Principles by Ray Dalio
Written and published for samxsmith.com
I don’t lack drive, but I spend most of the time with the sensation that I’m spinning on a merry-go-round, going fast but round in circles, getting nowhere. Life lacks an evident grand plan or central narrative. Taking steps every day, well intentioned steps, it’s difficult to be sure that they are all in the right direction.
Key Takeaways
- Develop principles for each of the kinds of situation you experience in life
- Self awareness is vital for catching defensive patterns that prevent you from getting to the truth
- Expected-value calculations help you to assess risk & reward, and clarify the parameters to any decision
- Focus on the problem and the solution will usually take care of itself
This book has been on my reading list since I first heard that Dalio had published it in 2018, but I reached for it now because I was facing a tough decision, between career options. Perhaps subconsciously I was hoping that one of the book’s principles would unlock the right decision for me. That didn’t quite happen, but the book is filled with a number of fantastic heuristics and tactics for making decisions.
The book is split into 3 parts. First, we are walked through in broad strokes the life of Ray Dalio, from New York kid to hedge fund billionaire. Throughout this section, alongside Dalio’s story, he explains the development of his principles and how they contributed to his successes. I will make no attempt to retell the story of Dalio’s life, and you should turn to the book for that albeit brief tale.
The second and third sections are dense with Dalio’s own principles for life and then work. Each principle is broken down and its rationale explained. It is not recommended that you simply copy his principles, although you could. Rather, the intention of the book is that you will follow his example and develop your own, based on your priorities and values.
I will discuss some of his principles, and you can find them all on his website, but the focus of the review will be on some of the broader ideas that Dalio posits for enjoying a successful life and career. Many of these are worth adopting, and some are worth calling out for the opposite reason, in my view.
The Punch Line
It is very rare that a book has more than a single grand thread, and Principles is no exception. So in the interest of your time, let’s jump straight to the essence of the book, before going over some of the other interesting ideas with a finer toothed comb.
We are emotional creatures, and that can make decision making difficult. It’s hard to separate sentimental attachments or evolutionary defensiveness from the logical brain. We should, Dalio asserts, tune ourselves to the frequency of the logical brain. As I will discuss later, separation may be worthwhile, but I believe that there is value in understanding those more instinctive reactions as well.
With our internal radio listening to logical signals, Dalio provides the main argument of the book. The cardinality of situations we face through our lives is relatively small. Most situations are “one of those”. We can begin to categorise the sorts of situations that we face regularly, and from that develop a playbook for handling them. As time goes on, we can use experience and outcomes to refine that set of rules. This approach and the principles developed are the core idea of the book.
Once I had grasped that message, which you could certainly gain from a Youtube video or review such as this, it is tempting to stop reading. That temptation almost won me over, but I’m glad that it didn’t, because there are other equally interesting gems hidden in the weeds of the book, that I discovered and was keen to dig up.
