Principles: Summary & Review (Ray Dalio)

principles by ray dalio

In Principles (2017) Bridgewater founder Ray Dalio shares how he developed and institutionalized the best asset of his multi-billion-dollar investment firm: its culture.
The principles are the lessons Dalio learned along the way and, allegedly, codified into his business systems.

Bullet Summary

  • What’s good for the whole is good. The whole takes precedence over the one
  • Perfect meritocracy is the best system for decision-making. It requires:
    • Radical open-mindedness (know and accept reality and your limits)
    • Radical transparency (be frank and open about your and other people’s assessments)
  • You must always voice your criticism (or else the environment becomes toxic)
  • Hire people with a thirst for making sense of the world
  • Pain + Reflection = Progress

Principles Summary

About the Author:
Raymond Thomas Dalio is an American hedge fund manager, author and philanthropist. He founded Bridgewater in 1975 in New York and led it to be one of the best-performing hedge funds in the world.

Ray Dalio has been on the receiving end of some critical investigative journalism.
The book The Fund paints a truly dark “behind the scenes” picture.
Before that, there was a highly critical article by the Wall Street Journal. Read my analysis here.

Also, see check out later our Machiavellian version of Principles:

Principles Life & Work: Machiavelli’s Version


Ray Dalio says the first principles serve to find your own principles.

This is what you should do:

  1. Think for yourself to first decide what you want
  2. Find out what’s true
  3. What should you do to achieve what you want in light of what’s true

You choose your principles and you can even accept someone else’s principles if they help you attain your goals. But your principles must be authentic, meaning they should reflect your real character and values. And then you should live by them and walk the talk.

Ray Dalio says that the success he had is because of the principles he followed, and not because of anything unique about him. So anyone else following these principles can achieve the same level of success.

Principles’ Levels

There are three level principles:
Higher-level principles are chapters; mid-level principles are designated by numbers and sub-level principles are designated by letters.
Please note I will not always write all sub-level principles.
However, for a complete understanding of Principles, I invite you to get the book.

Part I – Where I’m Coming From

My Note: I will be brief here because I’m not too interested in biographies. 

Here are a few points. Ray Dalio:

  • Fears mediocrity and boredom more than failure. Terrible is better than mediocre
  • A “can’t lose bet” he lost showed him it’s always best to assume you’re missing something
  • Meaningful work and meaningful relationships are better than money
  • Doesn’t want paycheck collectors but people who wanted to make sense of things -as he wants-
  • Bad times with good reflections provide the best lessons -and who are the real friends-
  • The greatest success is having others do well without you
  • There are far fewer types of people than people & far fewer types of situations than situations…
  • .. Hence matching people and situations is key
  • Happiness comes from struggling well

The key question is “how do I know I’m right”. The best way to answer is with other independent thinkers while engaging in thoughtful disagreement.
Dalio realized the only way he could succeed was to:

  1. Seek out the smartest people who disagree with him so he could understand their reasoning
  2. Know when not to have an opinion
  3. Develop tests and systematize time-universal principles
  4. Balance risks in a way that keeps big upsides while capping downsides

Part II – Life Principle

#1. Embrace Reality and Deal With It

Ray Dalio looks at problems as games and puzzles he has to solve.

Any time he solves a problem he gets a token in the form of a principle which allows him to avoid the same problem in the future.

The more tokens he collects, the better decisions he makes and the more he advances in the game (read The Obstacle is The Way for more problem-solving mindsets).

1.1: Be a Hyper Realist

Ray Dalio says he has become such a realist that he loves reality even when it’s harsh.
On the other hand, he came to despise all impractical idealism.

Dream + Reality + Determination = Successful Life

People who drive progress understand the cause-effect relationship that governs reality and idealists who are not grounded in reality cause problems instead.

1.2: Proof is The Foundation of Good Outcomes

The author says that proof or an accurate understanding of reality constitutes the bedrock of any achievement.

Most people don’t go for that though and fight reality when reality is not what they want to hear.

1.3: Be Radically Open Minded and Radically Transparent

We aren’t born knowing what’s true, we have to find out, says Ray Dalio. And the best way to do that is with radical open-mindedness and radical transparency.

We learn with feedback loops from our actions and beliefs, and radical open-mindedness improves those feedback loops.

Radical transparency means facing the truth and speaking that truth freely. It can be difficult because it opens us up to criticism, but fearing criticism is tragic, says Dalio because you won’t learn.
The more you do it, the more comfortable it will become.

Last but not least, radical truth and radical transparency allow for meaningful work and meaningful relationships.

1.4: Look To Nature to Learn How Reality Works

Ray Dalio says nature sets all the laws of reality.

It’s clear Dalio has been deeply influenced by evolutionary psychology because he says that evolution is the greatest force of reality.

Most people, says the author, judge bad and good based on how it affects them. But nature optimized for the whole, not for the individual (similar to what Nassim Taleb says in Antifragile).

Other big insights into this principle:

  • Don’t get hung up on how things should be because you miss how they really are
  • For something to be good, it must obey the laws of reality and contribute to evolution as a whole

1.5: Evolving is life’s greatest accomplishment and reward

Getting better and evolving is simply instinctive and that’s why we have an innate pull to it.
Radical open-mindedness will allow you to adapt to reality via trial and error.

And since nature and reality optimize for the whole and not for the individual (ie.: not for you), contribute to the whole and you will probably be rewarded.

Ray Dalio philosophizes here when he says we are unbelievably tiny and whatever we accomplish means nothing when seen from the universe.
And still, we want to matter and we want to matter to the people around us.

Which point of view do you choose and who do you choose to matter to and care for (family, country, world.. ?) It’s your choice, and it will determine who you will be.

My Note:
Mark Manson says we can see death as a reason not to do anything or say there’s no reason NOT to do anything (check The Art of Not Giving a Fu*k) and check my articles on how to leverage our insignificance and mortality

You are simultaneously everything and nothing. -Which one you choose?

1.6: Understand Nature’s Practical Lessons

It’s evolution and progress itself that makes us happy and fulfilled rather than achieving the goal or material wealth.
But to evolve remember that “no pain, no gain”.

1.7: Pain + Reflection = Progress

Ray Dalio says there is no avoiding pain, especially when you’re after ambitious goals.

Instead of trying to avoid it, you should develop a reflective reaction, which will make you develop much quicker.
Reflection before the pain and during is best, but also afterward is helpful (plan around inflection points, says The Power of Habit).

In any case, you must run through the pain or it means you’re not living to your full potential.

My Note:
To read more about a positive spirit of learning, Sometimes You Win Sometimes You Learn is a great book.

