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Only here to get real time updates from Elon, SpaceX, Tesla, NASA y ISS.

[Ray Dalio @RayDalio]

Learning must come before deciding. As explained in Chapter One, your brain stores different types of learning in your subconscious, your rote memory bank, and your habits. But no matter how you acquire your knowledge or where you store it, what’s most important is that what you know paints a true and rich picture of the realities that will affect your decision. That’s why it always pays to be radically openminded and seek out believable others as you do your learning. Many people have emotional trouble doing this and block the learning that could help them make better decisions. Remind yourself that it’s never harmful to at least hear an opposing point of view.

Deciding is the process of choosing which knowledge should be drawn upon—both the facts of this particular “what is” and your broader understanding of the cause-effect machinery that underlies it—and then weighing them to determine a course of action, the “what to do about it.” This involves playing different scenarios through time to visualize how to get an outcome consistent with what you want. To do this well, you need to weigh first-order consequences against second- and third-order consequences, and base your decisions not just on near-term results but on results over time.

Failing to consider second- and third-order consequences is the cause of a lot of painfully bad decisions, and it is especially deadly when the first inferior option confirms your own biases. Never seize on the first available option, no matter how good it seems, before you’ve asked questions and explored. To prevent myself from falling into this trap, I used to literally ask myself questions: Am I learning? Have I learned enough yet that it’s time for deciding? After a while, you will just naturally and open-mindedly gather all the relevant info, but in doing so you will have avoided the first pitfall of bad decision making, which is to subconsciously make the decision first and then cherry-pick the data that supports it.

But how does one learn well? #principleoftheday

[Ray Dalio @RayDalio]

The most important thing you can do is understand that hiring is a high risk gamble that needs to be approached deliberately. A lot of time, effort, and resources go into hiring and developing new employees before it’s clear whether or not they are good fits. Months or even years and countless dollars can be wasted in training and retraining. (For example, every person you hire requires you to hire others to support them. I call this the "1.6 effect.")

Some of those costs are intangible, including loss of morale and a gradual diminishment of standards as people who aren’t excellent in their roles bump into each other; other costs from bad outcomes can be measured all too easily in dollars and cents. So whenever you think you are ready to make someone an offer, think one last time about the important things that might go wrong and what else you can do to better assess those risks and raise your probability of being right.
#principleoftheday

[Ray Dalio @RayDalio]

If you’re not making many mistakes, you must not be learning much. Mistakes and failures are ultimately more valuable to you than successes because they provide the best learning.

I detailed some of my biggest mistakes—and what I learned from them—as part of the new MasterClass Executive program. At this stage in my life, I believe the most important thing I can do is to pass along everything I’ve learned to others, hoping that they find value in it and can avoid making the same mistakes I’ve made.

If you’re interested in the program, you can apply for one of the limited spots here:
https://t.co/9wMKPLsuTY

[Ray Dalio @RayDalio]

One of the most important lessons I’ve learned is to distinguish between what you can control and what you can’t.

You’ll lead a much happier life if you’re able to focus your energy on the things you can influence — like how you treat others — and also learn how to adapt well to everything else.

I’ve found that this perspective has provided me with a lot of equanimity.

[Ray Dalio @RayDalio]

Using principles is a way of both simplifying and improving your decision making. While it might seem obvious to you by now, it’s worth repeating that realizing that almost all “cases at hand” are just “another one of those,” identifying which “one of those” it is, and then applying well-thought-out principles for dealing with it. This will allow you to massively reduce the number of decisions you have to make (I estimate by a factor of something like 100,000) and will lead you to make much better ones.

Most of the challenges you face today aren't unique; they are just 'another one of those'. Identifying the pattern is the key to simplifying your life and improving your results. I built Digital Ray to help you automate this process. Start a conversation with my digital twin to categorize your current 'case at hand' and apply the well-thought-out principles that will lead to a better outcome. #principleoftheday

[Ray Dalio @RayDalio]

Most people make bad decisions because they are so certain that they're right that they don't allow themselves to see the better alternatives that exist. Radically open-minded people know that coming up with the right questions and asking other smart people what they think is as important as having all the answers. They understand that you can't make a great decision without swimming for a while in a state of "not knowing." That is because what exists within the area of "not knowing" is so much greater and more exciting than anything any one of us knows.

And there are strategies that you can take to make you more successful given the reality of not knowing--such as triangulation and diversification that can make you more successful. Most people make the mistake of thinking that the best path is to get to higher levels of knowing than are possible to achieve rather than realizing that the better path is to know how to deal well with their not knowing. #principleoftheday

[Ray Dalio @RayDalio]

It gives you the power to earn money, which gets you all that money can buy (though not more) and the freedom of choice to do what you want and navigate life’s challenges well. The most valuable forms of human capital are great skills, great relationships, and a great reputation. I urge you to invest heavily and uncompromisingly in getting these. Besides being the most powerful type of capital, human capital is the only capital that can't be taken away from you. Throughout history, those who had everything else taken away—including those who had to leave their countries with nothing more than the shirts on their back—but had great human capital were still able to prosper.

I’ll be sharing more investment principles in the coming weeks—if you’d like to be notified when I share them you can click the 🔔 next to the following button in my profile.

