Page 48 - Ray Dalio - Principles

3. Develop, test, and systemize timeless and universal principles.

4. Balance risks in ways that keep the big upside while reducing
the downside.

Doing these things significantly improved my returns relative to
my risks, and the same principles apply in other aspects of life. Most
importantly, this experience led me to build Bridgewater as an idea
meritocracy—not an autocracy in which I lead and others follow,
and not a democracy in which everyone’s vote is equal—but a
meritocracy that encourages thoughtful disagreements and explores
and weighs people’s opinions in proportion to their merits.

Bringing these opposing opinions into the open and exploring
them taught me a lot about how people think. I came to see that
people’s greatest weaknesses are the flip sides of their greatest
strengths. For example, some people are prone to take on too much
risk while others are too risk averse; some are too focused on the
details while others are too big-picture. Most are too much one way
and not enough another. Typically, by doing what comes naturally to
us, we fail to account for our weaknesses, which leads us to crash.
What happens after we crash is most important. Successful people
change in ways that allow them to continue to take advantage of
their strengths while compensating for their weaknesses and
unsuccessful people don’t. Later in the book I will describe specific
strategies for change, but the important thing to note here is that
beneficial change begins when you can acknowledge and even
embrace your weaknesses.
Over the years that followed, I found that most of the
extraordinarily successful people I’ve met had similar big painful
failures that taught them the lessons that ultimately helped them
succeed. Looking back on getting fired from Apple in 1985, Steve
Jobs said, “It was awful-tasting medicine, but I guess the patient
needed it. Sometimes life hits you in the head with a brick. Don’t
lose faith. I’m convinced that the only thing that kept me going was
that I loved what I did.”

I saw that to do exceptionally well you have to push your limits
and that, if you push your limits, you will crash and it will hurt a lot.
You will think you have failed—but that won’t be true unless you
give up. Believe it or not, your pain will fade and you will have
many other opportunities ahead of you, though you might not see
them at the time. The most important thing you can do is to gather
the lessons these failures provide and gain humility and radical