Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, is coming off another win. Not only did the uncorrelated hedge fund that eschews stock picking correctly get on the short side of the market leading up to the February 2018 crash, but his book, “Principles,” is a New York Times bestseller. Those who don’t have time to plow through the more than the 550-page tome, however, can now access it in an eight-episode, 30 minute animated presentation.
While the video does an entertaining job of outlining one aspect of the book – providing Tony Robbins-like advice on how to manage life – for the more serious devotee what was not included in the entertaining presentation should also be noted.
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Perhaps the most consumer-friendly message in “Principles” is what Dalio puts forth in the animated “adventure,” as he describes it, is how people can use the book to manage their everyday lives.
Dalio discusses the importance of an individual recognizing what they don’t know first, leaving their ego at the door and taking a realistic look at situations and their own strengths and weaknesses. Such true introspection can be painful, as he recommends analyzing failure in depth, taking notes on what went wrong and why with the goal of avoiding future problems.
“Think for yourself what is true,” he says, pointing to a five-step process or “principles” that guide how he makes decisions in business and in life. “Escape the conventions around you… to be an independent thinker.”
Principles are nothing more than an intelligent way to handle events that repeat. Dalio developed his principles mostly to understand his mistakes. Some of what Dalio suggests goes against human nature. “The need to be right often outweighs the need to discover what is true,” he said.
To manage the process, Dalio offers a five-step process that mostly looks at the situation as much like a “machine” as possible.
The first step is to clearly know what you want to achieve. Then identify the problems that are likely to get in the way. Diagnose those problems and their causes. This should be a highly reflective process, and one should resist the temptation to jump too quickly to solutions.
Once the problems and their causes have been identified, design a plan to get around the issues. Be realistic and recognize your strengths and weaknesses. Then execute on that plan.
Dailio touches on some of the more in-depth topics in the book, such as how to recognize the difference between people and their thought processes. Some people are linear thinkers while others are lateral; some enjoy details and might be reliable while others are creative and might see what others don’t. Dailo’s ultimate goal is to create an idea meritocracy where ideas can be thoughtfully debated, and people’s opinions are weighted relative to their unique perspective, level of expertise and style of thinking. “Not all ideas are equally valued,” he says while encouraging thoughtful disagreement, radical truth, and transparency which he says can be like going from seeing in black and white to color.
Those who follow Bridgewater might consider the videos a lighter representation of the book, as deep but often nuanced topics such as artificial intelligence or the difference between the derivatives industry and traditional Wall Street were left on the cutting room floor. Dailo is planning on producing additional videos, which the next being a more business-focused explanation of how the “machine” works. For those seeking an engaging overview of one segment of what is a multi-fascinated book, the video is an excellent introduction but not a replacement for the real thing.
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