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Ray Dalio's Principles of Investment ""Be radically transparent..." Ray Dalio - New Yorker article about him here Originally: The Ray Dalio area on GEI Started by PositiveDeviant, 31 Oct 2011 ( 17 replies, 1,359 views to the end of Sept. 2013) This is based on Ray Dalio's principles. The purpose here is to create an area where discussions take place whilst keeping in mind Ray's principles. These are found on his Bridgewater Associates website. What I've written about here are some elements of his principles document and since it is quite lengthy I've only chosen what I find to be the most meaningful parts of that, so it's not likely to be an accurate reflection of it, only my interpretation of the important points. Who is Ray Dalio and what are his principles? From Wikipedia; "Ray Dalio (born in 1949 in Jackson Heights, Queens, New York, United States) is an American businessman and founder of Bridgewater Associates. The son of a jazz musician, Dalio began investing at age 12 when he bought shares of Northeast Airlines for $300 and tripled his money when the airlines went through a merger. Dalio received a BA from Long Island University and an MBA from Harvard Business School. After completing his education, Dalio worked on the floor of the New York Stock Exchange and began investing in commodity futures. He was a Director of Commodities at Dominick & Dominick LLC  In 1974, he spent a year trading futures as a Shearson Hayden Stone broker.  In 1975, he founded the investment management firm, Bridgewater Associates, and his investment advisory service began to attract pension funds worth millions of dollars.  Dalio is a practitioner of the Transcendental Meditation technique and resides with his wife in Greenwich, CT.According to The New Yorker he is the 55th richest businessman in the world, with a net worth of US$6 billion as of 2011. " His most fundamental principle; "Truth —more precisely, an accurate understanding of reality— is the essential foundation for producing good outcomes." and others; "I believe that evolution, which is the natural movement toward better adaptation, is the greatest single force in the universe, and that it is good." "I believe that the desire to evolve, i.e., to get better, is probably humanity's most pervasive driving force." For me, this one is the most interesting; "I believe that the biggest problem that humanity faces is an ego sensitivity to finding out whether one is right or wrong and identifying what one's strengths and weaknesses are." More here; "Most of us are born with attributes that both help us and hurt us, depending on their applications, and the more extreme the attribute, the more extreme the potential good and bad outcomes these attributes are likely to produce. For example, highly creative, goal-oriented people who are good at imagining the big picture often can easily get tripped up on the details of daily life, while highly pragmatic, task-oriented people who are great with the details might not be creative. That is because the ways their minds work make it difficult for them to see both ways of thinking. In nature everything was made for a purpose, and so too were these different ways of thinking. They just have different purposes. It is extremely important to one's happiness and success to know oneself—most importantly to understand one's own values and abilities—and then to find the right fits. We all have things that we value that we want and we all have strengths and weaknesses that affect our paths for getting them. The most important quality that differentiates successful people from unsuccessful people is our capacity to learn and adapt to these things. Unlike any other species, man is capable of reflecting on himself and the things around him to learn and adapt in order to improve. He has this capability because, in the evolution of species man's brain developed a part that no other species has—the prefrontal cortex. It is the part of the human brain that gives us the ability to reflect and conduct other cognitive thinking. Because of this, people who can objectively reflect on themselves and others —most importantly on their weaknesses are—can figure out how to get around these weaknesses, can evolve fastest and come closer to realizing their potentials than those who can't. However, typically defensive, emotional reactions—i.e., ego barriers—stand in the way of this progress. These reactions take place in the part of the brain called the amygdala. As a result of them, most people don't like reflecting on their weaknesses even though recognizing them is an essential step toward preventing them from causing them problems. Most people especially dislike others exploring their weaknesses because it makes them feel attacked, which produces fight or flight reactions;; however, having others help one find one's weaknesses is essential because it's very difficult to identify one's own. Most people don't like helping others explore their weaknesses, even though they are willing to talk about them behind their backs. For these reasons most people don't do a good job of understanding themselves and adapting in order to get what they want most out of life. In my opinion, that is the biggest single problem of mankind because it, more than anything else, impedes people's abilities to address all other problems and it is probably the greatest source of pain for most people. Some people get over the ego barrier and others don't. Which path they choose, more than anything else, determines how good their outcomes are. Aristotle defined tragedy as a bad outcome for a person because of a fatal flaw that he can't get around. So it is tragic when people let ego barriers lead them to experience bad outcomes. " So an important part in personal evolution is the realisation that our ego can often get in front of an objective conclusion. Our ego is a barrier towards finding the truth. "Be radically transparent. Provide people with as much exposure as possible to what's going on around them. Allowing people direct access lets them form their own views and greatly enhances accuracy and the pursuit of truth. Winston Churchill said, "There is no worse course in leadership than to hold out false hopes soon to be swept away." The candid question-and-answer process allows people to probe your thinking. You can then modify your thinking to get at the best possible answer, reinforcing your confidence that you're on the best possible path. " This is about more in depth questioning taking place where the underlying factors and beliefs that lead to one's viewpoint or conclusion are looked at in more detail. Are they true? So what is this topic on GEI all about then? I think a lot of what Ray has to say makes a great deal of sense and it would be interesting to, first of all, discuss some of his principles and beliefs, including some of the ones that I may not have mentioned here that are part of his "Principles". Are they true? Do they make sense? Perhaps after this initial process, discussions can take place here on specific topics (decided by those who want to post here) whilst keeping these principles in mind. The aim being to reach more accurate conclusions that are closer to the truth.