This page has been archived and commenting is disabled.
Bridgewater's Ray Dalio Simple Advice For Success: "Think Independently, Stay Humble"
Authored by Bridgewater's Ray Dalio via Institutional Investor,
To make money in the markets, you have to think independently and be humble. You have to be an independent thinker because you can’t make money agreeing with the consensus view, which is already embedded in the price. Yet whenever you’re betting against the consensus, there’s a significant probability you’re going to be wrong, so you have to be humble.
Early in my career I learned this lesson the hard way — through some very painful bad bets. The biggest of these mistakes occurred in 1981–’82, when I became convinced that the U.S. economy was about to fall into a depression. My research had led me to believe that, with the Federal Reserve’s tight money policy and lots of debt outstanding, there would be a global wave of debt defaults, and if the Fed tried to handle it by printing money, inflation would accelerate. I was so certain that a depression was coming that I proclaimed it in newspaper columns, on TV, even in testimony to Congress. When Mexico defaulted on its debt in August 1982, I was sure I was right. Boy, was I wrong. What I’d considered improbable was exactly what happened: Fed chairman Paul Volcker’s move to lower interest rates and make money and credit available helped jump-start a bull market in stocks and the U.S. economy’s greatest ever noninflationary growth period.
This episode taught me the importance of always fearing being wrong, no matter how confident I am that I’m right. As a result, I began seeking out the smartest people I could find who disagreed with me so that I could understand their reasoning. Only after I fully grasped their points of view could I decide to reject or accept them. By doing this again and again over the years, not only have I increased my chances of being right, but I have also learned a huge amount.
There’s an art to this process of seeking out thoughtful disagreement. People who are successful at it realize that there is always some probability they might be wrong and that it’s worth the effort to consider what others are saying — not simply the others’ conclusions, but the reasoning behind them — to be assured that they aren’t making a mistake themselves. They approach disagreement with curiosity, not antagonism, and are what I call “open-minded and assertive at the same time.” This means that they possess the ability to calmly take in what other people are thinking rather than block it out, and to clearly lay out the reasons why they haven’t reached the same conclusion. They are able to listen carefully and objectively to the reasoning behind differing opinions.
When most people hear me describe this approach, they typically say, “No problem, I’m open-minded!” But what they really mean is that they’re open to being wrong. True open-mindedness is an entirely different mind-set. It is a process of being intensely worried about being wrong and asking questions instead of defending a position. It demands that you get over your ego-driven desire to have whatever answer you happen to have in your head be right. Instead, you need to actively question all of your opinions and seek out the reasoning behind alternative points of view.
This approach comes to life at Bridgewater in our weekly research meetings, in which our experts on various areas openly disagree with one another and explore the pros and cons of alternative views. This is the fastest way to get a good education and enhance decision-making. When everyone agrees and their reasoning makes sense to me, I’m usually in good shape to make a decision. When people continue to disagree and I can’t make sense of their reasoning, I know I need to ask more probing questions or get more triangulation from other experts before deciding.
I want to emphasize that following this process doesn’t mean blindly accepting the conclusions of others or adopting rule by referendum. Our CIOs are ultimately responsible for our investment decision-making. But we all make better decisions by maintaining an independent view and the conflicting possibilities in our minds simultaneously, and then trying to resolve the differences. We’re always in the place of holding an opinion and simultaneously stress-testing the hell out of it.
Operating this way just seems like common sense to me. After all, when two people disagree, logic demands that one of them must be wrong. Why wouldn’t you want to make sure that that person isn’t you?
»
- 16717 reads
- Printer-friendly version
- Send to friend
- advertisements -
"Stay humble"
His pic looks like he's hawking a used car.
To Ray I simply say, "right guy"
ass clown
Nobody's more "humble" than I have been the last 4 or 5 years. I'm so humble that it hurts...
This post is the best analysis of our system I've read: http://www.debtcrash.report/entry/history-and-introduction
Cult leader who got lucky in the crooked world of business.
Thanks RAy, also try to figure out where the manipulation is going, that will also help
im short the sp. if im wrong ill take my medicine.
in the sf gold rush there were many crooked casinos. one night the players took them apart brick by brick. im patient. being short means you are always too early.
Been short the market for year and a half, but soon it will be our time... Michael Burry had to wait 2 years - and endure an investor revolt - till his short positions made money. We can be patient for a little longer my friend.
I really just don't understand this. Who the hell wants to guess where an average of 500 stocks is going to be in 3, 6, or 12 months? That is truly a fool's errand. To be long or short "the market" is seriously one of the stupidest things I've seen people do. Why not just buy companies you believe are fundamentally misunderstood and undervalued and short the garbage? I'll never get the "im long or im short the market" mentality. Seriously idiotic.
Funny. That's the exact opposite of Dear Leader Obama, Hillary(!), Reid, Pelosi, Boehner, Kerry, et al.
Do others' bidding? Be an arrogant prick?!
.
...and don't get caught.
Become a literary scholar and lawyer. Write legislation to give your corporation government contracts and monopoly powers.
Sorry to burst your illusion, but the 'consensus' is nothing more than Pinko Fascist Commies who think they know better than you and are willing to abandon all ethics and morality to achieve their end. Either you are part of the problem or part of the solution. There is no 'in-between'. Mark your positions now so all will know where you stand...
Easy to philosophize when you've got more money than 99.99999999% of the global population.
How about shedding some of that excess fiat lard Dalio....or more importantly...shed a truck load of PM's and RE to the unwashed....you elitist prick
Quite frankly Dalio is one of the most down to earth billionaires I've seen; he actually is a humble and approachable guy. He earned his money and doesn't you owe you a penny. Go swipe your EBT card.
"Only after I fully grasped their points of view could I decide to reject or accept them".
So what was the problem? You didn't see that fiat money based on a fractional reserve methodology implied infinite credit growth to succeed?
Now that you see this simple fact, what say you? Accept or reject?
Looks to me like you accepted the lie and are still trying to capitalize on it.
You are either part of the problem or part of the solution.
Merely 'riding their coattails' is not any thinking at all. It is conformity, May as well pretend you are Bionce or some other popular figure---no original thought required...
How's the Great Deleveraging working out?
Beautifully
Stop whoring for Wall Street.
http://www.showrealhist.com/yTRIAL.html
http://patrick.net/?p=1223928
Dildo Dalio
Ray you could never work in DC - they dont want contrary opinion especially well reasoned contrary positions - way too dangerous
This guys is an idiot of the useful kind. The end.
Very good reminder about seeking out thoughtful disagreement, especially for many ZHers.
Also very true about being humble and constantly re-examining your own premise. Sometimes you need a daily reminder to ask yourself whether what you think is actually just what you personally "believe" rather than what you factually know and do not know.
I had to learn that the hard way.
Should bring him in on U.S. foreign policy.Obama and his menopause bitch Victoria Nuland are both disasters for the United States.The sooner you guys get rid of both of these idiots and at least bring in some common sense, the better for world peace.
any mention of befriending leaders like CT govenor and then hit them up for couple hundred million when you are already the richest guy in the state. his hedgefunds are as crooked as the next. And lets not forget he gets to pay himself using a customelow tax rate for very rich money managers? They should tax the hell out of these leeches...WHO MAKE NOTHING