Page 47 - Ray Dalio - Principles

in 1982), inflation and deflation can be balanced against each other.
As in 1971, I had failed to recognize the lessons of history. Realizing
that led me to try to make sense of all movements in all major
economies and markets going back a hundred years and to come up
with carefully tested decision-making principles that are timeless
and universal.

Third, I was reminded of how difficult it is to time markets. My
long-term estimates of equilibrium levels were not reliable enough
to bet on; too many things could happen between the time I placed
my bets and the time (if ever) that my estimates were reached.

Staring at these failings, I realized that if I was going to move
forward without a high likelihood of getting whacked again, I would
have to look at myself objectively and change—starting by learning
a better way of handling the natural aggressiveness I’ve always
shown in going after what I wanted.

Imagine that in order to have a great life you have to cross a
dangerous jungle. You can stay safe where you are and have an
ordinary life, or you can risk crossing the jungle to have a terrific
life. How would you approach that choice? Take a moment to think
about it because it is the sort of choice that, in one form or another,
we all have to make.
Even after my crash, I knew I had to go after the terrific life with
all its risks, so the question was how to “cross the dangerous jungle”
without getting killed. In retrospect, my crash was one of the best
things that ever happened to me because it gave me the humility I
needed to balance my aggressiveness. I learned a great fear of being
wrong that shifted my mind-set from thinking “I’m right” to asking
myself “How do I know I’m right?” And I saw clearly that the best
way to answer this question is by finding other independent thinkers
who are on the same mission as me and who see things differently
from me. By engaging them in thoughtful disagreement, I’d be able
to understand their reasoning and have them stress-test mine. That
way, we can all raise our probability of being right.

In other words, I just want to be right—I don’t care if the right
answer comes from me. So I learned to be radically open-minded to
allow others to point out what I might be missing. I saw that the only
way I could succeed would be to:

1. Seek out the smartest people who disagreed with me so I could
try to understand their reasoning.

2. Know when not to have an opinion.