  • Embrace Tough Love

What Rai Dalio wants to give people around them is not what they want, which ultimately makes them weaker.
He wants to give them the strength to deal with reality to get what they want by themselves, which ultimately makes them strong and independent.

1.8: Weigh Second and Third-Order Consequences

Ray Dalio says that people who stop at the first high-level consequences get duped by nature and rarely achieve their goals.

Translated into normal parlance, this is a bit of a more obvious point, and it says that not exercising and eating sugar, for example, have great first-order consequences, but bad second and third consequences.

My Note:

  1. This reminded me of Emotional Intelligence and the importance of having the strength of controlling one’s most basic drives.
  2. Similarly, Brian Tracey says that hard habits are hard to form but easy to live with, while easy habits are easy to form but hard to live with.

1.9: Own Your Outcomes

The author talks here about the internal and external locus of control.

Internal locus of control people think that they are in charge of their life and they are happier and outperform those who think that life is a crap shoot game they have no control on.

1.10: Look At The Machine From a Higher Level

Ray Dalio says it’s helpful to look at yourself and the people around you from above and as if you were a machine.

It will help you to be more objective about where you stand and what you need to do.
Looking from above you’ll be the designer and manager of your life looking at your worker self.

When you see a weakness from the above, you have four choices: deny them (unacceptable), accept them and work to address them (great), find ways around them (easy win), change what you’re going after (great if you’re not suited or don’t enjoy your current path).

#2. The 5-Step Process to Get What You Want

  1. Have clear goals
  2. Identify and don’t tolerate the problems standing between you and your goals
  3. Diagnose problems to get to the root causes
  4. Design plans to get around those problems
  5. Do what’s necessary to push those designs to completion

2.1 Have Clear Goals

  • Prioritize because you can’t have everything.
  • Don’t confuse goals with desires, but try to reconcile them to  “follow your passions”.
  • Don’t mistake the trappings of success for success (= don’t go after the bling)
  • Don’t rule out goals because they seem attainable: great expectations create great capabilities
  • Flexibility (accept what reality and mentors teach you) and self-accountability (holding yourself responsible) will get you there

2.2: Identify and Don’t Tolerate Problems

Ray Dalio says most people are loath of bringing problems to the fore because it exposes their weaknesses, but successful people know that they have to.

2.3: Diagnose Problems to Get to the Root Cause

Ray Dalio says you should focus on the root cause of the problem really is before moving into solutions.

Fixing the root causes is important because the manifestations of that problem, which can be many and varied, will keep popping up.

2.4: Design a Plan

Design precedes doing.

2.5: Push-Through Completion

Great designers who don’t execute their plans go nowhere.

Keep in mind your WHY when you’re struggling, why you want to do what you’re doing and it will help you stay focused and on track (to read more on the importance of your WHY, read Start with Why by Simon Sinek).

Good work habits are underrated

2.6: Weaknesses Don’t Matter If You Find Solutions

The author says everyone has at least one big thing standing in the way to success.
When you find them, go to the root cause, address it, and fix it. All the rest will come much easier.

If you can’t overcome your biggest roadblocks, have the humility to understand and ask for other people’s help and support.

2.7: Understand Your and Other People’s Mental Maps and Humilities

Mental maps mean understanding yourself well, and humility means the open-mindedness to find beyond yourself what are the best things to do.

#3. Be Radically Open Minded

Ray Dalio says this is one of the most important chapters in the book because it addresses the two biggest weaknesses almost everyone has:

  1. Your ego
  2. Your blind spots

3.1: Recognize Your Two Barriers

The two main barriers are your ego and your blind spots.

  • Ego Barrier

Our ego-protecting mechanisms make it hard for you to recognize and accept your mistakes and weaknesses.

Dalio talks about the high level (conscious) and low level (unconscious and emotional).
The high level is often fighting with the low-level amygdala.
For example, when someone disagrees and asks you to explain your point of view the low level you is getting angry and defensive, even if the higher level you know it’s better to understand each other and come to a better solution.

But to be effective, your need to find out what’s true must be more important than your need to be right.

  • Blind Spots

We all have a preferred way of seeing the world which determines what we pick up on and what we miss.

For example, we can big picture or detail types of people or linear or lateral thinkers.

Most people never realize their mental blind spots. And their ego makes it harder for them to understand when someone shows it.

But realizing your mental blind spots is paramount to succeed at any kind of complex project (once you know fix them or get people who are strong where you’re weak).

My Note:
To read more about the brain’s limitations read Incognito and Thinking Fast and Slow.

3.2: Practice Radical Open-Mindedness

Ray Dalio says that radical open-mindedness is how you fix the ego barriers and blind spots. To be radically open-minded you must:

  1. sincerely believe you might not know the best path
  2. recognize your ability to deal with not knowing is more important than what you know

Dealing with not knowing means you ask equally knowledgeable and smart people. And don’t worry if what they think is different and don’t worry about looking smart and being right, worry about achieving your goal.

3.3: Appreciate The Art of Thoughtful Disagreement

Your goal is not to convince anyone that you’re right, but to find out which view is true and how to act on it.

All people in thoughtful disagreement must be worried about missing some key information and talk with each other with the goal of putting all the pieces and perspectives together.

3.4: Triangulate Your View With Believable People Willing to Disagree

Ray Dalio proposes to individually talk to experts and encourage them to disagree with each other.

He basically creates a thoughtful disagreeing group that raises the chances of being right.

3.5: Recognize The Signs of Close and Open-Mindedness

Close-minded people:

  • don’t want their ideas challenged
  • frustrated the other person disagrees
  • feel bad about getting things wrong and are interested in being right.
  • make statements instead of questions
  • focus on being understood more than understanding
  • say “I could be wrong but..”, which is a semblance of open-mindedness while being defensive
  • have problems holding two conflicting thoughts
  • lack humility

Open-minded people:

  • not angry when someone disagrees
  • are conscious there’s always the possibility they are wrong
  • ask genuine questions
  • feel compelled to see things from other’s people’s eyes
  • listen attentively
  • can go back and forth between conflicting thoughts

My Note:
Ray Dalio here is basically talking here about a fixed and growth mindset (check my guide to developing a growth mindset).

3.6: Understand How You Can Become Radically Open Minded

It will take time to become truly open-minded because it’s a question of habit -18 months on average, Ray Dalio says-.

But you can become it and then anything else will become intolerable.
To practice open-mindedness:

  • Use pain as a guide to reflection

Anger, irritability, and tensions are all signs that your low road is taking over.
Don’t worry, it won’t last long. Resist it and use it as a queue to go the opposite direction instead.

  • Make Open-Mindedness a Habit

The more you practice, the more it becomes a habit and the more natural it will become.
Read more about changing habits from Tony Robbins and how habits work on the brain in The Brain That Changes Itself.

