Page 22 - Ray Dalio - Principles

would certainly go up, the common knowledge held, because
managing the economy had developed into a science. After all,
stocks had nearly quadrupled over the previous ten years, and

some had done much better than that.

As a result, “dollar-cost averaging”—investing essentially
the same dollar amount in the market every month, no matter
how few or many shares it could buy—was the strategy most
people followed. Of course, picking the best stocks was even
better, so that’s what I and everyone else tried to do. There

were thousands to choose from, all neatly listed on the last few
pages of the newspaper.

While I liked playing the markets, I also loved playing
around with my friends, whether in the neighborhood when I
was a kid, using fake IDs to get into bars when we were teens,
or, nowadays, going to music festivals and on scuba-diving

trips together. I’ve always been an independent thinker
inclined to take risks in search of rewards—not just in the
markets, but in most everything. I also feared boredom and
mediocrity much more than I feared failure. For me, great is
better than terrible, and terrible is better than mediocre,
because terrible at least gives life flavor. The high school
yearbook quote my friends chose for me was from Thoreau:
“If a man does not keep pace with his companions, perhaps it

is because he hears a different drummer. Let him step to the
music which he hears, however measured or far away.”

In 1966, my senior year of high school, the stock market
was still booming and I was making money and having a blast,
cutting school with my best friend Phil to go surfing, and
doing what fun-loving high school boys usually do. Of course

I didn’t know it then, but that year was to be the stock