Page 308 - Ray Dalio - Principles

c. Keep exceptions to radical transparency very rare. While I would like
virtually total transparency and wish that everyone would
handle the information they have access to responsibly to work

out what’s true and what to do about it, I realize that’s an ideal
to be approached but never fully achieved. There are
exceptions to every rule, and in very rare cases, it is better not
to be radically transparent. In those unusual cases, you will
need to figure out a way that preserves the culture of radical
transparency without exposing you and those you care about to
undue risks.

When weighing an exception, approach it as an expected
value calculation, taking into consideration the second- and
third-order consequences. Ask yourself whether the costs of
making the case transparent and managing the risks of that
transparency outweigh the benefits. In the vast majority of
cases, they don’t. I’ve found that the most common reasons to
limit broad transparency are:

1. Where the information is of a private, personal, or
confidential nature and doesn’t meaningfully impact the
community at large.

2. Where sharing and managing such information puts the
long-term interests of the Bridgewater community, its
clients, and our ability to uphold our principles at risk

(for instance, our proprietary investment logic or a legal
dispute).

3. Where the value of sharing the information broadly with
the community is very low and the distraction it would
cause would be significant (compensation, for instance).

What I’m saying is that I believe one should push the limits
of being transparent while remaining prudent. Because we tape
virtually everything—including our mistakes and weaknesses

—for everyone to see, we are a target-rich environment for
media that thrives on sensationalistic or critical gossip and can
find ways of having information leaked to them. In one case
when we faced the problem of having information leaked to
the press that was intentionally distorted and hurt our
recruiting efforts, we were forced to institute some controls on

ultrasensitive information, so that only a significant number of