By Tanvir Gill
When legendary investor Ray Dalio speaks, the world listens. It is no surprise then that his philosophy on life & work that he encapsulates as ‘principles’ has had a significant impact on his followers.
In a mini video series of eight episodes (“Principles for Success”) Dalio has tried to reinforce once again the values that have helped him become successful and remain successful through his career.
I have gone through the series, because I feel in the principles that govern how he lives his life lies the principles he followed to sharpen his skills as an investor.
We often wonder what it is it like to be successful, but what we don’t see is that success is never the end goal – even if it may seem so. Success is the beginning of a new process where you get into this tedious cycle of constant re-invention, because if you don’t keep that pace, the success you have achieved can disappear very quickly.
Through the video series & his book, Principles: Life & work, Dalio has emphasized on not just how to become successful but also how to ‘stay’ successful.
I was once told that success is not sustainable unless you walk on the two firm legs of aptitude and attitude. Without one, you would end up limping, losing your pace, energy and drive to go on.
In his series, Dalio highlights how ego and blind spot barriers can be two impediments to one’s growth professionally and personally. Even in markets, investing to be specific, that holds true. To believe only you are right and to not look at the others’ points of view can be limiting in taking a well- informed decision to invest.
There is a fine line between confidence and over-confidence. It is this fine balance that needs to be managed whenever making key decisions. Dalio has very aptly highlighted in his series to stare closely at the problem at hand, and not to jump to solutions.
Understanding the problem is far more critical than finding an apt solution. Part of the process to get the problem right is to look at it from all angles engaging in debates and, as Dalio says, thoughtful disagreements.
These are not bad words.
A disagreement can be very productive, if the purpose is aligned to maximise gains for all involved. Even in markets, discussing a company’s business model and what works or what does not and should it be an investment case or not – all that talk is very relevant.
It helps one think through what are the real reasons for which one would want to invest in a business. Is it because they are convinced or is it because the world around them seems to think it is a great idea? Dalio’s piece pushes us to discuss more, talk more, disagree more, fail more to strive more to push harder and reach greater heights.
At the core of it, he wants you to be true to yourself, in markets or otherwise, as truth holds the foundation of producing the outcome you desire. I see it in markets all the time: honest managements owning up their mistakes and fixing their problems, fund managers accepting when they have got a call wrong and why they slipped and macro experts acknowledging that their interpretation of the data was not accurate, and so on.
We all know mistakes are not bad. They help us learn. Yet, we fear them. Yet, we want to avoid the risk of failure. If there is anything I concluded from Dalio’s series and from the interview I did, is that you need to think for yourself like he did during the 2008 global financial crisis.
Till date, Dalio is credited for having successfully circumvented the market crash. Few others managed the same, at that time.