  • Know Your Blind Spots

Record all the times you’ve taken bad decisions because it might be a trend. Ask others and you might be about to uncover a blind spot.

  • Meditate
  • Be Evidence-Based

Many people make choices based on what they like or on what their subconscious dictates. Use data and evidence instead.

  • Help Those Around Be Openly Minded

Be calm and reasonable to help others prevent the fight or flight response (which is actually freezing, fight or flight, as per Joe Navarro).

#4. Understand People Are Wired Differently

Ray Dalio says hired plenty of book-smart people who excelled in top schools, but as often as not that didn’t turn out well.

He finally understood that the biggest differentiator was in personality.

4.1: Power Comes From Knowing How We’re Wired

Ray Dalio here passes the microphone to someone else -sorry don’t remember the name- who says that we are born with attributes that usually have both positives and negatives.

4.2: Meaningful Work and Relationships are Genetic Predispositions

We crave meaningful relationships (Brene Brown saying that “connection” is why we are here)

4.3: Understand Brain Battles and How To Control Them

Principles here go deeper into the previous concept of high and low you.

The conscious mind is in a battle with the unconscious mind, and the biggest battle is between feelings -unconsciously governed by the amygdala- and thinking -the prefrontal cortex operating consciously-.

The people who guide their own personal evolution and achieve their goals reflect on their own amygdala hijacking and form good habits.

My Note:
God, I couldn’t agree more with this one. 
Learning our psychology to transcend it is one of the emantras of this website. 
Also, read: The Laws of Human Nature, Start Here, and The Best Books About Power.

Good habits take on average around 18 months and if you keep up they will stick forever.
You don’t want to fight the lower level you though, but treat it with kindness and respect, as if you’d teach a child.

4.4: Find Out How You And Others Are

The author says that self-assessment of ourselves and others tend to be very inaccurate and psychometric assessments are better.

At Bridgewater, they map employees on their personality traits and he talks about a few personality traits, which are:

  • Introverts /Extroverts: introverts focus on the inner world and get energy from ideas and memories. Introverts prefer to share and communicate after they analyzed on their own, while extroverts can find it hard to work out ideas without someone (also read Quiet: The Power of Introverts“)
  • Intuitive / Sensing: Intuitives focus on the context while sensing people focus on details
  • Thinking / Feeling: some people make an analysis based on logic and others on harmony among people
  • Planning / Perceiving: some prefer plans, others prefer the flexibility
  • Tasks / Goals: goals-oriented are more visionary and task-oriented are more reliable and better at managing processes that don’t change much
  • WPI: Workplace Personality Inventory for example low achievement orientation and high concern for others are unwilling to step on people’s toes to achieve their goals; someone bad at rule-following might be a more independent thinker
  • Creators / Definers / Advancers / Executers / Flexors.

Dalio says that some traits often combine together to create archetypes we are all familiar with.

Albeit archetypes tend to be less useful and precise than the full assessments they can be useful when assembling teams: impractical artists, tidy perfectionists, crushers running through the wall to get things done, and visionary pulling ideas out of nowhere.

Dalio adds a few archetypes, the most important of whom are the shapers with which he identifies himself.
The shaper is very rage and goes from visualization to actualization, he can hold different conflicting thoughts at the same time and he’s a visionary + practical thinker + determined.

Also, check out this diagram on different personality types:

workstyle archetypes

4.5: Right People in The Right Role is Key to Success

Using the traits above, you want to have the people with the best fitting traits for each task, and form teams with complementary traits.

#5. Learn How To Make Decisions Effectively

Ray Dalio says he has spent his life trying to make decisions effectively.

He has been looking for a way people can make decisions repeatedly with the same quality under the same circumstances, often using systems and computers.

5.1: Ban Harmful Emotions and Learn Before Deciding

Ray Dalio says that to make good decisions one must synthesize reality well and know how to navigate well.

5:2 Synthesize The Situation at Hand

Many things come at you and they all seem bigger during the present moment. That’s why it’s important to take a step back and realize what to pay and what not to pay attention to.

  • One of the most important decisions you make is who you are asking questions to
  • Everyone has an opinion, don’t mistake opinion for facts, and don’t believe everything you hear
  • New is overvalued, great is better than new

5.3: Synthesize The Situation Through Time

Don’t get duped by the fact that something is simply “improving”.

Look how much it’s improving and where it’s starting from, or it might not be useful at all.

Everything important in your life needs to be above the bar and on a trajectory toward excellence.

  • Remember the 80/20 rule and be an imperfectionist

5.4: Navigate Levels Effectively

Ray Dalio intends levels as the depth you are looking at any given topic.

The example is that of a map, are you at street level or at the country level?
Your decisions should make sense at all levels.

5.5: Logic, Reasons, and Common Sense Are Your Best Tool

Don’t use anything else or you will be prey to your low level.
I loved the quote from Carl Jung:

Until you make your unconscious conscious, it will direct your life and you will call it fate. 

5.6: Make Decisions as Expected Value Calculations

Be logical and take decisions based on the likelihood of being right, including expected rewards, and the likelihood of being wrong, including expected losses.

Sometimes though it makes sense to take a chance if it costs you nothing even when the odds are fully against you if the rewards of a win would be big.

  • Knowing when not to be is as important as knowing what bets are worth making
  • Best choices have more pros than cons, not zero cons. Beware of people arguing against something just because they can find something wrong with it without considering the upsides

5.7: Prioritize Based on The Cost of Getting More Information

You need to decide if the cost of waiting to make a decision to collect more information is greater than the risks of making a decision right there and then.

  • Don’t mistake possibilities for probabilities: everything is possible, and the likelihood of it happening is what matters

5.8: Simplify

Any damn fool can make it complex, it takes a genius to make it simple. You do it simple

5.9: Use Principles

Using well-thought-out principles is a great way to simplify and improve your decision-making.

All situations could look slightly different, but if you can look beyond the differences and identify “which one of those” it is, you will have systematized your decision-making.

5:10: Believability-Weigh Your Decision Making

Triangulate your decision-making with people with high believability scores.

The two mental blocks to overcome here are assessing who is more believable and not rating your own believability too high.

5:11: Convert Your Principles in Algorithms and Recruit a Computer

Computers are an integral part of the process of systematizing and automatizing decision-making.

5:12: Be Conscious of Trusting AI Without Understanding It

Computers have no common sense, so you must be aware of the pitfalls of automatized decision-making.

Life Principles: Putting It All Together

To have the best life possible you have to know what the best decisions are and have the courage to make them.
To acquire principles that work it’s essential that you embrace reality and deal with it as it is.

Part III – Work Principle

Work principles might be much more important than individual ones, says Dalio.


Because the power of a group is so much greater than that of the individual.

