Editor’s note: This article was first published in July 2015. The figures are from 2015, including Ray Dalio’s personal fortune of more than 15 billion (the source gives no currency) and Bridgewater’s more than 169 billion dollars under management, described as the largest hedge fund in the world.
With a personal fortune of more than 15 billion dollars and at the helm of the world’s largest hedge fund, Bridgewater Associates, which today manages more than 169 billion dollars, Ray Dalio took some time to share the secret of his success in an interview with CNN.
Dalio says he attributes his success partly to keeping in mind how history repeats itself, and to learning from the decisions that didn’t work. According to Dalio, this approach to learning and success requires great humility and great fear, as protection against arrogance. Because let’s not forget that arrogance has toppled more empires and lost more fortunes than any bad business or investment decision.
“People think my success is due to what I know,” Dalio explained. “It isn’t. It’s more about how I deal with everything I don’t know.”
“In other words, in looking for where I might be wrong… I love finding people who might disagree with me and being able to see things through their eyes. Smart people who can credibly show you where you are wrong; learning from those people and weighing their arguments. Is that right? Is that wrong? This Socratic approach helps you learn more and make better decisions.”
In short, Ray Dalio is saying that he owes his success to knowing that how you deal with what you don’t know matters much more than what you do know.
“Knowing what we don’t know is more effective than knowing itself.” – Ray Dalio
Some time ago we published a summary of the manual Dalio gives every employee at his firm, in which he explained the four habits that took him from poor to rich, including the importance of working for yourself and not doing what others expect you to do.
Dalio also advised surrounding yourself with people smarter than you and learning everything you can from them. Being wary of overconfidence and limiting your exposure to risky situations is another of Dalio’s maxims: he acknowledged that he doesn’t make unintended bets and tries to limit his bets to a very small number of things he is confident about.
Last but not least, Dalio urges every professional and businessperson to reflect on the decisions they have made, and on whether those decisions led to success or failure.
“Every bad outcome is a reflection of something we have done wrong, so if we can understand what we did wrong, we can correct it and become more effective. In the same way, the things we did that led to success only need to be identified so we can repeat them.”
Further reading
- 6 things the middle class doesn’t quite understand about the rich
- 7 incredible ways to make a million that have nothing to do with making a million
Featured image: Web Summit, CC BY 2.0, via Wikimedia Commons.
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