Principles for investing in markets

Ray Dalio’s Principles and some rules for investing:

1)      It isn’t easy for me to be confident that my opinions are right. In the markets you can do a huge amount of work and still be wrong.

2)      Bad opinions can be very costly. Most people come up with opinions and there is no cost to them. Not so in the markets. No matter how hard I work I cannot be really sure.

3)      The consensus is often wrong, so I have to be an independent thinking. To make any money you have to be right when they are wrong.


1)      I worked for what I wanted, not for what others wanted me to do. For that reason, I never had to do anything. All the work I ever did was just what I needed to do to get what I wanted.

2)      I came up with the best independent opinions I could muster to get what I wanted.

3)      I stress-tested my opinions by having the smartest people I could find to challenge them so I could find out where I was wrong. I never cared much about others’ conclusion- only for the reasoning that led to these conclusions. That reasoning had to make sense to me. Through this process I improved my chances of being right, and I learned a lot of great people.

4)      I remained wary about being overconfident, and figured out how to effectively deal with my not knowing. I dealt with my not knowing by either continuing to gather information until I reached the point that I could be confident or by eliminating my exposure to the risk of not knowing.


5)      I wrestled with my realities, reflecting on the consequences of my decisions, and learned and improved from this process.

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