For groups to function well the work principles have to be aligned with the members’ life principles.
Not aligned on everything, but at least on the most important ones: the mission they’re on and how to deal with each other.

  • A great organization has both great people and great culture -and it’s not easy getting them both right-
  • Great people have both great character (radically truthful, radically transparent, and committed to the mission) and great capabilities (skills)
  • Great cultures bring problems and disagreements to the surface and solve them well
  • Work Relationships & Tough Love

Ray Dalio wanted the people working for him to be his partners more than his employees.

He says that treat partnerships come from sharing common values and interests, having a similar approach to pursuing them, and having consideration for each other.

At the same time, they must be willing to dish out tough love to push each other to greater levels. Too often people avoid facing the truth and put comfort ahead of success so they can stay safe in their social comfort zone.

Basically, the more care you give, the tougher you can be.

  • Believability-Weighed Meritocracy

Ray Dalio says he wanted an environment where everyone has the right and the responsibility to make sense of things for himself and fight openly for his point of view.
Resolving those conflicts in a meritocratic system with a believability-weighed will outperform any other system.

A full meritocracy means:

  • radical truth + radical transparency + believability-weighed decision-making.

Ray Dalio says that while some called Bridgewater a cult, it’s the opposite, and critical thinking is the main differentiator (Peter Thiel doesn’t go this deep in Zero To One when he suggests a start-up to be a cult).

  • Exceptions & Common Sense

It’s important to remember that all rules have exceptions and you should use your own judgment and common sense.
Your Principles are like your GPS, if your GPS is telling you to turn right when there’s no road to the right, you can’t simply blindly follow it.


#1. Trust Radical Truth and Radical Transparency

It takes time to adapt to radical truth and radical transparency.

But the critics say it’s not natural to have it wrong because after 18 months people adapt to it.

Dalio says it’s almost always best to shoot straight and be honest even when the news is not positive.

So when they were thinking about spinning off a division, most companies would have kept it secret to avoid employee dissatisfaction.
But in the name of honesty and radical transparency, they made it public instead and kept great relationships even when the team eventually spun off.

1.1: Realize You Have Nothing to Fear Saying The Truth

The truth is your best friend to improve and the best way to dispense love and make others improve.

1.2: Have Integrity and Demand it From Others

  • Never say something you wouldn’t say directly to them

Criticism is always welcome, but never beyond someone’s back

  • Don’t let loyalty to people stand in the way of truth and the well-being of the organization

Personal loyalties and covering for someone’s mistake stand in the way of improvement and encourages deception.
It’s an insidious form of corruption and undermines meritocracy.

Dalio says he believes in a healthier form of loyalty founded on exploring what’s true

1.3: The Right to Understand and the Obligation to Speak Up

In a perfect meritocracy, openness is not just a privilege but a responsibility.

Discuss what you disagree on until you are in sync or until you decided what should be done.

About Lying:
Don’t be naive about lying: people who lied once are more likely to do so again, but at the same time be practical, everybody has lied at least once, treat cases as appropriate

1.4: Be Radically Transparent

In the beginning, it will be difficult and it has drawbacks.

Since everything is in plain sight it might appear that a radically transparent organization has more problems, and it might be more prone to scandals because nothing gets swept under the rug.

But Ray Dalio says wisely: the only opinion that counts are those of your employees and your customers.

So being transparent is the way to go, especially with what’s difficult to share, and keep the exceptions rare.
Exceptions, of course, are private information and “enemies” of the organization.

1.5: Meaningful Relationships & Work Are Mutually Reinforcing

… Especially when underpinned by radical truth and radical transparency

#2. Cultivate Meaningful Work and Relationships

A meaningful relationship means that people care about each other and can have a great time together both inside and outside the organization.

Asked if the relationships in Bridgewater are more like a family or a team, Dalio answers that he wants the organization to be like a family business where members have to perform excellently or be cut.
He would do the same with a family member because he believes that’s best for all.

My Note:
I must call BS on this one though. 
He would not cut family members, I bet, and the “family lie” is a typical corporate manipulation.

He says he approached benefits for employees not in the impersonal transaction way most companies do, but like a family business.
It doesn’t mean he would give and give, quite the opposite. He was very generous with something while expecting them to take care of other things for themselves.

Dalio says the company behaved often like a family and many employees would do everything for the organization and they’d spend holidays often together.

It can happen that some employees don’t want to spend time with the organization outside of work and it’s totally OK to opt out.
However, the opt-out people are not the ones who provide the organization with the kind of commitment that is necessary for extraordinary performance over the long term.

2.1: Be Loyal To The Common Mission…

… And not to anyone operating inconsistently with it.

2.2: Be Crystal Clear on What The Deal Is

You must be clear on what the rules and values are -what’s the qui pro quod, what’s generous, what’s fair… And that people understand the difference between the two -.

Dalio advises making sure people give more consideration to others than they demand themselves.

2.3: Size of The Organization Can be a Threat to Meaningful Relationships

When you grow past a certain point people don’t know each other personally well anymore and sectarian tendencies might sprout.
Ideal meritocracy demands you do not allow factions.

2.4: Many Feign Organization Interest While Maximizing For Their Own

Don’t be naive.

Strive for the maximum amount of people going for meaningful relationships while realizing there will be exceptions.

For example, most people will try to maximize the money they can get while minimizing the amount of work they need to do.
So be aware, for example, of lawyers’ advice as they want to bill more hours.

2.5: Treasure Honorable People…

.. Who are capable and they will treat you well even when you’re not looking.

#3. Create a Culture of Learning From Mistakes

Ray Dalio says you must create a culture where making mistakes is OK but it’s not OK not learning from them.

Making a mistake is painful, but you shouldn’t shield yourself from that pain because it’s there to teach you a lesson.
It’s not easy finding people with the correct mindset towards mistakes, partially because schools stress the importance of having the right answers.

I particularly loved when Ray Dalio says:

If you cannot look back at yourself one year ago and don’t think how stupid you were, you haven’t learned much.

3.1: Mistakes Are a Natural Part of The Evolutionary Progress

Don’t feel bad about mistakes, but love them because they’re your milestones in evolutionary progress.

3.2: Don’t Worry About Looking Good: Worry About Achieving Your Goals

Get over blame and credit and worry about accuracy and inaccurate.

3.3: Are Mistake Patterns the Products of Weaknesses?

Our weaknesses are often revealed in the pattern of mistakes we make. Observe and take note.

3.4: Remember to Reflect When Facing Pain

Stay in the pain and explore them so you can build the foundations for improvement. And do the same for others: teach and reinforce mistake-based learning.

Pain + Reflection = Progress

3.5: Know What Mistakes Are Acceptable and Unacceptable

Of course, in some areas and situations, it’s not OK to make mistakes.

