Saturday, January 20, 2018

Principles: Ray Dalio: January 2018

Principles (2017), by Ray Dalio, is an incredible book. In it, Ray Dalio, at the age of 68, shares the principles on which he has based his life's work. He is the founder of the investment firm Bridgewater Associates, one of the world's largest hedge funds, with $160 billion in assets, and has amassed a personal fortune of $17 billion, according to Forbes (2017). He is among the 100 wealthiest people in the world, states Bloomberg. has become a philanthropist, and joined Warren Buffet and Bill Gates in wanting to share his fortune with others. He is presently building a large philanthropic foundation, the Dalio Foundation.

Ray Dalio was born in 1949, in Jackson Heights, Queens, New York, of a lower-middle class Italian/American family. At a very early age he realised that he wanted to be successful, and that to be motivated, he had to work for himself. He began working at delivering papers, mowing lawns, and caddying. At the age of 12, on a tip from one of his golfing customers, he made his first investment in the stock market. It was hugely successful. He received a bachelor's degree in finance from Long Island University, and an MBA from Harvard Business School. He has to have worked to pay for this. Perhaps he won a scholarship to Harvard.

He worked on the floor of the New York Stock Exchange. Later he worked for companies in the financial world. In 1975, he founded his company, Bridgewater Associates. It wasn't all smooth sailing, but Dalio navigated difficulties and continued on his course. The rest is history, as is said.

In Principles, Ray Dalio states the first five principles he lives by in his business. He says that they also carry over into his private world. These principles are, as follows:
  1. Embrace Reality and Deal with It. I particularly like his advice to look to nature to see how things are done.
  2. Use the 5-Step Process to Get What You Want Out of Life. This process is, as follows:  (a) Have clear goals. (b) Identify and don't tolerate the problems that stand in the way of your achieving those goals. (c) Accurately diagnose the problems to get at the root causes. (d) Design plans that will get you around them. (e) Do what's necessary to push those designs through to results.
  3. Be Radically Open-Minded. 
  4. Understand That People Are Wired Very Differently
  5. Learn How Make Decisions Effectively
In other words, Get a Grip and Just Do It! The book continues in that vein. If you don't believe in facing reality, acting on that insight, regardless if this means exercising tough love, don't bother reading this book. On the other hand, if you are in business and would like morale building, this book is for you. Here is everything you need to know to build a strong, successful business.

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