A Lesson In Risk Management

“We did not know how to navigate the virus and chose not to because we didn't think we had an edge in trading it. So, we stayed in our positions and in retrospect we should have cut all risk. We’re disappointed because we should have made money rather than lost money in this move the way we did in 2008.” 

- Ray Dalio speaking to the Financial Times

Periods of Turbulence: Risks & Opportunities

Periods of turbulence provide both large risks and large opportunities, so after you make sure that you and your people are safe from the risk of ruin, look for the opportunities. It is because at such times most people pay the most attention to the risks than the opportunities.

The Economic Impact Of The Coronavirus Outbreak Will Be Big

The negative economic impact of the coronavirus outbreak will probably be big, monetary policy will be of little use to counteract it, and co-ordination between political leaders and central bankers is both essential and unlikely.

Force Yourself To Do Difficult Things

It’s a basic law of nature: You must stretch yourself if you want to get strong. You and your people must act with each other like trainers in gyms in order to keep each other fit.

WORK PRINCIPLE:

Force yourself and the people who do work for you to do difficult things. 

Don’t Mistake Possibilities For Probabilities

“Don’t mistake possibilities for probabilities. Anything is possible. It’s the probabilities that matter. Everything must be weighed in terms of its likelihood and prioritized.Believe it or not, your pain will fade and you will have many other opportunities ahead of you.” 

- Ray Dalio

Ask Questions To Gain Perspective

Sometimes asking questions to gain perspective can be misperceived as being weak and indecisive. Of course it’s not. It’s necessary in order to become wise and it is a prerequisite for being strong and decisive. 

Always seek the advice of wise others and let those who are better than you take the lead. The objective is to have the best understanding to make the best possible leadership decisions. 

Be open-minded and assertive at the same time and get in tight sync with those who work with you, recognizing that sometimes not all or even the majority of people will agree with you.

Five Sunday Quotes (by Ray Dalio)

“If you’re not failing, you’re not pushing your limits, and if you’re not pushing your limits, you’re not maximizing your potential.” – Ray Dalio

“Having the basics, a good bed to sleep in, good relationships, good food – is most important, and those things don’t get much better when you have a lot of money or much worse when you have less. And the people one meets at the top aren’t necessarily more special than those one meets at the bottom or in between.” – Ray Dalio

“Listening to uninformed people is worse than having no answers at all.” – Ray Dalio

“Time is like a river that carries us forward into encounters with reality that require us to make decisions. We can’t stop our movement down this river and we can’t avoid those encounters. We can only approach them in the best possible way.” – Ray Dalio

To-do Lists

Good work habits are vastly underrated. People who push through successfully have to-do lists that are reasonably prioritized, and they make certain each item is ticked off in order.

Decide What You Really Want In Life

Take passion, for example. Without passion, life would be dull; you wouldn’t want to live without it. But what’s key is what you do with your passion.

LIFE PRINCIPLE: Decide what you really want in life by reconciling your goals and your desires. 

Life Principle: Success

Achievement orientation is important, but people who obsess over a $1,200 pair of shoes or a fancy car are very rarely happy because they don’t know what it is that they really want and hence what will satisfy them. 

LIFE PRINCIPLE: Do not mistake the trappings of success for success itself.