#4. Get and Stay in Sync

Ray Dalio says that since we’re all wired differently alignment among people cannot be taken for granted.

Quarrels can happen because of misunderstandings and disagreements.
And to fix disagreements people must be open-minded and assertive at the same time.

For open-minded assertiveness in conversations check Difficult Conversations.

4.1: Conflicts Are Essential For Great Relationships

Because it helps people understand each other and clarify their disagreements.

4.2: Know How to Get In Sync And Disagree Well

It’s essential to know where the final decision-making authority lies and it’s never acceptable to get angry because the meritocracy doesn’t produce the decision you wanted.

4.3:  Be Open-Minded and Assertive At The Same Time

Ray Dalio says most people have problems in being both assertive and open-minded at the same time and that being assertive comes easier because it’s easier to see things the way you want to see them.

But getting in sync is a two-way street with both responsibilities: listening and speaking.
And last tip: don’t waste time with close-minded people.

4.4: If It’s Your Meeting to Run Manage The Conversation

Make clear who is directing the meeting and who is there to serve. The person who has a goal for that meeting is responsible for it.

I also liked the warning on assertive fast talkers: people who articulately speak faster than people can process as a way of pushing their agenda.

Don’t be scared of appearing stupid in saying you didn’t get it.

4.5: Great Collaboration Feels Like Playing Jazz


In a great team, the result is greater than the mere sum of its parts.
But up to a certain point.
Beyond 3 the marginal benefit diminishes and it might be counterproductive as

4.6: When You Have Alignment, Cherish It

Make sure you end up with people with your same core values.

4.7:  If You Can’t Reconcile, Consider If The Relationship Is Worth It

If you can’t reconcile the core values chances are you’ll drift with time, so you might want to do that sooner rather than later.

#5. Believability Weigh Your Decision Making

In most organizations decisions are made either autocratically from the man on top or democratically.

Both systems produce inferior decision-making.

The best decisions are made by ideal meritocracy with believability-weighed decision-making.
Believability-weighed means that the opinions of more capable decision-makers are weighed more than those of less believable decision-makers.

How to Weigh Opinions
The opinions are weighed based on whether people have repeatedly and successfully accomplished the thing in question and can demonstrate they can logically demonstrate the cause-effect relationships behind their conclusions.

5.1: You Must Understand The Merit of Each Person’s Idea

But if you have never done something successfully don’t think you can tell others how it should be done, especially if they’ve done it successfully.

5.2: Find The Most Believable People Possible and Understand Them

Ray Dalio says you must check the believability of people you triangulate with and pick the best ones.

How do you check for believability?

Usually, those who have done it at least 3 times and who have great explanations of the cause-effect relationships that led them to their conclusions-.

Sometimes inexperienced people can have great ideas too though and sometimes better than experienced ones as they don’t have preconceived notions and experienced ones can get stuck in their own ways.

5.3: Think If You’re Playing Student, Teacher or Peer

You should be upfront about how confident you are in your opinion, and you should be upfront if it’s a suggestion, a conviction, or an opinion.

There’s also a weigh in the exchange depending on your position. It’s more important the student understand the teacher first than the other way around.

5.4: Understand How People Came By Their Opinions

Don’t just listen to the opinion as that can get you confused.

Ask people why they think what they think instead and it will help you get to the truth.

And be skeptical of statements with “I think that… “. Even more skeptical of statements beginning with “I think that I… ” as people are poor at self-assessment.

My Note: Watch out for fake confidence
I’m not sure about this advice since it plays straight into the hands of those who feign confidence. 
In general, men also tend to sound more confident than they’re competent, and women tend to use more “I think” structures.

5.5: Disagreeing Must Be Done Efficiently

Disagreeing must be done following a protocol.

The teacher role always speaks first then the students.

And agree on important things first, then move to the smaller things -if necessary at all-.

5.6: Make Sense of Important Things Is a Right & Responsibility

You don’t need to make a judgment about everything and if not important and not your expertise let someone else decide and move on.

5.7: Pay More Attention To Fairness of System Than Getting Your Way

Don’t worry about “winning” but whether or not the system is fair.

With a fair system, you will get your way when you’re right and you will develop as a person to reach your full potential.

#6. Recognize How to Get Beyond Disagreement

In this chapter, Dalio digs deeper into working out disagreements.

6.1: Principles Can’t Be Ignored By Mutual Agreement

If you don’t like a principle you need to speak up to change the principle, not just do what you wanna do.

6.2: The Right to Debate is Not The Same as The Right To Make Decisions

Responsibilities and authorities are assigned to certain individuals based on their ability to handle them.

They are stress-tested both up and down the chain and debates are always encouraged.

But the final decision is still their responsibility (but if they go against believability-weighed opinion they make a strong statement that will influence their future scorecard).

6.3: Don’t Leave Important Conflicts Unresolved

Important conflicts can undermine relationships and the decision-making process. Always address them.

6.4: Once The Decision Has Been Made Everyone Must Get Behind It

The decision might change in the future again and people must not pretend they agree with it if they don’t, but they must get to work towards the success of the final goal.

6.5: If Meritocracy Comes Into Conflict With The Organization…

.. Declare martial law only in rare and extreme circumstances when the principles need to be suspended.

But be aware of people who agree to suspend the meritocracy for the good of the organization.
Often these people place what they want above those of the organization.

Get rid of these people.

Also, read:

8 Types of Toxic Employees & How to Deal With Them

6.6: If People With Power Don’t Obey The Principles, The System Will Fail

For that reason, you only can give power to those who value the principles more than their individual or factional interests.


People can change the culture for better or for worse.

#7. Remember: WHO is More Important than WHAT

Who is taking the responsibility is more important than what should be done.

Ray Dalio sees his role as that of a conductor looking for the best players able to perform better than him. Ideally, he would find a conductor who would do a better job than himself.

As a conductor, you must:

  1. Remember the Goal
  2. Give the goal to those who can achieve it
  3. Hold them accountable
  4. If they can’t achieve this after training and time, get rid of them

7.1: Choosing Responsible Parties Is Most Important Decision

The parties holding responsibility are the most important parties in the system.

7.2:  Those Bearing The Consequences Are Ultimately Responsible

If you bear the responsibility for the failure you’re the ultimate responsible party.

If you want to build a house and pick an architect, you’re the one ultimately responsible as you will pay for mistakes.

So when you put someone in a position of responsibility make sure their interests are aligned with the final person bearing the consequences.
And make sure everyone has someone to report to.

7.3: Remember The Force Behind The Thing

Companies don’t make decisions, people do. Change the people, and change how things develop.

#8. Hire Right

Ray Dalio says people hire people whom they like, which are basically people who are like themselves.

