degrees that they operate consistently with these laws."
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WHAT WE SHOULD LEARN FROM HIM? Our unique success is the direct result of our unique way of being. We want an idea meritocracy in which meaningful work and meaningful relationships are pursued through radical truth and radical transparency. We require people to be extremely open, air disagreements, test each other’s logic, and view discovering mistakes and weaknesses as a good thing that leads to improvement and innovation. It is by continually striving together for the highest levels of truth and excellence that we create meaningful work and meaningful relationships. We are both idealistic and practical. We believe that creating excellent outcomes requires setting ambitious goals and applying our understanding of how the world works, as reflected in principles, to achieve them. Our Principles are ways of dealing with situations. They are the evolving record of our understanding of what works well. They’re not just read and followed, but stress-tested on an individual and collective level as our shared approach to working together. As Bridgewater is an idea-meritocracy in which we value independent thinking, we urge you to read and assess them for yourself.
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DUBNER: So let’s begin with literally saying your name and what you do. DALIO: I’m Ray Dalio. I was the founder of Bridgewater Associates. I’m still the chief investment officer and chairman. And right now I’m trying to help other people be successful without me in whatever form they want to be successful. DUBNER: Excellent. And Principles the book, Part 1, grew out of a non-book version that you published a while back. Did you set out to want to help people, or was that more of an internal working guide that you wanted to publish so that your employees could learn what you’re all about? In other words, did you intend for it to become a public proclamation? DALIO: Oh no. Just the exact opposite. I didn’t want any public attention. In 2008, we anticipated the financial crisis by thinking differently and that got a lot of attention, and I was faced with the choice of letting it be misunderstood or put them out. And so we put them on a website. They were downloaded three and a half million times. I got a whole bunch of thank you’s for that, and now I’m at a stage of my life that is my transition. I think that life exists in three big phases. In the first phase, you’re learning and you’re depending on others. You’re a kid. Second phase: you’re working, others are depending on you, and you’re trying to be successful. In the third phase and as you get into the third phase, the greatest joy you can have is to help others be successful. That gives them their abilities and it gives you the freedom. So 2017 I view as my transition year from the second phase of my life to the third phase of my life.
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DUBNER: I know it’s relatively early then in the third phase, but how would you rank the actual satisfaction
you
are
experiencing versus what you would have predicted as your satisfaction in this third phase? DALIO: In that transition from the second to the third phase, it’s an unbelievable kick to help
other
people
be
successful. I think it almost instinctively changes. When you’re in that second phase it’s a kick to be successful, but there’s a greater kick. I’m loving it. To be able to help other people be successful — it’s a kick. There was a book, Memoirs of Hadrian; it was Hadrian speaking in his own words. He had conquered and he described that very well — “For me to go in there and fight another battle and be successful is just not the same kick.” And it’s very interesting, because if you look at Joseph Campbell‘s Hero With a Thousand Faces, it’s almost exactly like that. There was a part of that book — maybe I’m answering too long, but anyway, my son gave me the book in 2014 — and he describes that phase of your life as “returning the boon.” In other words, you learn a lot of lessons in life and you want to help others be successful. And it’s a pleasure. It’s the greater pleasure than being successful yourself. At least it feels that way for me. DUBNER: So, a two-parter: Let me ask one first and I’ll hold off on the other. You’ve become famous for being not only analytical but self-analytical, and in a way, that’s what your management 19
style is about and has really pioneered. But let me ask you to apply that to yourself right now. The window of time you’re looking at for this third phase for yourself is very short, so persuade me that this joy that you’re experiencing in phase three is not just the novelty of phase three and is actually the accomplishment that you’re feeling in phase three. DALIO: Well, again, I don’t even know if it’s the accomplishment as much as I feel the need to convey it, and what other people do with it is fine. So it’s not just my principles. I just want to be clear. My aspiration here is to make clear how effective principled-level thinking in general is. I’ve just interviewed a number of remarkably successful people to try to have them bring out their principles, because principles are like recipes for success that have worked for people. And so there are a number of people who are very, very successful. Wouldn’t you like to know Elon Musk‘s principles? Wouldn’t you like to know Bill Gates‘s principles? Wouldn’t you like to know Einstein‘s principles? Because they’re the recipes for success. And if one operates in a principled way — I hope we’ll get into what that means — but if one operates in a principled way, where you know your principles and you’re refining them and you’re clear about them, magical things happen. And I feel a responsibility to pass those things