Principles (Ray Dalio)

Trader's Library #67 · Investing and the stock market. A system for learning from mistakes from the founder of the biggest hedge fund.

Author: Ray Dalio · Original: Principles · Year: 2017 · Usefulness for traders: ★★★★☆

What it's about

The founder of Bridgewater, one of the world's biggest hedge funds, describes his life and work principles. The key moment: a disastrously wrong forecast in 1982, after which he almost lost his firm and began learning systematically from his mistakes.

What it gives a trader

For a trader the most important thing is the loop: goal, problem, diagnosis, design of a change, execution. That's exactly what a trading journal should do. Dalio also teaches that the pain after a mistake is a signal to learn, not a reason to hide the failure.

Lessons for traders

• pain plus reflection equals progress
• write down your decision rules and improve them after mistakes
• look for people who disagree with you (confirmation bias, Atlas of biases #21)

What to watch out for

Long, and the part about running a company is less useful for an individual trader. Bridgewater's culture is controversial.

Discussion

The discussion takes place in Hetman Capital Club (in Polish). Join the discussion in the Club →

Navigation

← #066 The Most Important Thing (Howard Marks) · Library index · #068 The Psychology of Money (Morgan Housel) →

Educational content, not investment advice. The book description is my own summary and assessment, not quotations. Edition details were checked in catalogues and bookshops, and where there was doubt I said so plainly.