So he developed two ways to radically improve Bridgewater’s hiring practices:

  1. Be crystal clear on what type of person they were looking for and
  2. Develop a way to assess people at a much more granular level

At a high level they’re looking for people who think independently, argue open-mindedly and assertively and, most of all, value the intense pursuit of truth and excellence, improving themselves and the organization.

8.1: Match The Person to The Design

Don’t design jobs to fit people but think about which values, abilities, and skills you need -in that order- and find a person that fits those.

Values are deep-seated beliefs that motivate people and determine people’s compatibility with each other; abilities are ways of thinking and behaving (faster learners, big picture types, etc.); skills are learned tools -the easiest to chance-.
Since most people don’t change much, especially in the short term, it’s best to assume their values and abilities won’t change at all.

Once you know who you’re looking for, make your hiring systematic and scientific.

8.2: Different Personalities Make For Different Jobs

Ray Dalio is a big proponent of personality assessments, which he says are often more reliable than interviews.

He also has a top suggestion on how to use the human tendency of people to pick people who are like themselves: if you are looking for a visionary, have other visionaries interview the candidate as their positive opinion will give you a stronger clue.

8.3: Think of Your Team The Way Sports Fans Do

Nobody by itself has it all for success and everyone must excel.

8.4: Pay Attention to Track Records

Since people don’t often really change that much, track records do matter.

But be wary of school track records: they will not tell you much in terms of the abilities you are looking for. School is best at measuring memory, processing speed, determination to succeed, and the ability to follow directions.
And you might not need those.

And check the references.

8.5: Hire People You Want to Share Your Life With

You want to hire for the long term, so don’t just look at the ability to do the first job you are hiring them for, but hire based on long-term compatibility.

  • Look for candidates with lots of great questions

Great questions are a much better indicator of future success than great answers.

8.6: Provide Both Compensation and Opportunity With Salaries

Pay enough that people are not under financial stress.

Ray Dalio says to pay more than it’s fair, but not so much that people become unmotivated fat cats.

Capturing all the intricacies of top performance is very hard, but you should try to put incentives loosely tied to performance metrics.
And finally, I loved:

Focus more on making the pie bigger than on slicing the pieces

The very best negotiation is the one saying “you should take more”, “no you should take more”.

Also, read: negotiation manipulations you should be aware of.

8.7: Consideration and Generosity Are More Important Than Money

Some people respond to generosity and others respond more to money.

You want more of the first kind of people, and start with yourself: be generous first and expect the same from others.

8.8: Great People Are Hard to Find…

.. So make sure you know how to keep them. Encourage them to speak up and assign a mentor.

#9. Constantly Train, Test, Evaluate and Sort People

Ray Dalio says that both people and design must improve for the machine as a whole to improve.

It can be hard but if people can’t get up to the bar in an acceptable time frame, they must go.

Choose between keeping incapable and liked people and missing your goals or getting rid of them and achieving your goal.

At Bridgewater, you have no choice because you must choose excellence, which in the end is best for everyone.

9.1: You And The People You Manage Go Through an Evolution Process

Since people evolve, their careers cannot be planned from the outset.

Evolution is a natural consequence of discovering strengths and weaknesses and how to tackle them.

The best way to teach them is to let them fail and make mistakes.

9.2: Provide Constant Feedback

Assessments should not come as a surprise because they should be constant.

9.3: Evaluate Accurately, Not Kindly

It might not seem so at first blush, but at the end of the day, accurate and kind are the same thing.

You must be precise in assessing who has been responsible for what results and judge independently because people tend to inflate their own contributions.

9.4: Tough Love is The Hardest and Most Important Type of Love

It’s the most important because it’s so rare. Compliments are easy, tough love is not, but it’s the most useful.
No pain, no gain.

9.5: Don’t Hide Your Observations About People

But explore them openly.

Make and note all observations, but at the same time don’t overemphasize any single observation but look at trends.

9.6: Make Personal Evolution Open, Evolutionary and Iterative

The review must be done together with the person being reviewed and must be ongoing.
There can be an inherent struggle in open evaluations: the evaluated see themselves better and have an interest in appearing better.
Keep in mind that your only final goal is always the truth.

9.7: Know How People Operate Is More Important Than What They Did

Ray Dalio says that knowing how people operate and whether that way of operating will lead to good results is more important than knowing what they actually did.

In Bridgewater, they call it “paying more attention to the swing than to the shot”.

If someone is doing a job poorly pay attention if it’s because of a lack of learning, which can be fixed, or a lack of ability, which cannot be.

Pay more attention to the swing than the shot

9.8: If You’re in Sync About Weaknesses It’s Probably True

If you are in sync with someone about their weaknesses, it’s because it’s probably true.

Ray Dalio says that people feel safer evaluating candidates for hire than colleagues. But anyone looking for the truth should see how that’s a mistake.

9.9: Train, Guardrail or Remove. Don’t Rehabilitate

Rehabilitation is an attempt to create changes in values and abilities, but since those are difficult to change, you’re better off removing incompatible people.

Including the people you love. The best way to “shoot the people you love”, says Dalio, is to love the people you shoot.
Do it with consideration and in a way that helps them.

Sometimes you can let people step back to another role after failing, but you have to be cautious about it. They could grow resentful and that position could go to someone better suited.

Love the people you shoot

9.10: Transferring is to Benefit The Community

Both managers should agree a new role is the best highest use for someone.

If there’s no such role they should escalate to make a termination.

For continuity reasons, it’s always best to let people finish their tasks and goals before moving to a new position.

9.11: Don’t Lower The Bar

Ray Dalio says that at Bridgewater they cannot compromise on the fundamentals of their culture.

And if a person cannot operate within the requirements of excellence and radical truth and transparency in an acceptable time frame, he must go.


Ray Dalio says that thinking of your organization as a machine has some important ramifications on how you behave.

#10. Manage And Operate a Goal-Achieving Machine

Anyone diagnosing problems must understand what the parts of the machine -the design of the people in it- are like and how they work together.

10.1: Look Down On Yourself And Your Machine From High Level

That macro-perspective of looking at yourself and the machine from afar will give you a better perspective and much better insight.

Always simultaneously try to accomplish the goal and evaluate the machine, people, and design as all outcomes are a reflection of how the machine is running.

10.2: Move Closer To Your Goals and Train/Test The Machine

Use any situation to move closer to your goals and to train and test the machine.

Training and testing your machine is even more important than moving closer to your goal because that’s how you build a solid organization working well in all circumstances.

I particularly liked that Dalio suggests looking at everything as a case study and looking at it at two levels: the case level and what to do about it and the machine level (why that outcome was produced).

