Before becoming a colleague of founder Bridgewater, not to mention the well-known writer, Ray Dalio faces a moment of financial distress that reshapes his entire investment and attitude to life. After being fired early in his career, Dalio in New York City. Within a few years, he found himself “so bankrupt” that he had to borrow $4,000 from his father to pay his family bill.
“It’s painful,” Dalio told a billionaire. Carlyle Group Co-founder David Rubenstein Conversations at 92nd Street, New York In July. He continued, but it also had a profound impact.
“It changed my approach to everything,” Dalio said, adding that he drew two key lessons from this episode.
After Dalio’s self-strike set up Bridgewater in 1975, he said he reached his lowest point around 1980-81, when he calculated that the United States had borrowed more money, borrowed more money from the country, and predicted a major debt crisis. When Mexico defaulted on debt in 1982, Dalio believed that his position would pay off even in the face of the severe economic crisis he expected. But he was “wronger.” Stock markets rose, rather than sluggish, but reduced monetary policy, causing him to pay a heavy price. The miscalculation caused him financial damage, forcing him to borrow $4,000 from his father to meet family expenses.
Dalio told Rubenstein that he said, “No one can do the perfect thing, not even Warren Buffett,” he said, and the episode made him “humble” with his “bold.”
Dalio’s courses
He said this frustrating plot fundamentally changed Dalio’s perspective, leading to two transformative insights:
• Lesson 1: Develop humility and question your certainty. Dalio’s experience deeply reflects how he truly knows whether he is right or not. This new approach led him to practice about 35 to 40 years ago: pause to reflect and write down the specific criteria he would use to make decisions. The behavior of this document forces people to think more deeply, and later he realizes that these standards can be encoded and tested later to evaluate their validity over time. This systematic approach to decision-making is called “principles” (thousands of principles are written down), and becomes the cornerstone of the establishment of Bridgewater Associates. This is also Dalio’s New York Times bestseller.
• Lesson 2: Embrace the power of diversity. The crisis also leads Dalio to appreciate that diversification may reduce risks by up to 80% without reducing returns. He said the revelation became “the bottom of Bridgewater” and since then the company’s positive returns have been consistent, with an average of about 11.8% over the following 30 years, with the least annual decline. His investment mantra became “15 good unrelated returns streams”, designed to have similar expected returns, which he found significantly reduced the risk and increased the return risk ratio by 5 times.
For Dalio, this nearly affluent period was not only a setback, but a profound educational experience that redefined his investment strategy and personal philosophy. Now that he is in a “stage of life,” Dalio said, he found “great joy” when sharing the mechanisms of these knowledge with others and promoting relationships. His goal is not to scare pose, but to provide understanding based on the principle of “if you worry, don’t have to worry and don’t have to worry about you need to worry”, because worry can stop people from worrying. His personal financial rock ended up being the foundation for his lasting success and dedicated himself to teaching others how to navigate the complex financial landscape.
Dalio’s new book on how the country goes bankrupt
Dalio’s mind was broken due to the theme of his new book: How the country goes bankrupt: Big Cycle. Dalio often sends warnings about the United States on social media Record $37 trillion in Treasury bonds,Write LinkedIn He wanted to write this book because he saw that the United States and other countries were “just equivalent to Economic heart attack. He said he wanted to explain the mechanisms and principles he used since he learned these key lessons in the early 1980s.
He likens the credit/market system to the human circulation system, “bringing nutrients to various parts of the body that make up the market and the economy.” If this does not generate enough income to repay debt and interest, then “debt sales will accumulate like plaques, thus squeeze out other expenses.”
Provided to wealthDalio said one of his principles was related to recognition of large cycles and patterns.
“For the same reasons, the basic big cycles that drive these system change have happened thousands of times before,” he describes the “overall big debt cycle” in this book because he believes the world is “on the brink of great change.”
It is the product of years of boldness, filled with a lot of humility and continuous diversity.