"Principles"

The author of "Principles" is Ray Dalio, known as the "Jobs of the investment world". The Bridgewater Associates he founded has become the largest hedge fund company in the world.

In the book "Principles", Dalio reveals the life and work principles he relies on to succeed.

Most of the book is a list, divided into 8 sections, containing more than 500 principles. To be honest, these principles are relatively abstract and not that easy to read.

But even so, the "Principles" are still popular in China and the United States. In addition to Dalio's celebrity halo, I think this book must have met some needs in everyone's lives.

I don’t know if you have noticed that there seem to be many repetitive scenes in our lives:

For example, when falling in love, some girls always meet scumbag men;

For example, at work, we often have to wait until after get off work to finish the work;

Another example is when chatting with family members, we always end up talking about a certain topic;

…

In fact, the repetition of scenes is not terrible. What is terrible is that we will make mistakes again and again in these similar scenes.

Take Little L in our office as an example.

In 2015, the bull market reached its peak, exceeding 5,000 points. Friends around him made a lot of money. The People’s Daily also shouted that the stock market exceeded 10,000 points. Little L was moved after hearing this and entered the market with 200,000. , but the stock market crash happened... When I escaped, I only had 100,000 left.

Later, at the end of 2017, a structural bull market appeared in A-shares, and many large-cap stocks doubled. Little L was tempted again and entered the market with 200,000. As a result... this time the loss was not that much, and the remaining 160,000 came out.

Why do we fall into the same pit repeatedly? Dalio said that's because we have no principles.

He gave a three-part formula for forming principles -

1) Slow down your thinking and refine the decision-making criteria you are citing;

2) Write this standard down as a principle;

3) Based on the results, evaluate the standard and improve it before the next "similar situation" occurs.

Little L felt like crying but had no tears. To him, these three sentences are worth at least 40,000.

If he used this method to break it down carefully, his second loss could actually be avoided.

In 2015, his decision-making criterion for buying stocks was, "The stock market is rising, others are making money, and I want to buy it."

In fact, there is no need for results to prove it. This standard is inherently untenable. But he did not write down this standard as Dalio said, let alone subsequent revisions and improvements.

So, in 2017, Little L made the same mistake again.

Generally speaking, people's decision-making methods can be divided into two types, either relying on subconscious mind or relying on principles.

Like most people, Xiao L relied on his subconscious mind to make decisions when investing in stocks, that is, relying on instinct. His instinct felt that everyone was speculating and it couldn't be wrong, so he followed it.

Dalio said in the book:

Most of our daily decisions are made subconsciously. Most people are controlled by their lower brain (the part of the brain that governs instinct) most of the time, which leads to poor decision-making without them even realizing it. Making decisions based on principles is much more reliable.

This is a very important question.

If the principle is wrong from the beginning, then a life based on principle will inevitably become a tragedy.

But principles are not simply insights or whims. For example, if you are stimulated today, you have to work hard. If you are tired tomorrow, you will live a Buddhist life.

In Dalio’s eyes, principles are fundamental principles. Only in this way can they become the basis for action.

But where to look for fundamental principles? When reading "Principles", I discovered that a major source of Dalio's principles is nature.

Once, Dalio went to Africa and saw a group of hyenas knocking down a young wildebeest. Here's how he felt at the time:

This makes me feel sick to my stomach. I felt for the wildebeest and thought what I was seeing was terrible. But the question is, is this really bad, or am I biased into thinking it's bad when in fact it's great?

Think about this logic: If hyenas cannot hunt wildebeests, the end result must be that the number of wildebeests will increase because of fewer attacks, and the numbers of hyenas will decrease because of less food. It seems that the impact is only on Between the two animals, it will actually destroy the ecological balance of the entire grassland.

Thinking about it this way, hyenas hunting wildebeests are not only innocent, but actually a good thing. In Dalio's view:

It seems that nature defines "good" as something that is good for the whole, and it is a better approach to achieve this "good" through the optimization process.

Most people judge whether things are good or bad based on themselves. We often call things that are good for ourselves or the people we care about good things, and vice versa, bad things.

But what Dalio believes in is - for a thing to be "good", it must conform to the laws of reality and promote the overall evolution, which can bring the greatest returns.

Under this principle, the essence of many life phenomena can be revealed:

GoPro can become bigger because it provides a clearer sports photography. New value;

The hot trend of knowledge payment in the past two years is due to the improvement of the distribution scope and efficiency of knowledge;

And those teachers who use the Internet to teach can earn The doubled salary is because they serve more students.

Whether it is providing new value or serving more people, it promotes the overall evolution, and all these behaviors will be realistically rewarded.

This may be an inspiration for us in choosing a career and making money: What value does your job or company provide? Can you provide greater value? Serve more people?

Finding the evolutionary path that promotes the whole is your path to profit.

In nature, Dalio also understood many other principles. For example, from the virus, he concluded that "adapting to reality through rapid trial and error is priceless"; from the human initiative, he realized that - "Imagine yourself as a small machine running in a big machine. , and understand that you have the power to change your machine to achieve better results."

But what struck Shudanjun the most was Dalio’s answer to the ultimate question in life - why do people live? He said that people live to evolve.

