Introduction

Ray Dalio, born in 1949, is the billionaire founder of Bridgewater Associates, one of the world’s largest hedge funds. He wrote Principles to pass on his principles for living life and reaching goals.

What Are Principles?

What are principles? Principles are the fundamental truths that determine how you behave. They reflect your inner character and values.

If you consistently operate by a set of principles, then you are a principled person. People know what you stand for and how you behave. In contrast, if you don’t have clear principles and have inconsistent behavior, then you’ll be seen as a “phony.” Phonies lose people’s trust and respect.

Principles help you deal with the complexity of life. Every day, you face new situations that require our response. If you had to decide what to do at each point in time, you’d react impulsively and be exhausted. Instead, your fundamental principles help you figure out what situation you’re facing and how to deal with the situation.

We all have principles. Successful people adopt principles that help them be successful.

People who share their values and principles get along. People who don’t will have constant conflicts and misunderstandings.

Ray Dalio’s Principles

Ray Dalio’s goal is to share the principles that have worked for him throughout his life and contributed to his success.

He learned his principles the hard way, by failing repeatedly and learning from his mistakes. He refined his principles over time in an iterative loop—he set audacious goals, made mistakes, reflected and learned new principles, then set even more audacious goals. Over time, he collected a set of principles that he believes addresses pretty much any situation you can run into in life or work.

The author is adamant that each person needs to discover his or her own principles. Each person’s principles should be different depending on her goals and natures.

• Dalio’s principles center around success as he defines it—being an independent thinker, a successful financial trader, and working alongside a team that thinks likewise. They also center around his personality and nature—someone who doesn’t like following other people’s instructions and instead prefers to figure out things himself.

Therefore, you shouldn’t take the principles in this book on faith. Instead, question his ideas, see if they make sense to you, then walk away with the principles that fit your goals the best.

Organization of the Book

The book is organized in three parts:

1. A short autobiography of how Dalio became an investor and built Bridgewater. This explains how he developed his principles.
2. Life Principles: the fundamental principles with which he conducts his life and business. These are universal and can be applied to pretty much anything by anyone.
3. Work Principles: the specific principles that underlie how Bridgewater operates. These build on the Life Principles. In sum, they operate as an idea meritocracy through radical transparency, believing that disagreement by independent thinkers can produce the optimal decision making.