Book Summary

Principles by Ray Dalio

4 minutes read


The Importance of Principles

Your values are what you consider important, literally what you "value." Principles are what allow you to live a life consisten with those values.

Without principles, you would be forced to react to circumstances that come at you without considering what you value most and how to make choices to get what you want.

Adopting pre-packaged principles without much thought exposes you to the risk of inconsistency with your true values.

Your principles will determine your standards of behavior. When you enter into relationships with other people, your and their principles will determine how you interact.

Those principles that are most valuable come from our own experiences and our reflections on those experiences. Every time we face hard choices, we refine our principles by asking ourselves difficult questions.

My Most Fundamental Life Principles

Truth - more precisely, an accurate understanding of reality - is the essential foundation for producing good outcomes.

I believe that evolution, which is the natural movement toward better adoptatin, is the greatest single force in the universe, and that it is good.

I believe that the desire to evolve, i.e., to get better, is probably humanity's most pervasive driving force.

Personal evolutionary process

  1. Seeking new things (goals)
  2. Working and learning in the process of pursuing these goals
  3. Obtaining these goals
  4. Doing this over and over again

I believe that pursuing self-interest in harmony with the laws of the universe and contributing to evolution is universally rewarded.

The most important quality that differentiates successful people from unsuccessful people is our capacity to learn and adapt to those things.

The quality of our lives depends on the quality of decisions we make.

Reality + Dreams + Determination = A Successful Life

Pain + Reflection = Progress How big of an impediment is psychological pain to your progress?

People who know that understanding what is real is the first step toward optimally dealing with it make better decisions. How much do you let what you wish to be true stand in the way of seeing what is really true?

People who worry about looking good typically hide what they don't know and hide their weaknesses, so they never learn how to properly deal with them and these weaknesses remain impediments in the future. How much do you worry about looking good relative to actually being good?

People who overweight the first-order consequences of their decisions and ignore the effects that the second and subsequent-order consequences will have on their goals rarely reach their goals. How much do you respond to 1st order consequences at the expense of 2nd and 3rd order consequences?

Successful people understand that bad things come at everyone and that it is their responsibility to make their lives what they want them to be by successfully dealing with whatever challenges they face. How much do you let yourself off the hook rather than hold yourself accountable for your success?

Those who are most successful are capable of “higher level thinking” —i.e., they are able to step back and design a “machine” consisting of the right people doing the right things to get what they want. Machine

The biggest mistake most people make is to not see themselves and others objectively.

5-Step Process to Getting What You Want Out of Life

  1. Have clear goals.
  • You can have virtually anything you want, but you can’t have everything you want.
  • To achieve your goals you have to prioritize, and that includes rejecting good alternatives.
  • Avoid setting goals based on what you think you can achieve.
  1. Identify and don't tolerate the problems that stand in the way of achieving your goals.
  • Most problems are potential improvements screaming at you.
  • Push through the pain of facing your problems, knowing you will end up in a much better place.
  • Be very precise in specifying your problems.
  1. Accurately diagnose these problems.
  • You will be much more effective if you focus on diagnosis and design rather than jumping to solutions.
  • You must be calm and logical.
  • You must get at the root causes.
  1. Design plans that explicitly lay out tasks that will get you around your problems and on to your tasks.
  • Creating a design is like writing a movie script in that you visualize who will do what through time in order to achieve the goal.
  1. Implement these plans - i.e., do these tasks.
  • It is critical to know each day what you need to do and have the discipline to do it.

General points about the process

  1. You must approach these as distinct steps rather than blur them together.
  2. Each of these five steps requires different talents and disciplines.
  3. It is essential to approach this process in a very clear-headed, rational way rather than emotionally.

If this process is working, goals will change much more slowly than designs, which will change more slowly than tasks.

What do you think is the biggest weakness you have that stands in the way of what you want – the one that you repeatedly run into?

5-Step Process: Qualifiers Needed