Page 65 - Ray Dalio - Principles

approach of clearly specifying, testing, and systemizing our
logic wasn’t preferable to making decisions less
systematically.

All great investors and investment approaches have bad

patches; losing faith in them at such times is as common a
mistake as getting too enamored of them when they do well.
Because most people are more emotional than logical, they
tend to overreact to short-term results; they give up and sell
low when times are bad and buy too high when times are
good. I find this is just as true for relationships as it is for

investments—wise people stick with sound fundamentals
through the ups and downs, while flighty people react
emotionally to how things feel, jumping into things when
they’re hot and abandoning them when they’re not.

Despite our relatively poor investment performance, 1988
was a great year for Bridgewater, because by reflecting on and
learning from our poor performance, we made systematic

improvements. I have come to realize that bad times coupled
with good reflections provide some of the best lessons, and not
just about business but also about relationships. One has many
more supposed friends when one is up than when one is down,
because most people like to be with winners and shun losers.
True friends are the opposite.

I got a lot out of my bad times, not just because they gave
me mistakes to learn from but also because they helped me
find out who my real friends were—the friends who would be
with me through thick and thin.

THE NEXT FOOTHOLD FOR

BRIDGEWATER

As the 1980s came to an end, we were still a very small
company, with just two dozen employees. Bob introduced me
to Giselle Wagner in 1988. She would be my partner in
running the noninvestment side of the business for twenty

years. Dan Bernstein and Ross Waller joined in 1988 and
1989, respectively, both fresh out of Dartmouth College. At