Even famous personalities in the field of finance say that he is cooler than Buffett himself. In one of his speeches, Tony Robbins admitted that he would gladly transfer all his capital to his management - the Bridgewater company manages $ 160 billion. Its founder is among the top 100 richest and top 100 influential people in the world (Time and Forbes ratings). And the trading principles of an outstanding trader have changed the entire exchange industry - the CIO magazine called him "The Steve Jobs of Investing."
The author earned $ 18 billion in financial markets, which in itself commands respect. Therefore, we decided to make a short summari on the book by Ray Dalio “Principles. Life and work ”and draw your attention to some important things.
WHAT IS THE WHOLE JUICE AND THE USE OF THE BOOK FOR TRADERS
When the author writes about the principles of work, they seem utopian. But let's not forget that the Bridgewater Foundation is too real to ignore the points in the book.
A thought runs through the whole book as a red thread - one cannot ignore pain. If it hurts, then you need analysis and awareness of what exactly hurts you. And only after the debriefing, progress awaits you. A trader will go through one and that pain over and over again, if he does not understand the first one to the end and does not make the right conclusions - the lessons must be learned, otherwise the same pain will lie in wait for every nearest corner.
But this does not mean that you need to specifically look for her and, as they say, run up. Everything is good in moderation. But you should know - when pain periodically overtakes a trader in the process of growth, it means that your growth point is located in this place, a chance to go beyond any limits.
Too often, traders are stopped by the fear of pain, and they roll back instead of going through this fear and ending up on the other side with a well-deserved reward in hand or on a deposit.
And this is the fundamental difference between successful traders and losers - the desire to achieve the goal develops into a need that is stronger than the pain that prevents it from reaching it. It all depends on what outweighs - the need to realize a dream or the fear of obstacles.
With all this, a balance is needed between an uncompromising pursuit of goals on the one hand and an adequate attitude to work on the other.
There is often a chasm between the desire to achieve something and real action. To overcome it, you need to develop appropriate habits. And according to Dalio, this will take about 18 months, and not the popularized 21, 28 and 40 days by coaches of all stripes.
IT'S TIME TO SOUND THE LIST OF THESE LIFE PRINCIPLES BY RAY DALIO
Success principle # 1. Accept reality as it is and work effectively with it
What does this include:
Treat life like a game and treat a problem like a puzzle to be solved.
Optimize reality in the interests of the entire system, not its individual members.
Visualize what you want to create and be inspired by it.
Realize that any learning is the result of quality feedback.
Be extremely open and completely honest with yourself - admit mistakes, mistakes and work with them.
Relate the incentives of individuals to the overall goal of the group.
Take responsibility for the result.
Who you become is influenced only by your view of yourself and your picture of the world.
Success principle # 2. Do not ignore the pain and deal with it promptly
To achieve your goals, take the following 5 steps
Define and clearly formulate a goal.
Understand what obstacles can prevent her from coming and write them out.
Analyze each of them and find the root of the problem.
Draw up a plan to eliminate the problems and causes that caused them.
Start implementing your plans.
It seems that everything is very simple when you read a book. But only a few people bring it to the end. The problem is that at each step a different type of thinking is needed - people of different psychological types cope with each step very differently and no one can do all five steps equally well. Therefore, it is important to realize your limitations, recognize them and accept them, so that later you can get around.
The only thing that gets in the way is the human ego. And if you also take into account the need to interact with people of a different psychotype and way of thinking, then stubbornness can become a serious obstacle on the way to the goal. No wonder Ray Dalio regularly conducts psychometric tests in his company in order to choose the best role for each employee and form an effective team.
As for drawing up a plan and analyzing your actions, keep in mind that you can come to a goal in different ways and do not get stuck on one.
Success Principle # 3. Avoid prejudice towards people and events with all your might.
The most painful thing here is to be able to live and make decisions in conditions of uncertainty and unpredictability, to cope with what you do not yet know.
Your logical "I" will always fight for total control with the emotional and unconscious. Plus, every trader and person has "blind spots" - areas where your limitations do not allow you to see a difficult situation objectively and impartially.