[Ray Dalio @RayDalio]

In some companies, employees hide their employer's mistakes, and employers do the same in return. This is unhealthy and stands in the way of improvement because it prevents people from bringing their mistakes and weaknesses to the surface, encourages deception, and eliminates subordinates' right of appeal. #principleoftheday

[Ray Dalio @RayDalio]

In an idea meritocracy, openness is a responsibility; you not only have the privilege to speak up and "fight for right" but are obliged to do so. This extends especially to principles. Just like everything else, principles need to be questioned and debated. What you're not allowed to do is complain and criticize privately-- either to others or in your own head. If you can't fulfill this obligation, then you must go.

Of course open-mindedly exploring what's true with others is not the same thing as stubbornly insisting that only you are right, even after the decision-making machine has settled an issue and moved on. There will inevitably be cases where you must abide by some policy or decision that you disagree with. #principleoftheday

[Ray Dalio @RayDalio]

Most people are reluctant to take in information that is inconsistent with what they have already concluded. When I ask why, a common answer is: "I want to make up my own mind." These people seem to think that considering opposing views will somehow threaten their ability to decide what they want to do. Nothing could be further from the truth. Taking in others' perspectives in order to consider them in no way reduces your freedom to think independently and make your own decisions. It will just broaden your perspective as you make them. #principleoftheday

[Ray Dalio @RayDalio]

While it's easier to avoid confrontations in the short run, the consequences of doing so can be massively destructive in the long term. It's critical that conflicts actually get resolved--not through superficial compromise, but through seeking the important, accurate conclusions. In most cases, this process should be made transparent to relevant others (and sometimes the entire organization), both to ensure quality decision making and to perpetuate the culture of openly working through disputes. #principleoftheday

[Ray Dalio @RayDalio]

Meaningful relationships are invaluable for building and sustaining a culture of excellence, because they create the trust and support that people need to push each other to do great things. If the overwhelming majority of people care about having an excellent community, they will take care of it, which will yield both better work and better relationships. Relationships have to be genuine, not forced; at the same time, the culture of the community will have a big influence on how people value relationships and how they behave with each other. To me, a meaningful relationship is one in which people care enough about each other to be there whenever someone needs support and they enjoy each other’s company so much that they can have great times together both inside and outside of work. I literally love many of the people I work with, and I respect them deeply. #principleoftheday

[Ray Dalio @RayDalio]

You need to be clear in conveying your assessments to your reports and openminded in listening to their replies so you can work on setting their training and career paths together. Recognizing and communicating people's weaknesses is one of the most difficult things managers have to do. It's important for the party receiving feedback to be sympathetic to the person trying to give it, because it's not easy--it takes character on the part of both participants to get to the truth. #principleoftheday

[Ray Dalio @RayDalio]

It’s important not to let our biases stand in the way of our objectivity. To get good results, we need to be analytical rather than emotional.

Whenever I observe something in nature that I (or mankind) think is wrong, I assume that I’m wrong and try to figure out why what nature is doing makes sense. That has taught me a lot. It has changed my thinking about 1) what’s good and what’s bad, 2) what my purpose in life is, and 3) what I should do when faced with my most important choices. #principleoftheday

[Ray Dalio @RayDalio]

The greatest gift you can give someone is the power to be successful. Giving people the opportunity to struggle rather than giving them the things they are struggling for will make them stronger.

Compliments are easy to give but they don't help people stretch. Pointing out someone's mistakes and weaknesses (so they learn what they need to deal with) is harder and less appreciated, but much more valuable in the long run. Though new employees will come to appreciate what you are doing, it is typically difficult for them to understand it at first; to be effective, you must clearly and repeatedly explain the logic and the caring behind it. #principleoftheday

[Ray Dalio @RayDalio]

People who achieve success and drive progress deeply understand the cause-effect relationships that govern reality and have principles for using them to get what they want. The converse is also true: Idealists who are not well grounded in reality create problems, not progress.

What does a successful life look like? We all have our own deepseated needs, so we each have to decide for ourselves what success is. I don’t care whether you want to be a master of the universe, a couch potato, or anything else—I really don’t. Some people want to change the world and others want to operate in simple harmony with it and savor life. Neither is better. Each of us needs to decide what we value most and choose the paths we take to achieve it. #principleoftheday

[Ray Dalio @RayDalio]

People typically try to prove that they have the answer even when they don't. Why do they behave in this unproductive way? It's generally because they believe the senseless but common view that great people have all the answers and don't have any weaknesses. Not only does this view not square with reality, it stands in the way of their progress. People interested in making the best possible decisions are rarely confident that they have the best answers. They recognize that they have weaknesses and blind spots, and they always seek to learn more so that they can get around them. #principleoftheday

[Ray Dalio @RayDalio]

If both parties are peers, it's appropriate to argue. But if one person is clearly more knowledgeable than the other, it is preferable for the less knowledgeable person to approach the more knowledgeable one as a student and for the more knowledgeable person to act as a teacher

#principleoftheday

[Ray Dalio @RayDalio]

You have a responsibility to be reasonable and considerate when you are advocating for your point of view and should never let your "lower-level you" gain control, even if the other person loses his or her temper. Their bad behavior doesn't justify yours.

#principleoftheday

[Ray Dalio @RayDalio]

The answer doesn't have to be in your head; you can look outside yourself. If you're truly looking at things objectively, you must recognize that the probability of you always having the best answer is small and that, even if you have it, you can't be confident that you do before others test you. So it is invaluable to know what you don't know. Ask yourself: Am I seeing this just through my own eyes? If so, then you should know that you're terribly handicapped.

#principleoftheday