Page 202 - Ray Dalio - Principles

4 Understand That People Are Wired

Very Differently

Because of the different ways that our brains are wired, we all experience reality in different
ways and any single way is essentially distorted. This is something that we need to
acknowledge and deal with. So if you want to know what is true and what to do about it, you
must understand your own brain.
That insight led me to talk with many psychologists, psychiatrists, neuroscientists,
personality testers, and other believable people in the field, and it led me to read many books. I
discovered that though it is obvious to all of us that we are born with different strengths and
weaknesses in areas such as common sense, creativity, memory, synthesis, attention to detail,
and so forth, examining these differences objectively makes even most scientists
uncomfortable. But that doesn’t make it any less necessary, so I pushed forward with these
explorations over several decades.
As a result, I have learned a lot that helped me and that I believe can help you. In fact, I
attribute as much of my success to what I’ve learned about the brain as I do to my
understanding of economics and investing. In this chapter, I will share some of the amazing
things I’ve learned.

WHY I TURNED TO NEUROSCIENCE

When I started Bridgewater two years out of business school, I had to manage people for the
first time. At first I thought that hiring smart people—for instance, the top students out of the
top schools—should get me capable employees, but as often as not, those people didn’t turn
out well. “Book smarts” didn’t typically equate to the type of smarts I needed.
I wanted to work with independent thinkers who were creative, conceptual, and had a lot of
common sense. But I had a hard time finding those sorts of people and even when I did, I was
shocked at how differently their brains seemed to work. It was as though we were speaking
different languages. For example, those who were “conceptual” and imprecise spoke one
language while those who were literal and precise spoke another. At the time, we chalked this
up to “communication problems,” but the differences were much deeper than that—and they
were painful for all of us, particularly when we were trying to achieve big things together.
I remember one research project—an ambitious attempt to systemize our global
understanding of the bond markets—that took place years ago. Bob Prince was running it, and
while we agreed conceptually on what we were trying to do, the project didn’t get pushed
through to results. We’d meet with Bob and his team to agree on the goal and lay out how to
get there. But when they’d go off to work on it, they’d make no progress. The problem was
that conceptual people who visualized what should be done in vague ways expected more
literal people to figure out for themselves how to do it. When they didn’t, the more conceptual
people thought the more literal people had no imagination, and the more literal people thought
the more conceptual people had their heads in the clouds. To make matters worse, none of
them knew which were which—the more literal people thought that they were as conceptual as
the conceptual people and vice versa. In short, we were gridlocked, and everyone thought it
was someone else’s fault—that the people they were locking horns with were blind, stubborn,
or just plain stupid.