Success strategies from a self-made billionaire
Ray Dalio on meritocracy, audacious goals, and how to profit from a volatile market
Listen on iTunes
Listen on iTunes
Where is the economy is today – is it growing? Flat? Declining?
What about YOUR economy – your personal investments, your nest egg? How safe is it, and how likely it is to grow at the rate you want it to? When you think about your current investments, how do you feel? Secure, or are you half-panicked?
For many, the recession of 2008 still lingers. Those who suffered are waiting, white-knuckled, holding on to their portfolios and still wondering what to do next. We have, after all, been in one of the longest bull markets in history and bull markets always come to an end at some point. So how do you protect yourself from the possibility of another 2008? And how can you start to take a more proactive, confident approach to your portfolio?
When Tony wrote Money Master the Game, he had the unique privilege of sitting down with some of the most successful, masterful investors and financial gurus of all time – including the legendary Ray Dalio.
Ray founded the investment management firm Bridgewater Associates in 1975 out of his two-bedroom New York City apartment. Four decades later, Bridgewater has grown to be the largest hedge fund in the world, managing over 160 billion dollars, and making more money for its investors than any other hedge fund in history. Dalio himself has appeared on the Time 100 list of the most influential people in the world, as well as the Bloomberg Markets list of the 50 most influential people. And in Money Master the Game, Ray explains his view on what it means to create a balanced portfolio. He even revealed the exact percentages of a simple portfolio that he believes will protect you from the dips and even the dives in the market.
But now – as Ray nears retirement, he has made the decision to share even more of the systems and strategies that have brought him such massive success in his deeply personal book Principles: Life & Work.
Tony recently sat down with Ray to discuss just why Ray felt so inclined to share his wisdom with the world and why Principles is an absolute must-read for everyone – whether you’re in the financial industry or not. And in this episode of the podcast, you will hear from Tony and Ray as they discuss the evolution of Ray’s career, the catastrophic mistakes he made that almost destroyed everything he built, and how the lowest points in his life taught him his biggest lessons. You’ll also hear Tony and Ray discuss their personal beliefs about creating a successful and productive workplace culture, and why everyone should strive to create a meritocracy and invoke “radical honesty” in their lives.
SHOW NOTESPart 1:
[00:08] Introduction[02:50] Tony introduces Ray Dalio[05:30] Ray’s upbringing and early life[06:00] The first stock he bought[07:00] Getting hooked on the market[07:30] Why he wants to share his secrets now[08:15] The three stages of life[08:45] Finding joy in helping others achieve success[09:15] Creating principles in life[09:45] Why his new book is a recipe book[10:45] The two things you need to be successful[11:10] You have to stress test your ideas[11:50] The power of making mistakes[14:00] Public humiliation in 1982[15:30] The most painful experience became the most powerful[15:50] Learning to ask: “How do I know I’m right?”[16:00] Pain + reflection = progress[16:30] Creating a meritocracy to draw the best out of everybody[18:30] How to raise your probability of being right[18:50] Why we are conditioned to need to be right[19:30] The neuroscience factor[19:50] The habitual and environmental factor[20:20] How to get to the other side[21:20] Great collective decision-making[21:50] The 5 things you need to be successful[21:55] Create audacious goals[22:15] Why you need problems[22:25] Diagnose the problems to determine the root causes[22:50] Determine the design for what you will do about the root causes[23:00] Decide to work with people who are strong where you are weak[23:15] Push through to results[23:20] The loop of success[24:15] Ray’s new instinctual approach to failure[24:40] Tony’s ritual after every event[25:30] The review that changed Ray’s outlook on leadership[27:30] Creating new policies based on fairness and truth[28:00] What people are missing about Ray’s culture[29:30] Creating meaningful work and meaningful relationships[30:15] The importance of radical honesty[30:50] Thoughtful disagreement[32:10] Why it was the relationships that changed Ray’s life[33:10] Ray’s biggest weakness and how he overcame it[34:30] The jungle metaphor[36:00] The dot collector – deciding what to listen to[40:15] The wanting of meritocratic decision-making[41:40] How to see bubbles and busts[42:40] Productivity[43:00] Where we are in the cycle[43:40] What the Fed will do[44:05] We are late in the long-term debt cycle[44:30] Long-term debt is going to be squeezing us[45:00] We have 2 economies[45:30] This year is very similar to 1937[46:10] The top tenth of the top 1% of wealth = bottom 90% combined[46:25] How this creates populism[47:00] The economy for the bottom 60% isn’t growing[48:20] If you look at averages, the country is in a bind[49:10] What are the overarching principles that bind us together?[50:20] Determine the principles that will guide your decision-making[50:50] What will happen to the economy when technology disrupts industries[52:30] Technologies can now surpass the capacity of people[53:00] 40% of jobs will be replaced by technology[54:00] People must learn how to write algorithms[55:00] How to redistribute wealth[56:20] The problem with many programs and policies[58:00] Ray’s advice for anyone trying to get to the next level[59:50] Why meditation has become so important to Ray[1:02:10] Reduce risk without reducing returns[1:04:00] The market is a zero sum game[1:05:50] The risk of ruin[1:06:30] Ray’s most important message for you
[00:08] Introduction[00:50] Crisis creates breakthroughs[01:20] How should investors think about dealing with the current market?[02:15] The behavioral pattern of the typical investor[03:50] Learn how to find balance in your portfolio[05:15] Competing in the market is incredibly difficult[06:10] It’s impossible to time the market[07:10] Who is buying and who is selling at any moment[07:40] Ray’s thoughts on Bitcoin[08:20] The 2 purposes of currency[09:40] The technology underlying digital currency[11:20] Speculation around digital currency[11:50] Where most of Ray’s money is – a balanced portfolio[12:20] What do the most successful business titans have in common[13:00] Visualizing a future and seeing the gap[13:30] No one stands in their way[13:50] What do you do with people saying you’re wrong?[14:20] Mistakes are part of the deal[14:30] Example: the founder of micro-finance[15:00] It can be very uncomfortable when going against the grain[15:20] These people can see the big picture and the details[15:50] Elon Musk[16:30] Partner with those who can see what you can’t[17:30] The best entrepreneurs have high levels of humility[19:10] The ability to be simultaneously open-minded and assertive[20:20] The three steps to creating a meritocratic relationship[21:20] Decision-making is a 2-step process[22:20] Believability-weighted decision-making[24:00] Mutually agreeing to bring a 3rd-party into the resolution[24:30] Looking at disagreement with curiosity and respect[24:50] “Making sure people are great without me”[26:00] A new phase in his life[27:40] Do you have your own principles?[28:00] Write down your principles and clarify them[29:00] Principles vs. decisions[30:00] What are the principles that bind us together?[31:10] Creating principles facilitates decision-making[31:40] Tony is guided by his principles
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