I am still reading the fist part of the book 《Principles》by Ray Dalio. Not yet to finish the whole life journey of Bridgewater up until today.
However there was some profound words written in the book, around the period of end of 70s to early 80s, when Bridgewater had gone almost bankruptcy in spite of a very early success of trading silver prior to that. According to the author , he predicted the economy was about to go into depression based on his algorithm ,and made his predication publicly as an trusted authority . Later he found that with the stimulus provided by the government, the inflation and deflation could be balanced against each other , and he was wrong, US economy didn't run into depression but rather, a rebounding afterwards.
He learnt a huge lesson from his arrogance, later he acknowledged. He believed that to move forward without a likelihood of getting whacked again, he needed to look at himself more objectively and stay humble.
One of the huge changes of his behaviour and mindset was that instead of thinking “I m right” , asking “how do I know I m right”?!
This is a great way to cross check one self’s opinion and also , part of critical thinking skills by challenging one self. To put a “time out” before one rush to make a decision.
The author also gave some tips in managing risks and decision making :
1 seek out the smartest ppl who disagreed with me so I could try to understand their reasoning
2 know when not to have an opinion ( personally I think this is critical)
3 develop, test and systemise timeless and universal principles
4 balance risks in ways that keep the big upside while reducing the downside
The very last point here( no.4) is a tricky one. This in particular is related to financial decisions. However I think it also applies to general risk mitigations.
The painful failure didnot knock him down. Here is the metaphor describing his then inspirational thinking:
“ imagine that In order to have a great life you have to cross a dangerous jungle, you can stay safe where you are and have an ordinary life, or you can risk crossing the jungle to have a terrific life.”
So he did.
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