According to Ray Dalio, much of his success in business and in life stems from principled decision-making.
In addition to founding global investment management firm Bridgewater Associates and running it for most of its 47 years, Ray Dalio has authored several books focused on principles. In fact, two of his books have been No. 1 on The New York Times Best Sellers list, including his most recent, “Principles: Life and Work, Principles for Dealing with the Changing World Order.”
Making decisions based on principles requires what he calls ‘the pause,’ which comes in handy especially when there’s “a blizzard of stuff” coming at you.
“If you pause, reflect and think, ‘Why did I do that?’ and write it down, you’ll think deeper, you will communicate better,” Dalio says. “By pausing to reflect on the criteria you use to make decisions, and writing down your thought process, you’ll discover your ‘recipe’ for success,” Dalio says.
A practitioner of transcendental meditation, Dalio is also a student of history, and as he grew Bridgewater into the largest hedge fund in the world, he drew from the patterns he saw in the past.
“You start to see the same things happen over and over again, and you see cause-and-effect relationships that exist over a period of time,” Dalio says. He adds that when it came to running his business and making investments, “That’s what worked for me, and I think it could work for anybody.”
Pausing to consider his principles and capitalizing on the patterns he saw in history have helped Dalio as an investor and entrepreneur, and it has shaped his world view, a view he shares to help other chief executives.
— Ray Dalio, Founder of Bridgewater Associates share
“I’m in a stage in my life that I want to pass along some things,” he jokes.
Dalio’s world view
Dalio says there are five forces that drive the global economy – and that they cycle through history in a specific pattern. “You can basically look at everything that’s happening in every country through the lens of those five forces,” he says.
Here are the forces to watch for:
- Nations carrying high levels of debt and rising inflation, which we are currently experiencing.
- Internal conflicts within a nation. For instance, the U.S., which has been the dominant power since the end of WWII, has been struggling with this and the rise of populism.
- Tensions between nations. We see this now between China and the U.S. and, of course, throughout Europe with the war in Ukraine.
- Acts of nature. Dalia has observed that droughts, floods and pandemics actually toppled more civilizations and caused more deaths than the first three forces.
- Adaptability. Our innovativeness and technologies as well as our capacity to invent, adapt and make solutions is key, much like the way we dealt with COVID-19 with vaccinations relatively quickly to address the situation, he says.
Dalio says the cycle begins “when the first three forces come together,” peppering what could come across as doom-and-gloom with the hope that comes with the fifth: “The most important factor over time is man’s adaptability and our innovativeness.”
Writing his next chapter
“Transition is an important thing,” says Dalio. “I built a business – started work as a 12-year-old – and I’m ready for a transition, and I understand that transitions are difficult.”
He likens building Bridgewater to raising a family, and like with your own children, there’s a time to let go. As a parent, he says, “What do you want most? You want them to be successful. The beauty of raising this kind of extended family and watching them is understanding they don’t have to do it exactly your way; they’re good.”
Co-CEOs were announced in January 2022, but, in his own words, getting it right took a few tries.
“I needed a governance system in place and a board that would hold the CEOs accountable,” Dalio says. “I believe in partnerships. When you get the right combination of different talents, one plus one equals three.”
Ray Dalio addressed business leaders at EDGE, YPO’s premier annual event and the largest gathering of CEOs in the world. For three days in New York City, more than 2,500 chief executives from 80 countries gather with influential thought leaders and experts to learn about and discuss critical topics in business and beyond. EDGE fosters a culture of trust, respect and inclusivity, where global leaders emerge with solutions to drive change and help shape our collective future. YPO EDGE returns to New York City in 2023 and 2024 and is open to all YPO members. Learn more about EDGE
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