Principles by Ray Dalio



Not your usual trading book because 1. it is written by Ray Dalio, the founder of Bridgewater Associates, the worlds largest hedge fund; 2. It is a way to live and think where trading success will be the manifestation or outcome if you choose to; 3. It is so controversial some people call this the manual of a cult. Highly recommended.

Book Information

Written by Ray Dalio



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This book is divided into 3 parts. The 3 parts are interconnected. Part 1 asked several questions about principles. Part 2 provides the answers to Part 1. Part 3 is essentially expansion and application of part 2. Hence it is not possible to skip chapters to read the book properly to understand Mr. Dalio’s concepts.

In a sense, this book is Mr. Dalio’s personal reflection (i.e. critical thinking) on how he manages his life and his company. Most people who are not well studied in philosophy or history would label this a cult manual because they do not understand the author’s point of view. The principles defined in the book is very similar to the Asian philiosophy of separation of mind, emotion and reality. It is not something new and it is not that common in modern Asia either.

This book is sort of a required reading for the new members of Bridgewater. This book is like at outline of the operating culture at the firm which can be very difficult for anyone, whose background has been greatly influenced by various classic western philosophies, to accept and follow. Those who cannot operate in such environment are known to leave the firm within a year or two.

Everything written in the book makes sense and is understandable. It is the difficulty in applying the principles in life that makes it impossible for many. It is very similar to my observations of critical thinking and how it falls apart when one cannot turn the conclusions into action.

What I think the book missed is how big a role meditation plays in Mr. Dalio’s ability to separate his emotion and mind so that he can observe the world from a third person point of view. Mr. Dalio has mentioned in various occasions outside of the book that meditation is the most important thing he has learned leading to his success. Thus, if you want to really follow Mr. Dalio’s principles, you need to accept and practice meditation too.

Overall, the book can be utilized in 2 completely different ways. First, you can utilize it as what the book was written for. Namely, to operate your life and thinking process as outlined by the principles. The other way, is to accept only the fact that this world (or financial markets) is a machine made of various parties including humans, nations, etc. Thus it has predictable outcomes where you can take advantage of if you can analysis the machine without your own emotional interference.

Highly recommended.

p.s. The book is freely available from Bridgewater’s website. Find the the link at the top of this review to download the PDF file.

p.p.s. Following is about mediation and can be skipped if you are not interested in meditation.

It is known that the practice of meditation has many benefits like improvement in sleep, reduction in anxiety, etc. It is easy to learn basic meditation. Some people find it easier to follow the transcendental meditation way. Some find it easier doing it the classic ways through body mind training. And there is also the modernized versions where the practice is based on body reflex, etc.

It is known that it is more difficult for older people to learn meditatation. It is also known that developing the sense of complete detachment and carrying it into everyday life is quite difficult. At very high level of meditation, the detachment becomes a continuous process – the person’s mind continuously stay in state between doing intense meditation yet fully aware of the outside world and can do all normal things.

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