Page 46 - Ray Dalio - Principles

At one point, I’d lost so much money I couldn’t afford to pay the
people who worked with me. One by one, I had to let them go. We
went down to two employees—Colman and me. Then Colman had
to go. With tears from all, his family packed up and returned to
Oklahoma. Bridgewater was now down to just one employee: me.

Losing people I cared so much about and very nearly losing my
dream of working for myself was devastating. To make ends meet, I
even had to borrow $4,000 from my dad until we could sell our
second car. I had come to a fork in the road: Should I put on a tie
and take a job on Wall Street? That was not the life I wanted. On the
other hand, I had a wife and two young children to support. I
realized I was facing one of life’s big turning points and my choices
would have big implications for me and for my family’s future.

FINDING A WAY PAST MY

INTRACTABLE INVESTMENT

PROBLEM

Making money in the markets is tough. The brilliant trader and
investor Bernard Baruch put it well when he said, “If you are ready
to give up everything else and study the whole history and
background of the market and all principal companies whose stocks
are on the board as carefully as a medical student studies anatomy—
if you can do all that and in addition you have the cool nerves of a
gambler, the sixth sense of a clairvoyant and the courage of a lion,
you have a ghost of a chance.”

In retrospect, the mistakes that led to my crash seemed
embarrassingly obvious. First, I had been wildly overconfident and
had let my emotions get the better of me. I learned (again) that no
matter how much I knew and how hard I worked, I could never be
certain enough to proclaim things like what I’d said on Wall $treet
Week: “There’ll be no soft landing. I can say that with absolute
certainty, because I know how markets work.” I am still shocked and
embarrassed by how arrogant I was.

Second, I again saw the value of studying history. What had
happened, after all, was “another one of those.” I should have
realized that debts denominated in one’s own currency can be
successfully restructured with the government’s help, and that when
central banks simultaneously provide stimulus (as they did in March
1932, at the low point of the Great Depression, and as they did again