10.3: Managing, Micro-Managing & Non-Managing

Micromanaging is telling the people working for you what tasks to do or doing the task for them.

Not managing is letting them do their tasks without oversight or involvement.

Great managers orchestrate like conductors of an orchestra.

10.4: Your People Are The Most Important Resource: Know Them Well

Know how much confidence you can have from the people around you instead of assuming. And regularly take a temperature check of the most important people around you.

10.5: Assign Responsibilities Clearly

It made me chuckle when Dalio says people in organizations are often like children playing football and all running after the ball. Avoid that with clearly defined responsibilities.

10.6: Probe Deep and Hard to Learn What You Can Expect

Ray Dalio asks people reporting directly to him to take 10-15 minutes daily to write a report of what they did, their thoughts, and their problems.

He says that probing into problems allows you to get a feeling before those problems hit with full force.

It’s also important to probe to a level beneath your direct reports and allow them to escalate problems to you because you can’t fully know the person until you know how he behaves with his direct reports.

10.7: Think Like an Owner

.. And expect the people you work with to do the same. As Dalio said before, you don’t experience the consequences of your action, you’ll take less ownership of them.
Thinking like an owner means that you are always responsible… Even when on vacation.

Read more on becoming a linchpin instead of an employee living for paychecks in Linchpin by Seth Godin.

10.8: Recognize and Deal With Key Man Risk

Every key person should have one person who can replace him.

10.9: Don’t Treat People The Same, Treat Them Appropriately

To treat people fairly and appropriately, you must treat them differently. But all are treated with the same set of rules.

Over the years, many threatened Dalio to quit, sue or spread bad press.
He says that while it seemed easier to “just let things go away” giving in to threats is short-sighted and communicates that the rules have changed. It only invites more of the same behavior.

He says he is willing to take the punch in the short term because he’s worried about doing the right thing, not what people think.

Worry not about what people think, but about doing the right thing

10.10: Great Leadership is Not What It’s Made Out to Be

Dalio says he does not describe what he does as great leadership because he believes what most people think of leadership is ineffective.

The stereotypical leader is strong, and confident, and motivates others to follow him. The emphasis is on “follow”.

He says that it’s more important to have challengers than followers and you should be both weak and strong at the same time.
Asking questions is perceived as weak and indecisive, Dalio says, but it’s not because it’s a necessary step to becoming strong and decisive.

Don’t Worry Whether People Like You
Some people will dislike you no matter what decision you take, says Dalio.

That’s why you only have to worry about making the best decision possible.

If you are in a leadership position it’s also plausible to believe your opinion weighs more than the average person’s opinion.
If that weren’t true then the average person should be in your position.

How To Lead
The best way to deal with your people is to encourage everyone to come up with their own ideas and let the meritocracy decide so openly and reasonably that everyone will recognize the valid merits of your thinking.

Once the decision has been taken in a meritocratic way, be happy whether your idea “won” or not as long as the best idea wins.

And don’t give orders to follow, but strive to be understood, understand and get in sync.

10.11: Hold People Accountable…

… And appreciate them for holding you accountable.

Keep in mind you can’t hold people accountable when there wasn’t a clear agreement between you two, so always be clear.

10.12: Communicate The Plan Clearly and Have Clear Metrics

Once you decide on a plan, it’s your responsibility to communicate it well and know how you will measure progress.

10.13: Escalate When You Can’t Handle Responsibilities

Escalation is not a failure, but a responsibility

#11. Perceive and Don’t Tolerate Problems

Most people have a tendency to celebrate wins and sweep problems under the carpet.

Those people have their priorities exactly backward.

11.1: If You’re Worried, You Need to Worry…

.. And if you’re worried, you don’t need to worry.

This really made me smile. A favorite saying of mine has always been “the best way to be unsafe is to feel safe”

11.2: Your Machine Must Check if Things Are Good or Not

You have to make sure that people are not afraid to look for, investigate and report problems.

Dalio, for example, gives them independent reporting lines.

Without systems that make sure problems are brought to the surface, you cannot count on people to raise all the problems you need to hear about.

And be aware of group-think: the fact that nobody seems concerned doesn’t mean nothing is wrong (also check the spiral of silence on Wikipedia)

11.3: Be Very Specific About Problems

Avoid “we” and “they”, be specific about people.

11.4: Don’t Be Afraid to Fix Difficult Problems

Sometimes people can be afraid to start tackling problems that seem too difficult to fix. But not fixing them is worse.

#12. Diagnose Problems to Get at Their Root Cause

Ray Dalio says that the most common issues when fixing a problem are:

  1. not getting to the root cause
  2. not connecting the problems to people
  3. not connecting the problems to see patterns

12.1: Diagnose Well and Ask These Questions

  • Is the outcome good or bad
  • Who’s responsible for the outcome
  • Is the party responsible incapable or is the design bad?

12.2: Diagnose Continuously

Your system should keep diagnosing on an ongoing basis.

12.3: Diagnoses Should Produce Outcomes

Or at the very least lead to theories about root causes and clarify what information is needed to reach outcomes

12.4: Use Drill-Down Techniques

Step one is to list all the problems and identify the root causes. Ray Dalio uses the “5 whys technique” (5 whys on Wikipedia).

12.5: Diagnosis is Foundational to Progress and Quality Relationships

As you dig deep into problems, it’s also an opportunity to get to know people better and help them grow (and vice versa).

#13: Design Your Machine to Get Around Your Problems

Once you find out the problems, you have to design plans to solve them.

13.1: Build Your Machine

Instead of focusing on each task at hand, try to modify the machine in a way that you fix the issue at the operating system level.

It takes longer, but it will pay many times over.

13.2: Systematize Principles And How to Implement Them

Build your principles into habits and into the machine.

Ray Dalio, for example, puts all his thinking processes and principles into algorithms to systematize his decision-making.

13.3: A Good Plan Resembles a Movie Script

Try to visualize different plans and assess the second and third-order consequences they will bring about.

13.4: Between Now and Then There’s a Work-Through Period

Between a bad now and a good then you try different plans and designs

13.5: Build Organization Around Goals, Not Tasks

Build the organization around goals and organize departments and sub-departments around “gravitational pull”.

Hire and build from the top down.
You hire managers before hiring reports. The people overseeing others must have higher standards, and don’t just trust people to do their job well.

13.6: Create an Organizational Chart Like a Pyramid

The arrows should go down and don’t cross.

The whole organization should look like a series of pyramids but try to minimize layers to minimize hierarchy.

13.7: Create Guard Rails When Strictly Needed

Guard railing is to help good people perform better, not to prop up not good enough people.

An example of a good guard railing is siding people with other people who have key strengths they are lacking.

