I’m Ray Dalio – founder of Bridgewater Associates. I’m interested in how reality works and having principles for dealing with it well - especially about life, work, economics and investments. Ask me about these things—or anything

Ray,

Since 'Principles: Life And Work' was published 2 years ago, have you formed any new principles since then?

Yes, I'm always learning new principles and refining my old ones. I share and discuss them on social media so if you're interested let's discuss them there.

What are your top 5 books of all time? Principles doesn't count ;)

The Lessons of History by Will and Ariel Durant, Hero of a Thousand Faces by Joseph Campbell, The River Out of Eden by Richard Dawkins, The Rise and Fall of the Great Powers by Paul Kennedy--gee there are so many that are running through my mind.

By the way, happy cake day.

What is something you wish you had that money can never buy?

Time. I love meaningful work and meaningful relationships and I never have enough time to have as much of them as I would like.

Ray, thank you for doing this - big fan here.

I was hoping you can talk through actionable steps for encouraging radical transparency in the workplace. I work in a *less than* transparent company right now and I find that my transparency is working against me at times. I truly subscribe to your school of thought here and I just don't know how to bring small steps of radical transparency with me in my day to day.

Thanks again for doing this, Ray. It is so cool that you're on Reddit! (PS have you seen the subreddit dedicated to you?)

The key to all good relationships is being clear about how you're going to be with each other and then doing that. I would encourage you to have organized conversations (or at least one conversation) with the people you work with about that.

Explore whether:

1) you want an idea meritocracy,

2) how truthful and transparent you want to be with each other, and

3) whether you can be forthright in being clear about people's strengths and weaknesses and getting at it in an evidence-based way.

I guarantee you that you will have a fascinating conversation and you might even come out of it with clear principles that you can agree on. However, if you can't agree on how you should be with each other because your principles are different, you can always go somewhere else where the principles are more aligned.

Hi Ray,

Thanks for doing this AMA!

1. You end your recent piece (https://economicprinciples.org/downloads/MMT_%20MP3_MK.pdf ) by saying "[you] expect some of these policies will occur in the intermediate future, and will probably take many people by surprise." What exactly do you mean by this?
2. What are some things you have eye on as a possible cause of a recession if one were to occur over the next 5 years?
3. On the flip side, are there good signals/strong components of our economy that you feel individuals asking about recessions tend to miss?
4. Do you consider the ongoing budget deficit, outstanding US government debt and/or unfunded liabilities to be problematic?
5. Do you have any thoughts about:
   1. Forgiving student debt (for example, as proposed here and supported by Elizabeth Warren http://www.levyinstitute.org/pubs/rpr_2_6.pdf )
   2. The ongoing wave of IPOs and/or Softbank
   3. Corporate debt
   4. The China Trade War
   5. Cutting edge technologies, such as Gene Therapy, Self-driving Cars
   6. Mobile applications that make it easier to trade, such as RobinHood
6. Do you have a favorite macro-economic model (in addition to your economy-as-a-machine model) / textbook / regular book that you'd recommend?
7. [Just for fun] Any thoughts about the subreddit r/wallstreetbets?

I think that what will take people by surprise will be:

1) the failure of monetary policy to be adequately stimulative in the next downturn while

2) there is so much polarity and conflict both within countries and between countries.

I think that these things will be surprising to people because they've never happened before in their lifetimes though they've happened many times before in history. I suggest that you study the cause-effect relationships in the 1930s to see the mechanics that led to the outcomes of that period. If you'd like to read my analysis of the period, you can at www.economicprinciples.com.

As you say populism rose in the 1930s and the again now. It rises when the economy is not able to function in a way that creates plentiful job/work opportunities resulting in pain and misery for a large number of people. Why do economies fail to create jobs? Do interest rates have much to do with it?

Yes. When they can't decline, the first type of monetary policy (which I call Monetary Policy 1) ceases to work, which is bad. They then go to printing money and buying financial assets (which I call Monetary Policy 2), which causes financial asset prices to rise which helps those who have financial assets but isn't nearly as good for those who don't, so it widens the wealth gap. Still, it is necessary, though it ceases to be effective. Europe and Japan are now in that position, and the US will probably find itself in that position in the next downturn. That is when central banks have to go to what I call Monetary Policy 3, in which central governments run deficits to stimulate spending and these deficits are monetized by central bankers.

To see numerous examples of these, I suggest you read both part I and part II of "It’s Time to Look More Carefully at “Monetary Policy 3 (MP3)” and “Modern Monetary Theory (MMT)” on www.economicprinciples.com. The overarching principle is that when there is a large wealth and values gap between people who have to share a budget and there is an economic downturn, and monetary policy is not effective in reversing it, there is a high likelihood of significant conflict.

You have 10 minutes with yourself from 20 years ago. What info do you give him and why?

While it's a bit more than 20 years ago, the big message I would want to have given myself is "Why are you so stupidly arrogant!?!" That was in 1982 when I was 33, and I would have told myself you can be worlds smarter and raise your chances of making better decisions if you could simply be humble and worried enough about being wrong to have the smartest people who are willing to disagree with you and challenge you so that you could examine their reasoning.

Hi Ray, how do you prioritize Principles that could seemingly be in conflict?