How to develop open-mindedness:
Ask yourself the right questions - not “why did I get in again?”, But “why did I need it? what did I want to get? "
Collect information to the maximum, with both pros and cons.
To be able to give, learn to receive.
When trying to get involved in any discussion, ask yourself - with what intent do I want to do this? What motivates me - trying to understand my opponent or to prove my superiority?
Understand that all people are different and everyone is entitled to their reality and their opinion.
Assume the worst-case scenario and decide what you will do and how to improve it if you have to go through it.
Meditate regularly is the best thing you can do when all other measures have been taken and you have no power to influence anything else.
Always rely on facts only.
Important quotes from the book:
What we know is often less and less valuable than what we don’t know.
Smart is not the one who knows all the answers, but the one who knows how to ask the right questions.
Do not follow the recommendations of incompetent people - it is better to act on a whim than to consult with amateurs.
Desires and goals often contradict each other - be able to distinguish one from the other.
The most important skill in life is to distinguish between which decisions can be made independently and which cannot.
Cherry on the cake - even the richest people don't have enough money for whatever they want. Are you shocked? Exactly.
Success Principle # 4. All people are different!
What specific actions can you take after reading the book:
Start writing down your own principles of life.
Likewise, write down personal principles in trading, developed over the years of your trading and based on the analysis of personal flights, and not far-fetched.
Become aware of the style in which you communicate.
Formulate the problems that you regularly face in life and in trading - the larger the list, the better. In essence, this will be a program for correcting errors.
Start to act.
This will lead to the fact that you stop looking around, imitate all sorts of gurus, rely on magic pills. You will understand that in spite of the patterns, everything in trading is very individual - speed, results, mental attitude, willpower, and so on. Tricks and techniques that are effective in the hands of a more successful trader may not suit your temperament and trading style. And vice versa.
Success Principle # 5. Strive to make effective decisions.
We make thousands of small decisions every day without even realizing it. And only life or trade failures make some daredevils realize the repeating vicious circle, think hard and still break it. Then the next one. And so over and over again. Then his own system for making effective decisions is born, which can be unloaded on paper or in a file - and everything becomes so clear and simple.
The only obstacle to making effective decisions is negative emotions. And the decision-making process itself consists of two stages - information search and its processing, and only then - the choice of a solution.
But in order to find information and accept it for processing, you need open-mindedness in relation to it (see the third principle). It is always helpful to listen to what people who understand it have to say about something. Even if their opinion contradicts yours, you will get a more voluminous look at the situation, you will see new facets that you did not notice before.
Then you are less likely to fall into the trap of spontaneous wrong decisions, especially when buying stocks. But only those traders who have already been on a rake understand this and they are pretty tired of it.
Ray Dalio made Bridgewater Associates one of the top 5 largest private companies in the United States. The reason for this is the unique corporate culture developed by the author of the book, based on absolute honesty and transparency, extremely simple and clear principles of decision-making.
Ray Dalio's principles of success apply to any company or individual. The author does not consider himself special and tirelessly repeats - anyone who applies the book in practice, who is ready to spend 18 months developing useful habits that improves life, can become successful.
It is definitely worth listening to this opinion, especially since Dalio predicted a drop in the dollar rate by March 2020. It was about contracts for $ 1.5 billion, which gave investors the right to sell shares at a certain price by a certain date. This was the most significant of the latest forecasts. And Dalio, who made his capital on trading, was rarely wrong.
The main conclusion of the book is to develop principles and follow them. Adjust and sand on the way. This will help you reach your goals faster. Without principles, you will go with the flow and are unlikely to get at least something from life and trading.
Build effective, meaningful connections to make you more productive, healthier, and happier. Learn to interact with people and get rewarded - the results of teamwork are always better. Not because the pie is bigger, but because there is the joy of communicating with others like you and the understanding that you are not alone on this island. That the same questions have others, but some have already dealt with them.
For those who have not yet read the "Principles" - each of them is disclosed in great detail. For beginners, that's it. We hope that this summary will interest many people to read this work in its entirety.