Book Notes: Principles

By Ray Dalio. 552 pages.

NOTE: Whenever I read a nonfiction book, I like to summarize the ‘meat’ of it, the parts that really had value to me (I copied the idea from Derek Sivers). So, fair warning: this is less a book summary and more a ‘points I liked in a book’ summary.

Ray Dalio is legendary in the business world. A reflective billionaire who, like Warren Buffett and Charlie Munger, has had a long (and ultimately successful) career in the stock market. Principles, the supposed culmination of everything he’s learned, comes off as dry but sincere, and somewhat useful.

The ‘Principles’, divided into Life and Work sections, consists of long exposition and details and winding stories. Dalio doesn’t seem to come to the point often, and when he does, I often found myself disagreeing with it or dismissing it as a platitude.


Life Principles I Liked

  • Your ability to deal with not knowing what is ‘best’ is more important than what you do know.
  • The most constant struggle is between thinking and feeling. Reconcile your thinking and your feelings.
  • The biggest threat to good decision making is harmful emotions.
  • Regularly use pain as your guide towards quality reflection.
  • Reality is optimizing for the whole, not for you.
  • Evolve or die.
  • Everyone has at least one big thing that stands in the way of their success; find yours and deal with it.
  • Understand your ego barrier. Your two ‘yous’ fight to control you. Understand your blind spot barrier.
  • Realize the conscious mind is in a battle with the subconscious mind.
  • Remember the 80/20 rule.
  • Don’t mistake possibilities for probabilities.
  • To grow stronger you have to push your limits, which is painful. No pain, no gain.
  • Compare your outcomes with your goals to learn how to modify your machine.
  • Identify and don’t tolerate problems.
  • Diagnose problems to get at their root causes. Focus on ‘what is’ before ‘what to do about it’.
  • Understand the power that comes from knowing how you and others are wired.

Work Principles I Liked

  • A great organization has both great people and great culture.
  • Speak up, own it, or get out.
  • Be extremely open.
  • Remember that most people will pretend to operate in your interest while operating in their own.
  • Treasure honorable people who are capable and will treat you well even when you’re not looking.
  • Get over blame and credit, and get on with accurate and inaccurate.
  • Observe the patterns of mistakes to see if they are products of weakness.
  • Nobody can see themselves objectively.
  • Spend lavishly on getting in sync, because it’s the best investment you an make.
  • Distinguish between idle complaints and complaints meant to lead to improvement.
  • Distinguish open-minded people from close-minded people.
  • Watch out for people who think it’s embarrassing not to know.
  • If you can’t successfully do something, don’t think you can tell others how it should be done.
  • Don’t pay as much attention to people’s conclusions as the reasoning that led them to their conclusions.
  • Know when to stop debating and move on to agreeing about what should be done.
  • Recognize that you don’t need to make judgments about everything.
  • Pay more attention to whether the decision-making system is fair than whether you get your way.
  • The same standards of behavior apply to everyone.
  • Don’t get stuck in disagreement–escalate or vote.
  • Remember the force behind the thing.
  • Pay for the person, not the job.
  • Pay north of fair.
  • Constantly compare your outcomes to your goals.
  • Beware of paying too much attention to what is coming at you and not enough attention to your machine.
  • Everything is a case study.
  • Vary your involvement based on your confidence.
  • Watch out for people who confuse goals and tasks, because if they can’t make that distinction, you can’t trust them with responsibilities.
  • Don’t confuse the quality of someone’s circumstances with the quality of their approach to dealing with the circumstances.

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