along and then let people do whatever they want with them. DUBNER: Okay we’ll get very micro for a long time, I promise, but let’s start a little bit macro. When you look outside your firm — and even outside the financial services industry — which industries or realms do you see that do tend to operate according to their principles? DALIO: Well I don’t know that I could describe it as a particular industry, but I think that what’s happening quite a bit is that the development of algorithms is requiring people to be very clear in specifying the equations. And that’s almost helping the development of algorithms. So let’s say you have a self-driving car, and now you’re having to make a choice of, “I will kill three people or I’m going to go over a cliff and I’m going to die,” or those types of things — that forces people to think through, “Okay, what would I do in that situation?” and become very, very explicit in that form of an algorithm. Let’s say an algorithm is nothing more than a principle, which is now put in to computerese rather than put into words. I think we’re coming down that path in a faster way. Of course religions think about principles, but the thing about religions is that in many cases they come as packaged principles, and they come from somebody else and then you move them along. I think that principle-level thinking nowadays allows the individual to choose his own principles and to be clear about those principles and, in a sense, operate that way. Now different institutions 20
and organizations are operating differently, so I couldn’t comment on the whole universe. But I think inevitably these things are happening, and I just want to make it clear what those things are: Algorithms will form and will help to force the clarity of principles. We are probably in a society that is going from principles that are given to us by others in a more prepackaged way, a society that doesn’t think adequately about principles, to one that I think will evolve to making one’s own principles clear. DUBNER: Let me ask you a flip side of the previous question. When you look around the world for an area or environment or industry or institution where you see that there’s an awful lot of behavior, an awful lot of decisions being made not according to principles but rather expediency or emotion or self-dealing or whatever — where do you see that happening a lot in particular? And yes this is a leading question, because what I really want to ask you about is politics. I see politics as something where we as citizens would like nothing more than principled behavior — even if it’s a principle that we personally don’t agree with — and yet it feels as though we’re in a political moment where principles are not being applied. And I guess I’m curious about your take on that. DALIO: I think that’s exactly right. I think it would be an unbelievable world, but a better place, if each person — particularly those who are in leadership positions — wrote down their principles and walked the talk. And then that we as a country are clear in what the principles are that bind us together, and what the principles are that separate us. So being clear about that. And then to have good “idea-meritocratic” ways of working ourselves through those disagreements. I think that that’s the problem. First, not having clear principles clearly stated. And second, not having ideameritocratic decision making that lets you move past it. Let me explain quickly what I mean by idea-meritocratic decision making. It’s, of course, hoping that the best processes for producing the best ideas win out.
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Okay, three things you need to do: First, you need to put your honest thoughts on the table for everybody to see with other people’s honest thoughts so they’re clear. Second, you need to have the ability and protocols for having thoughtful disagreement. In other words, work yourselves through disagreements to make better decisions, and by having principles and being clear about that, that helps that second step of having thoughtful disagreement and getting past those disagreements. And then third, if you have remaining disagreements, you need to have an ideameritocratic way of getting past that. We call that believability-weighted decision making — that’s a whole other topic if you want to digress into it. But I think that’s been extremely powerful for us. And I think that as we’re entering a period in which we’re going to have a greater ability to have collective decision making because of the use of algorithms, and because also we can find out what everybody is like so easily. So I think that we’ll have to move in that direction. But if we don’t, we’re just going to be in our silos arguing and trying to kill each other.
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Source: •
https://www.valuewalk.com/ray-dalio-bridgewater/
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https://www.bridgewater.com/
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https://www.bloomberg.com/news/articles/2015-03-17/bridgewater-s-dalio-warns-of1937-market-risk-with-rates
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http://www.achievement.org/achiever/ray-dalio/#
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http://freakonomics.com/podcast/ray-dalio/
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https://www.institutionalinvestor.com/article/b1cpywndrkcyzk/Here-s-What-Ray-DalioMade-in-Bridgewater-s-Impressive-2018
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https://www.principles.com/
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https://economictimes.indiatimes.com/topic/Ray-Dalio
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https://en.wikipedia.org/wiki/Ray_Dalio
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