Ray Dalio

Holding people accountable means understanding them and their circumstances well enough to assess whether they can and should do some things differently, getting in sync with them about that, and, if they can't adequately do what is required, removing them from their jobs. It is not micromanaging them, nor is it expecting them to be perfect (holding particularly overloaded people accountable for doing everything excellently is often impractical, not to mention unfair). #principleoftheday

When new technologies emerge, people often assume the winning technology automatically means winning investments. History shows us that’s rarely the case. Most companies disappear as competition sorts out the winners and losers, but the underlying technology will endure and continue transforming the world. So are we in an AI bubble? Yes. But that has nothing to do with the lasting power of this innovation. @theallinpod @friedberg

Natural selection’s trial-and-error process allows improvement without anyone understanding or guiding it. The same can apply to how we learn. There are at least three kinds of learning that foster evolution: memory-based learning (storing the information that comes in through one’s conscious mind so that we can recall it later); subconscious learning (the knowledge we take away from our experiences that never enters our conscious minds, though it affects our decision making); and “learning” that occurs without thinking at all, such as the changes in DNA that encode a species’ adaptations. I used to think that memory-based, conscious learning was the most powerful, but I’ve since come to understand that it produces less rapid progress than experimentation and adaptation. #principleoftheday

These are some principles I shared in my recent article about the Iran war and the battle over the Strait of Hormuz. To read the full article which explains how the lessons and the principles I gleaned from history coincide with what is now happening, you can find it here: x.com/RayDalio/statu…

Comparing what is now happening with what has happened in analogous historical situations and triangulating my thinking with smart, well-informed leaders and experts has always helped me make better decisions. I have found that most wars are filled with big disagreements about what is likely to happen and big surprises. However, in the case of this Iran war, it is obvious, and there is near-universal agreement, that it all comes down to who controls the Strait of Hormuz. I hear from those who run governments, geopolitical experts, and people all over the world that if Iran is left with control over who can pass through the Strait of Hormuz, or is even left with the power to negotiate, there are four (4) key implications. I wrote about these consequences in my latest article. I want to emphasize that I am not political; I am just a practical person who has to bet on what will happen and has studied history to draw lessons that help me do that well, and I am now passing along my principles and thoughts that might help others navigate these tumultuous times. I remain ready, willing, and able to explore these things with you if you’d like to ask me questions in the comments. x.com/RayDalio/statu…

In my latest article, I look at the mechanics of the current Middle East crisis. You can read it here: x.com/RayDalio/statu…

I’ve found that most wars are filled with surprises, but the stakes of this conflict are obvious: it all comes down to who controls the Strait of Hormuz. We’ve seen this pattern before—with the Dutch in the 17th century and the British in 1956. When a world power reveals military and financial weakness, the world order shifts.

It is a great paradox that individually we are simultaneously everything and nothing. Through our own eyes, we are everything--e.g., when we die, the whole world disappears. So to most people (and to other species) dying is the worst thing possible, and it is of paramount importance that we have the best life possible. However, when we look down on ourselves through the eyes of nature we are of absolutely no significance. It is a reality that each one of us is only one of about seven billion of our species alive today and that our species is only one of about ten million species on our planet. Earth is just one of about 100 billion planets in our galaxy, which is just one of about two trillion galaxies in the universe. And our lifetimes are only about 1/3,000 of humanity's existence, which itself is only 1/20,000 of the Earth's existence. In other words, we are unbelievably tiny and short-lived and no matter what we accomplish, our impact will be insignificant. At the same time, we instinctually want to matter and to evolve, and we can matter a tiny bit--and it's all those tiny bits that add up to drive the evolution of the universe. #principleoftheday

Seek the advice of the most believable people you can find. If you don't know how to judge who the most believable people are, seek the advice of others about how to do that, such as people who have already chosen such believable people. By questioning experts individually and encouraging them to have thoughtful disagreement with each other that I can listen to and ask questions about, I both raise my probability of being right and become much better educated. This is most true when the experts disagree with me or with each other. Smart people who can thoughtfully disagree are the greatest teachers, far better than a professor assigned to stand in front of a board and lecture at you. The knowledge I acquire usually leads to principles that I develop and refine for similar cases that arise in the future. #principleoftheday

When considering an issue or situation, there should be two levels of discussion: the case at hand and the relevant principles that help you decide how the machine should work. You need to clearly navigate between these levels in order to handle the case well, test the effectiveness of your principles, and improve the machine so similar cases will be handled better in the future. #principleoftheday

Where you go in life will depend on how you see things and who and what you feel connected to (your family, your community, your country, mankind, the whole ecosystem, everything). You will have to decide to what extent you will put the interests of others above your own, and which others you will choose to do so for. That's because you will regularly encounter situations that will force you to make such choices. #principleoftheday

Some decisions are best made after acquiring more information; some are best made immediately. Just as you need to constantly sort the big from the small when you are synthesizing what’s going on, you need to constantly evaluate the marginal benefit of gathering more information against the marginal cost of waiting to decide. #principleoftheday

Watch out for people who argue against something whenever they can find something--anything-- wrong with it, without properly weighing all the pluses and minuses. Such people tend to be poor decision makers. #principleoftheday

I often observe people making decisions if their odds of being right are greater than 50 percent. What they fail to see is how much better off they'd be if they raised their chances even more (you can almost always improve your odds of being right by doing things that will give you more information). The expected value gain from raising the probability of being right from 51 percent to 85 percent (i.e., by 34 percentage points) is seventeen times more than raising the odds of being right from 49 percent (which is probably wrong) to 51 percent (which is only a little more likely to be right). Think of the probability as a measure of how often you're likely to be wrong. Raising the probability of being right by 34 percentage points means that a third of your bets will switch from losses to wins. That's why it pays to stress-test your thinking, even when you're pretty sure you're right. #principleoftheday

AI shouldn’t be something you just "follow"—it’s a partnership. The idea that we can make the best possible decisions by just juggling everything in our own heads is becoming obsolete. To really excel today, you need a thought partner. You need a system that can help you process information and logic more effectively than you can alone. I’ve codified my 50 years of experience into a new tool called Digital Ray to act as your personal thought partner. Try the beta at this link: digitalray.ai/guest?utm_sour…

Think of every decision as a bet with a probability and a reward for being right and a probability and a penalty for being wrong. Normally a winning decision is one with a positive expected value, meaning that the reward times its probability of occurring is greater than the penalty times its probability of occurring, with the best decision being the one with the highest expected value. #principleoftheday

Even in a terrible situation, you can still raise your probabilities of making the right decisions by open-mindedly triangulating with believable people. #principleoftheday

You can significantly improve your track record if you only make the bets that you are most confident will pay off. #principleoftheday