13.8: Keep Strategic Vision While Making Tactical Changes

Don’t act like you don’t have time for strategic issues because you’re dealing with tactical ones.
Kicking the can down the road is the path to slaughter.

13.9: Have Good Controls to Fence Dishonesty

Do not assume that people will act in your interest rather than their own.

When faced with the choice of being fair or taking more for themselves most people will take more for themselves.

Dalio says that even a minimum of cheating is intolerable, so investigate and let people know you will investigate.

Dalio suggests using public hanging and shaming to deter bad behavior and make sure everyone sees that bad behavior does not pay.

13.10: Have Clear Reporting Lines for Responsibilities and Reporting Lines

Assign responsibilities based on workflow and abilities, not job titles.

Dalio also says he is always looking for leverage, and technology is a great way of doing so.

For example, designing FAQs and building manuals and training (same as Michael Gerber suggests in The E-Myth Revisited).

13.11: Virtually Everything Will Cost More and Take Longer

Virtually nothing goes according to the plans.
To get better estimates, Dalio usually multiplies the estimates by 1.5.

#14. Do What You Set Out to Do

Motivations of why people follow through differ says Ray Dalio.

And at the end of the day, most of the success comes from doing mundane and often distasteful stuff, like identifying problems and sticking through them for a long time.

My Note:
on the importance of long-term commitment for success, but also for the long-term growth of your passion, I warmly invite you to read Grit by Angela Duckworth).

14.1: Work For Goals You’re Excited About

.. And think about how your tasks are connected to those goals.

14.2: Recognize Everyone Has Too Much To Do

What differentiates those who do a lot with the same amount of time is creativity, character, and wisdom.

Creativity leverages people, technology, or different work approaches. Characters help wrestle with the challenges.
Wisdom looks at us as a machine from above to prioritize, redesign and make sensible choices.

If something bad hasn’t happened yet, wait and it will. But it is what is, success is going from failure to failure without loss of enthusiasm.

14.3: Use Checklists

But don’t confuse them with responsibilities.
Your task is doing your job well and achieving your goals, not crossing items off a list.

14.4: Allow Time For Rest and Renovation

Plan and schedule for rest.

14.5: Ring The Bell

Do celebrate when you achieve your goals.

#15. Use Tools and Protocols

Dalio says that even though most can see why these principles make sense, they won’t be implemented because people agree or recognize it makes sense.

Tools and protocols are needed to shape those principles into habits.

15.1: System-Embedded Tools Are Especially Useful For Ideal Meritocracy

For an ideal meritocracy to operate the way Ray Dalio describes it, you need effective tools to collect all the data and convert it into decisions.

These tools allow people and systems to work with each other in a symbiotic way.

A good system will make the system fair and all decisions less arbitrary.

#16. Don’t Overlook Governance

Governance is the oversight system that removes people or processes when they are not functioning well.

And all the principles will be useless without good governance.

Governance makes sure that the best interests of the whole are placed above those of the individuals.

16.1: To Be Successful All Organizations Need to Check And Balances

For an ideal meritocracy, governance must always be more powerful than any single individual.

Make sure nobody is more powerful than the system and that nobody is irreplaceable.

My Note:
As a website on sociology and Power Moves, I must note the divergence here.
Your interest as an individual is to be (almost) irreplaceable instead. But it also means you deliver outstanding work, which is great for the organization. 

16.2: A Great CEO Is Not As Good As a Group of Great Leaders

In Bridgewater Dalio places several co-CEOs instead of just one. That’s what’s best for ideal meritocracy, he says.

16.3: Great Partnerships Still The Way To Go

All governance, check and balances, and principles will take you far unless you have great partnerships.

Such as capable people in positions of power who want to operate for the good of the community based on the agreed-upon principles.

Work Principles: Putting It All Together

Ray Dalio says we work together to accomplish three things:

  1. more leverage to accomplish our goals
  2. quality relationships
  3. money that allows us to buy what we want for ourselves and others

Ray Dalio believes an ideal meritocracy is the best way to achieve all of them.
An ideal meritocracy requires you to do three things:

  1. Put honest thoughts on the table for everyone to see
  2. Have thoughtful disagreements to come up with the best answer possible
  3. Obey the meritocratic ways of getting past disagreements (such as believability-weighed decision-making)

Real-Life Applications

This is how I would recommend you strive to apply Ray Dalio’s principles:

Love Reality
Always look at reality. Love reality even when it’s harsh.

Radical Open-Mindedness
Be open to accepting the feedback you receive on your current skill levels, action, and personality. Only by accepting the feedback from the real world as openly as you can, you’ll be able to move forward as quickly as possible.

Radical Transparency 
Foster relationships based on radical transparency. Accept and give feedback with full transparency and straightforwardness. Don’t start business ventures with close-minded people who can’t handle radical transparency.

My Note:
don’t be radically transparent with everyone! Most people would get hurt and you’d make enemies out of them (read How to Win Friends for more).

Sit Through Pain… With A Pen
Painful experiences with reflection are the biggest growth opportunities. Don’t shy away from pain. Sit through it and make your principles.

Believability-Weighted Decisions
Just genius. Pick the people with the most credibility and assign different weights to their opinions.

Duty Of Speaking Up
If you’re building a company, make it a duty of every employee to speak up when unhappy or when they feel wronged. It will stop rumors and dissatisfaction from spreading behind people’s backs.

Love Reality. Even when it hurts. Especially when it hurts.


  • Sub-Principles Org-Chart Not Perfect

Some sub-level principles did not fit well with their upper-level principles. They still made sense, but they would have been better under other higher-level principles.

  • Repetitive

Some concepts repeated across different principles and a slight pruning would have made the book more digestible.

  • Some principles can trample individuals’ rights 

The concept of “the whole is more important than the individual” is good for reaching a goal.

However, it can lead to treating the individual as disposable, especially in bigger corporations (something Sinek talks about in Leader Eat Last).

The idea of “loving the person you shoot” can be applied in many harsh ways, too.
Call me an ineffective romantic, but I like to think that bonding between individuals can matter as much as the whole.

Also, read: corporate manipulations.

12 Ways Companies Manipulate Employees (W/ Examples)

Principles Review

Principles is a great book that packs endless insights for self-development and empowered mindsets.

It’s one of the best books I have read about business, one of the best leadership books, and one of the top 3 best books I have read on how to shape company culture.

Keep in mind though that it’s a bit on the idealistic end.
In that sense, if you don’t add power dynamics and human nature, it may even be naive self-help.

So we recommend you also read The Fund and Machiavellian principles right after.

Get The Book on Amazon

2 thoughts on “Principles: Summary & Review (Ray Dalio)”

  1. Best version around!
    Separates wheat from chaff and leaves only the gold. I got the book but always use your summary. Thank you for sharing!

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