Because from the perspective of brain science research, humans are naturally happy and excited about progress. The happiness that evolution brings us is a long-term sense of satisfaction, which is far more lasting than the happiness brought by things like money, power, and houses.

Dalio said that external rewards such as money are just bait to induce us to evolve. And what matters to everyone is the evolution, not the reward itself.

Therefore, in his concept, failure to evolve means death, and hard work is a must in life. He also set his life goal as: to continuously evolve and contribute a small amount to the overall evolution. It sounds grand, but from the logic of the formation of his principles, it is very reasonable.

As for why we should take nature as our teacher, Dalio said this:

Although humans are very smart compared to other species, compared with the entire nature, our intelligence Like moss growing on rocks. We don't have the ability to design and build a mosquito, let alone all species and most other things in the universe. So my starting point is that nature is smarter than me, and I try to let nature teach me the laws of reality.

Of course, in addition to nature, Dalio’s principles also rely on common sense, realistic laws, and research results in fields such as psychology and brain science. It can be said that they give the principle a relatively solid foundation.

However, this does not mean that the path of principle is easy to follow.

Mr. Shudan can pessimistically predict that 90% of people will only pass by after reading "Principles".

Because there are many difficulties on the road to cultivating principles. The first enemy we face is ourselves. And I dare say that most people will not be able to pass this level.

In fact, it stands to reason that humans are the most promising animals in nature to break through themselves, because we have developed brains and a prefrontal cortex that can think rationally.

However, the power of the instinctive brain is still strong, so strong that it is difficult for us to accept our own mistakes and weaknesses. We often mobilize our defense mechanisms, regard differences as provocations, stick to our own opinions, and easily become closed-minded.

This seems to be an inherent flaw of human beings, no matter how smart they are, they will have this problem.

Dalio made a big mistake because of this. That was in 1982. Dalio had been working in the financial industry for 8 years and had achieved some success.

At that time, Mexico defaulted on its debt, posing great risks to the U.S. economy. Although the US government has taken countermeasures, Dalio feels that it is all in vain.

He publicly announced on television that the United States would usher in a depression.

In order to hedge risks, Dalio also deliberately switched investment portfolios. But as a result, the U.S. economy not only did not collapse, but ushered in a bull market.

Dalio lost face and lost all his wealth in one fell swoop. The Bridgewater Company he worked so hard to establish suddenly collapsed, leaving him alone. At that time, he was on the verge of bankruptcy and could not even afford an economy class ticket.

This incident had a lifelong impact on Dalio. Years later, he still scolded himself as an "arrogant bastard."

Since then, his way of thinking has changed from "thinking I am right" to "how do I know I am right".

Dalio wrote the most famous principle, which is almost the most important principle in this book - "Keep your mind extremely open." He said:

The basis for extreme open-mindedness is a genuine concern that the situation you see when making a decision may not be the best representation of the facts. ?

Being radically open-minded is the ability to effectively explore different perspectives and possibilities without letting your ego or blind spots hold you back.

To do this, you not only have to hold back your anger in the face of disagreements, but you also have to be able to see your own natural limitations.

Because each of us is born with different talents, some people are good at big-picture thinking but not good at implementing details, some people have outstanding imagination but are messed up in logic, and some people have strong execution ability but are not good at strategic planning. Everyone has his or her own shining points, but also has blind spots in thinking.

Dalio specifically wrote in his principles: "Know your blind spots in thinking." If you don't do this, you are likely to fall into your own weaknesses again and again.

?To remind himself, he also made a list of characteristics of open-minded and closed-minded people. "Shu Mi" people can also check themselves.

Dalio says that once you can differentiate between open-minded people and closed-minded people, you will want to surround yourself with open-minded people. Even the best decision-makers can significantly improve the quality of their decisions if they can get help from other good decision-makers.

Not only that, Dalio also saved his own life by keeping an open mind.

One time when he went for a physical check-up, Doctor A told him that he was in the early stages of cancer and would not die soon.

An ordinary person would probably have a psychological breakdown, but Dalio likes to discuss opinions with different people and does not blindly follow authoritative experts even when faced with them.

He went to see doctors B, C, and D. As a result, their diagnostic opinions and treatment methods were different. Later, Dario simply asked them to examine it together, and finally found that there was nothing abnormal about Dario's body.

He wrote in the book:

Experts also make mistakes. My point of view is simple: keep an open mind and do not think that you are absolutely right, nor do you think that others are absolutely right. , it pays to look at issues with smart people.

In our lifetime, each of us will probably make millions of choices, and the final results add up to make up our life.

It can be said that the quality of our lives directly depends on the quality of these choices.

No one is born with the ability to make wise decisions. You can regard the path of cultivating principles as a way to optimize choices and improve life achievements.

In addition to what is mentioned in the article, the "Principles" also contains many suggestions for improving the quality of decision-making. Interested "Shu Mi" can check it out by themselves.

However, one thing I want to point out in particular is that Dalio’s principles are just his principles. It can be used as a reference, but should not be copied. After all, no matter how successful or perfect other people’s lives are, they may not be suitable for us.

Each of us will have our own understanding of life. If we sum up, we will form different life principles.