Ray Dalio - Business Casual

Ray Dalio: Predicting Our Future Using Our Past | The Business Casual Podcast

Check out the Business Casual Episode Page & Show Notes

Key Takeaways

  • Everything happening now has happened before, just in a slightly different flavor – “Nothing is new”
    • It’s imperative to understand how reality works, but your knowledge is limited. Hence, Ray Dalio recommends triangulating views with other people. 
  • “Pain + Reflection = Progress”
    • “If we can pause, maybe not in the moment of pain, but right after that moment of pain, and think how should I handle that type of situation, and then write it down, that’s great progress” – Ray Dalio
  • Recognize that “What you don’t know is much greater than what you do know”
    • Then ask yourself: “How do I diversify well and stay safe”
  • Be prepared for the worst-case scenario before investing 
  • “Your work and your passion should be the same thing, and it has got to pay enough” – Ray Dalio

Intro

Significance of Personality Traits at Work

  • Bridgewater Associates uses personality assessments in its hiring process – here is why:
    • How we think, value different things, our inclinations for ourselves and others are essential to have quality communication
    • There is a purpose for every personality trait, and they are complementary 
  • Ray considers himself an ENTP creator

Career Advice 

  • “Your work and your passion should be the same thing, and it has got to pay enough” – Ray Dalio
    • For Ray, that’s figuring out how the world works and betting on it
  • Combined with the principle: “Cultivate meaningful work and meaningful relationships”
    • Ray describes how this is reflected in the culture at Bridgewater:
    • “An idea meritocracy in which the goals are meaningful work and meaningful relationships and the way we want to get there is through radical truthfulness and radical transparency”

Play your Role

  • “I know what my role is and what my role isn’t, I have to do my role well”
  • You don’t wait for someone to give you a leadership role, do what needs to be done
    • For instance, getting more respirator masks

Remote Work Doesn’t Change How Relationships Work

  • Realities change but the human capacity to adapt and re-optimize will produce new and better results
    • Nature is adaption: we will always evolve but the underlying principles remain the same

Good Principles are Timeless and Universal

  • It’s imperative to understand how reality works, but your knowledge is limited – the answer?
    • “Triangulate with other people to figure out how it works and to have good principles for dealing with it”
    • Principles are like recipes for your particular encounters with reality
  • Ray distilled his life lessons in his book Principles: Life and Business

Pain is a Learning Vehicle

  •  “Pain + Reflection = Progress”
    • “If we can pause, maybe not in the moment of pain, but right after that moment of pain, and think how should I handle that type of situation, and then write it down, that’s great progress” – Ray Dalio
    • Ask: What does it tell us about how reality works or a principle I should have?
  • Look at things from a higher level and ask what the reality is, for instance:
    • An economic hardship: How much savings do I have/ need?
    • Health event: How do I protect myself? What is like to lose a loved one?

Importance of Learning from History

  • Everything happening now has happened before, just in a slightly different flavor – “Nothing is new”
  • Identify the big patterns:
    • Money and credit cycle
    • Wealth gaps grow and decline
    • Constant fights over wealth and power
  • Cyclical nature of the economy:
    • It starts with a boom – e.g. The Gilded age of late 1800s, roaring 20s
    • People always over-do it – e.g. Robber barons, debt over leveraging
    • Causing a crisis – e.g. Debt crisis in 1907/ or in 1929-1932
    • Wealth redistribution happens
    • A fresh beginning – people are inventive and work well together
  • Wealth redistribution can come about by war (WWI & WWII) or by peaceful means
    • The stimulus program moment happened before in history
      • Roosevelt on March 5th 1933, and Nixon on August 15th 1971
    • “What did they do? They gave you a ton of money and credit. Where did they get it from? They made it up, because they can make it up”

Financial Markets

  • In short: Take all risks off the table; Go to cash and gold
  • Ray regrets not studying the pandemic that coincided with the 1918 economic crash
    • It’s essential to be aware of how acts of nature happened in the past and to think about their contemporary versions
  • The everyday person has a choice: To compete in the markets Or to diversify well
    • Keep in mind: To compete in the markets is more difficult than to compete in the Olympics – why?
      • There are more people who are trying to do it, and more resources put behind it
    • Recognize that “What you don’t know is much greater than what you do know”
      • Therefore,  ask yourself: “How do I diversify well and stay safe”

How to Position Yourself

  • Be prepared for the worst-case scenario before throwing money at any situation – A framework:
    • Ask yourself: How long can you survive with no income? – cover that
    • Ideally, aim for a year of “days of safety”
    • Think about your worst-case scenario: Never be squeezed or forced into a position
    • Remember: Luxury isn’t worth much in the face of instability
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Notes By Mostafa Khaled

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