What is the book “Principles: Life and Work“ about?
To make the book not similar to a summary of life rules, in its first part Ray Dalio talks about himself, at the same time illustrating some of the principles with the examples from his life.
Ray Dalio was born on Long Island, in a poor Italian family. His mother was a housewife, and father was a jazz musician. He was the ordinary child and did not like the school just like the majority of kids. Most of the school subjects were uninteresting to him. He forced himself to do homework, only not to upset his mother, who was distressed by bad marks. Much more he liked playing football with friends and earning the first pocket money.
From the age of eight, he worked as a paperboy, laid out goods in stores, and washed dishes in a restaurant. Being quite young he became interested in the stock market, listening to people talking in the golf club, where he worked part-time, distributing clubs.
At the age of twelve, he invested the first saved sum in shares of Northeast Airlines; it was simply because they were the cheapest, and he thought that the more he invested, the more he would receive. The airline merged with another one, after which the value of the shares really increased, and the boy earned his first small capital.
After that, he took the pile of magazines and began to study the laws of the stock market. As he says, he was drawn to adventure, risk; he was much more afraid of boredom and mediocrity than the real danger. Since childhood, he knew that he has his own way, and followed it.
The first steps in the stock market led him to the inevitable errors of the fresher. Dalio believed that if buy cheap shares, eventually they will necessarily grow in price. He did not take into account that the whole state of the economy influences their price, and there are a lot of other factors too. Since then, he realized that operations with securities require a more serious approach. He entered the college, and, influenced by his favorite Beatles, began to meditate (the Beatles specifically visited the ashram in India to practice there) and appreciated great opportunities of the meditation.
In college, he studied the work with futures, which then were not currency, but the commodity: corn, soy, and livestock. After graduation from the college, he entered the Harvard Business School, while working as a clerk on the New York Stock Exchange. He watched the ups and downs of shares and currencies and tried to understand the cause-and-effect relationship of this phenomenon, in particular, the politics’ influence on the economy. He observed several crises, a panic on the stock exchange, a change of presidents and a series of political scandals; and in everything he was looking for patterns.
Forty years ago, Ray Dalio and his friend created a tiny consulting company, called Bridgewater, which today is a powerful hedge fund, one of the largest in the world. He grew up and studied with Bridgewater, on its failures and ups, and constantly noted their connection. In such a way his principles were gradually formed. According to Ray Dalio, leading by these principles one can achieve any goal.
Ray Dalio’s approach to life is based on the principles described in his book. They played a huge role in his life, and he is ready to share them. Gradually, he learned to perceive the reality as a machine that is in perpetual motion. The causes give rise to consequences, and they, in turn, become new causes, and so on ad infinitum. It is only necessary to grasp this relationship, and then failures will be perceived as tests of character and a challenge to creative thinking.
Since our birth, we have different mental abilities, but none of us are born with decision-making skills. We gradually acquire them when confronted with reality. During the whole life, in the author’s opinion, we are responsible for all sorts of challenges, coping with difficulties, facing difficult situations. If we do not have any system, we will simply react to each stimulus again and again as the first time. But the principles will help us to classify these situations and tasks and have ready-made tools for their solution.
Ray Dalio emphasizes that it is best to develop one’s own principles, although it is not forbidden to take advantage of others. His own principle, which he considers universal, is:
- determine what you want to achieve;
- make sure that this is the right goal;
- make up a plan of what you need to do to achieve this;
- then start moving in this direction.
You will interact with many people; try to be closer to those whose principles coincide with your own. Take consistent steps, guided by your principles, and gradually you will come to any desired goal. Principles are the criteria for decision-making.
Summary and Ideas of “Principles: Life and Work”
Idea №1. To change something, you should first accept what you have
Idea №2. Your thinking should be extremely open
Idea №3. Evolution controls the world, and everything that does not evolve is doomed to extinction
Idea №4. Pain is the inevitable companion of progress, both in the laws of the universe and in the development of personality
Idea №5. Learn to objectively assess your weaknesses and failures and cope with them.
Idea №6. A personal evolutionary process is a cycle consisting of five steps
Idea №7. On the way to success, everyone encounters two obstacles: his own ego and blind spots
Idea №8. Learn to unite individual data into a whole picture
Idea №9. To interact with reality, use logic and common sense
Idea №10. Each organization is a mechanism consisting of culture and people who constantly influence each other
Idea №11. The main joy is not the achievement of the goal, but the struggle for it
Review “Principles: Life and Work”
Ray Dalio believes that the world would benefit if as many talented, uncommon and successful people as possible sharing their principles. It would be so much interesting if we knew about the principles of, for example, Leonardo da Vinci or Winston Churchill! It would be wonderful to compare them with the principles of Steven Jobs or Einstein to find out what is common between them, how do they differ, which ones can be used in our own strategy? It would be important to know the principles of politicians before voting for them. Ray Dalio believes that currently, it is especially important to have clear principles. They allow better interaction with people and making reasonable decisions.
Pros and Cons
- Personal experience of the author; interesting examples; structured; simple exposition.
- Sometimes ideas in the book might repeat each other
About Author Ray Dalio
Ray Dalio is one of the most influential people in the world presiding the Bridgewater Associates corporation he created, a famous financier, entrepreneur, and investor.
Dalio has appeared on the Time 100 list of the most influential people in the world as well as the Bloomberg Markets list of the 50 most influential people.