Raymond Thomas Dalio.

The Man, The Myth, and The legend. Once bankrupt, today's company has amassed a fortune of more than $20 Billion. Owner, founder, and Chief investment officer of the world's biggest Hedge Fund, Bridgewater Associates, managing an AUM of $150 Billion. Advisor to many central banks, countries, politicians, and organizations like the World Bank and the IMF. He is one of those very few heroes who saw the financial crisis of 2008 coming and had already built a short position to take advantage of it. A believer in philanthropy and, more importantly, a humble human being. It's hard to see someone like him leading such a normal life. He is none other than, Mr. Raymond Thomas Dalio, or Ray Dalio, as he is famously called. 

After getting a master's in business administration degree from the Harvard Business School and beginning his career on Wall Street, and after getting drunk and punching his boss in the face, Ray started Bridgewater Associates from his two-bedroom Manhattan apartment in 1975. 

                    

Dalio's methods and principles, sometimes the subject of critique but also widely emulated by other executives and organizations in the financial services sector and beyond, played a key role in growing Bridgewater into the financial behemoth that it is today. His philosophy is based on the notion that cause-and-effect relationships are the key to understanding complex realities. Dalio believes that studying how these relationships have shaped the past provides the key to making optimal decisions in the present and unlocking success in the future.

Born in the rich neighborhoods of Jackson Heights, Queens, New York, Ray grew up in a middle-class neighborhood on Long Island. He was 12 years old and was working as a caddy at a local golf course. Stock market and the economy were frequent words that he grew up listening to, which justifies the fact that he was 12 years old when he bought his first stock, Northeast Airlines, because it was the only name he had heard. As the years passed, he started working at a very low level on the stock exchange. As the years passed, he found out that much of what is going to happen in the future has already happened somewhere in the past. Hence, to gain a competitive advantage, he became a student of history.

During his time as a student, Dalio was introduced to Transcendental Meditation, which he has credited as a key to his business success. Dalio's initial conception of his company included a vision for trading commodities overseas—hence the reference to bridging waters in the name—but the company solidified its business into consulting. The superior level of analysis led Bridgewater to some early successes, but there were still some bumps in the road in the story of Bridgewater's growth. Based on the volatility seen in the markets at the end of the 1970s, he predicted a depression in 1982. Instead, the markets entered a massive bull market. This was because President Nixon stopped the convertibility of the US dollar to gold. Ray had miserably failed and had to close his fund. He wasn't mad that his prediction had failed. He was mad because he had to close down his fund, which led to many people losing their jobs.

This particular event helped shape Dalio's philosophy and principles, which resulted in the massive AUM and net worth he has built. It also leads to two amazing books that are must-reads. More than his investment philosophies, his philosophies related to decision-making, and many such things have gained immense spotlight, and I am here to share those same rules here. He calls it the 5 steps process to get what you want out of your life.

1. HAVE CLEAR GOALS. 
   a. Prioritize: while you can have virtually anything you want; you can't have everything you want. Life is like a giant smorgasbord with more delicious alternatives than you can ever hope to taste. Choosing a goal often means rejecting some things you want in order to get other things that you want or need even more. Some people fail at this point, before they've even started. 
  
   b. Don't confuse goals with desires. A proper goal is something that you really need to achieve. Desires are things that you want that prevent you from reaching your goals. Typically, desires have first order consequences. 

   c. Decide what you really want in life by reconciling your goals and desires. Take passion, for example. Without passion, life would be dull, you wouldn't want to live without it. But what's key is what you do with your passion. Don't let it consume you and drive you to irrational acts. 

2. IDENTIFY AND DON'T TOLERATE PROBLEMS. 
   a. View painful problems as potential improvements that are screaming at you. Though it won't feel that way at first, each and every problem you face encounter is an opportunity; for that reason, it is essential that you bring them to the surface. Most people don't like to do this, especially if it exposes their own weaknesses or the weaknesses of someone they care about.  

   b. Be specific in identifying your problems. You need to be precise, because different problems have different solutions. If a problem is due to inadequate skill, additional training may be called for; if it arises from an innate weakness, you may need to seek assistance from someone else or change the role you play. 

   c. Don't avoid confronting problems because they are rooted in harsh realities that are unpleasant to look at. Thinking about problems that are difficult to solve may make you anxious, but not thinking about them (and hence not dealing with them) should make you more anxious still. When a problem stems from your own lack of talent or skill, most people feel shame. Get over it. I cannot emphasize this enough. 

3. DIAGNOSE PROBLEMS TO GET TO THEIR ROOT CAUSE. 
   a. Focus on "what is" before deciding "what to do about it". It is a common mistake to move in a nanosecond from identifying a tough problem to proposing a solution for it. Strategic thinking requires both diagnosis and design. A good diagnosis typically takes between fifteen minutes and an hour, depending on how well it's done and how complex the issue is. 

   b. Distinguish the proximate cause from the root cause. Proximate causes are typically the action (or lack of action) that leads to problems, so they are described with verbs (I missed the train because I missed to check the train schedule.). Root causes run much deeper, and they typically described with adjectives (I didn't check the train schedule because I am forgetful). 

   c. Recognize that knowing what someone (including you) is like will tell you what you can expect from them. You will have to get over your reluctance to assess what people are like if you want to surround yourself with people who have the qualities you need. That goes for yourself too. People almost always find it difficult to identify and accept their own mistakes and weaknesses. What differentiates people who live up to their potential from those who don't is their willingness to look at themselves and others objectively and understand the root causes standing in their way. 

4. BE RADICALLY OPEN MINDED. 
   a. understand ego barriers. When I refer to your "ego barriers", I'm referring to your subliminal defense mechanisms that make it hard for you to accept your own mistakes and weaknesses. Your deepest-seated needs and fears - such as the need to be loved and the fear of losing love, the need to survive and the fear of not surviving, reside in primitive parts of your brain, such as the amygdala, which are structures in your temporal lobe that process emotions. 

   b. Your two "yous" fight to control you. It's like Dr.Jekyell, though your higher-level self is not aware of your lower level you. This conflict is universal, if you pay close enough attention, you can actually see when the different parts of a person's brain are arguing with each other. Because the lower level you won out over the thoughtful, higher level self. 

   c. Understand your blind spot barrier. In addition to your go barrier, you also have blind spots - areas where your way of thinking prevents you from seeing things accurately. A person who can't identify patterns and synthesize doesn't know what it's like to see patterns and synthesize any more than a color-blind person. 


5. Appreciate the art of thoughtful disagreement. When two people believe opposite things, chances are that one of them is wrong. It pays to find out if that someone is you. That's why I believe you must appreciate and develop the art of thoughtful disagreements. In thoughtful disagreements, your goal is to convince the other party that you are right - it is to find out which view is true and decide what to do about it. In thoughtful disagreements, both parties are motivated by the genuine fear of missing important perspectives. To me, it's pointless when people get angry with each other when they disagree because most disagreements aren't threats as much as opportunities for learning. 

People who change their minds because they learned something are winners, whereas those who stubbornly refuse to learn are losers. What's important is that you prioritize what you spend time on and who you spend it with. Holding wrong opinions in one's head and making bad decisions based on them instead of having thoughtful disagreements is one of the greatest tragedies of mankind. 

Happy Investing.