Principles - Life and Work
Ray Dalio

by

Jack Shields

Context

Introduction

Principles: Life and Work holds the set of rules for work as well as life that one of the world’s most successful investors and entrepreneurs, Ray Dalio, has acquired throughout his 40-year career in finance. In the book, Dalio shares the unconventional principles that he has developed, refined and utilized over the past forty years to obtain unique results in both his life and business – and which organizations or any individual can adopt to help in the achievement of their goals. The book is divided into three parts: the first part being Dalio’s background; the second part Life principles; and the final part work principles.

In Principles, Dalio shares what he has learned over the course of his remarkable career. According to him, one can systemize life, management, economics, and investing into rules, and understand them like machines. Instead of spouting advice, the author dissects his success to further build on it and ensure that the reader understands it. While Principles brims with novel ideas for institutions and organizations, it also offers a clear, straightforward approach to decision making that Dalio thinks that anybody can apply irrespective of what they want to achieve. The overall theme of the book is that finding the truth is the best way to make decisions and that emotion, ego, as well as blind spots, prevent one from discovering the truth. The author shares the main strategies to evade these weaknesses, including radical transparency, radical open-mindedness, thoughtful disagreement and believability-weighted decision making. 

Context

Ray Dalio’s Principles: Work and life is one of the best books on business culture, and it was published by Simon and Schuster and released on September 19, 2017. Since its release, the book has sold over a million copies worldwide. Principles was a New York Times number one best-seller and was also named Amazon’s number one business book of 2017. In 2010, Dalio posted a short version of his principles on the Bridgewater website. Since this shorter version was made available for free on the website, it has been downloaded over three million times (Angelo para. 1-8).

The popularity of Principles: Life and Work rests on its revelation of the “magic” formula that is the origin of Dalio’s success and that of Bridgewater Associates. Dalio founded Bridgewater Associates in 1975. Forty years later, the firm has made more money for its clients than any single hedge fund in history and has become one of the most important private firms in the United States, as stated by Fortune magazine. In the course of his career, Dalio discovered a set of unique principles that are the source Bridgewater’s exceptionally effective culture, which according to him are “an idea meritocracy that strives to achieve meaningful work and meaningful relationships through radical transparency” (Dalio xvii). It is these principles that Dalio has been unequivocal that they are the “the reason behind my and Bridgewater’s successes,” and which he shares in the book.

Initially, Dalio preferred to stay under the radar. Afterward, however, Bridgewater obtained some attention, something that forced him to put the principles out so that everybody would understand what exactly they were. He chose to share the “magic” because he felt that other people could benefit from them. He has written: “I feel that it is my responsibility at this stage in life to pass along the principles that helped me” (Angelo para. 10)

Dalio’s book comprises hundreds of practical lessons, all of which are built around his cornerstones of “radical truth” and “radical transparency.” These include Dalio laying out the most effective methods through which an individual, as well as organizations, can use to make decisions, approach challenges and create strong teams. He also offers a description of the innovative tools that Bridgewater utilizes to bring an idea meritocracy to life, including employing computerized decision-making systems to make believability-weighted decisions and creating “baseball cards” for all workers that distill their weaknesses as well as strengths. Overall, Principles is not about investing, but a lot of the principles are likely to help managers and entrepreneurs in building an organization or even a team that is focused on excellence. Employees can also benefit from the principles by raising their standards and improving the quality of their work as well. In the book, the author mentions that he will be releasing a second volume of the principles on investing and the economy at some future date.

About the author

Ray Dalio is an American billionaire investor, hedge fund manager, and philanthropist. He was born in Jackson Heights, Queens, New York. Dalio grew up in a middle-class long island neighborhood and began playing the markets at an extremely young age, getting tips from golfers for whom he caddied. He started investing at the age of 12 when he bought shares of Northeast Airlines for $300. His investment tripled after a merger between the airline and another company.

Dalio obtained a bachelor’s degree in finance from Long Island University and an MBA from Harvard Business School. Upon completing his education, he began working on the floor of the New York Stock Exchange. He also traded commodity futures. Later Dalio worked as the director of commodities at Dominick and Dominick LLC, and also became a future trader as well as a broker at Shearson Hayden Stone.

Dalio founded an investment management fund, Bridgewater Associates out of his two-bedroom apartment in New York City in 1975. Years later, the firm became the world’s largest hedge fund. As of October 2017, the firm had $160 billion in assets under management.

Dalio self-published a 123-page volume known as “Principles,” which detailed his logic as well as a personal philosophy for investment and corporate management based on analysis and practical application through his hedge fund, and a lifetime of observation as well. He later turned these principles into a book, which has received considerable success since its release.

According to Bloomberg, Dalio is one of the 100 wealthiest people in the world. Bloomberg Markets also named him among the 50 most influential people in the world. Dalio has also appeared in Time magazine’s list of the most influential people in the world. He was also ranked no.2 by Institutional Investor’s Alpha on their 2012 rich list.

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