I started a company, but self-reflectively (after reading your book) didn't think I was doing an excellent job, so I put another person in the CEO position. That person has turned out to be untrustworthy, has proven to aggressively take value within the company for herself (away from me personally), and while probably more effective of a manager than me, probably not the best person to run the organization.

I'm not sure what to do and how to prioritize the Principles in this (and potentially similar) circumstances.

I'd love to have people understand the art of thoughtful disagreement. I think the greatest tragedy of most individuals and most groups in dealing with most of their issues is that individuals are inappropriately attached to their own biased perspectives so that they don't properly stress-test their thinking through the art of thoughtful disagreement.

If I could change anything, it would be that individuals understand how thoughtful disagreement can be a path toward idea meritocratic decision-making that gets people past their disagreements onto doing the best things for them individually and collectively.

I've understood you enjoy history, which do you prefer?

• Abraham Lincoln or George Washington

• Alexander the great or Julius Caesar

• Elon Musk or Steve Jobs

• NIkola Tesla or Thomas Edison

• Warren Buffet or George Soros

• Mozart or Beethoven

• Gallileo or Da Vinci

• Einstein or Newton

Abraham Lincoln, Alexander the Great, both Steve Jobs and Elon Musk, Nikola Tesla, another tough choice but George Soros (sorry Warren), Da Vinci, and Einstein.

I skipped Mozart and Beethoven because they were both so extraordinary and my mind also drifts to jazz. But wow! What great people you listed.

Mr. Dalio- what are your thoughts on climate change generally and, specifically, how it can impact our economy, both through the challenges and opportunities it will lead to (assuming you agree with the science that it's something to worry about)?

I think that climate change is a really important issue that will certainly impact us in big, evolutionary ways that people are not paying enough attention to or dealing with well, like a slow-growing cancer. The biggest problem with it, like so many of our other problems, is with us in dealing with ourselves in working through our disagreements to determine what we should do. We have a real problem in making good collective decisions and getting on with the things we need to do collectively.

For us individually, we need to think about what it means for us personally because a lot of the next thirty years' changes are coming at us regardless of what we do and we need to adapt to them. Though we certainly could do a lot for future generations if we could just get past our big problem of not being about to reach agreement about what to do.

Hey Ray! I am 20 years old from India and I read you book. You reallly inspire me

I wanted to know Does only the passion for your work fuel you to work hard or it's grinding

Some people say do what you love and you would never have to work 1 day of your life Others say, work hard grind it out

What's the truth to all this ?

It's passion that pulls but sometimes it feels like climbing Everest so that there's a fair amount of grinding involved to get there. If you really want to know what it's like for me, I urge you to watch my 30 minute animated video, "Principles for Success," which is available on YouTube. I wanted to distill my most important life principles into that animation, just like I wanted to distill my most important economic principles into my 30 minute animation "How the Economic Machine Works," which is also available on YouTube.

What would your advice be to someone in their teenage years?

Explore the things that excite you, think for yourself while having humility, and have fun!

If you were 18 in 2019, what would you study in college and how would you start your career?

What I would study in college would depend on what my particular passion was and also the practicalities of that direction. I would recognize that the most important thing is to have as broad of a direct exposure to different perspectives and different places in the world.

I think life is like a giant smorgasbord in which you can't taste everything but at that age you want to sample as much as possible to start seeing what's great for you.

Ray

I, too, love ocean exploration. Who do you relate to most? Nemo or Marlin?

Nemo—I'm more curious and likely get lost in it.

Mr. Dalio, in your industry (and a handful of others) it has become possible for individuals to attain extraordinary levels of wealth at relatively early stages in their adult lives. Are you ever in a position to advise these people about their very singular circumstances? If so, do they have common concerns or fears? What piece of your advice do you feel is most needed and/or appreciated, and why?

Most of the people who I knew who acquired great wealth did so because they got excited about, and built out something that a lot of people really wanted and not because they tried to make a lot of money. The ones who are most blessed are those who started with nothing and experienced the increments of the changes all the way up to having a lot because they gained the full range of experiences that allow them to know what each of these circumstances are like because it helped them understand what's really important. Most of their experiences and also studies of what causes happiness around the world show the same thing--that beyond having enough money to comfortably deal with the basics, there is no correlation between the amount of money one has and the amount of happiness one has, and the factor which is most correlated to happiness is being part of a community. Having meaningful work and meaningful relationships is most valued.

Of course, some people can get hung up making money and connect their value to it or the supposed status that it brings; however, that's not true for most of the people I know.

Hi Ray. Thank you for all the amazing knowledge you are sharing with us.

I know that recently you have downgraded the chances for a recession to 35 % or so. However, i cant stop thinking that valuations of equities are extremely high. Are you worried about this, and would you be more neutral with your portfolios as an amateur investor?

First of all, the main thing I would worry about as an amateur investor is whether you can win at this game. I strongly doubt that you can. I believe that competing in the markets is more difficult than competing in the Olympics because there are more people trying to make money doing it and it's a zero sum game, yet most people think that they can do it. However, history has shown that only a small percentage of the players of this game walk away with a lot of money and most lose money.

Regarding the first part of your question, I look at the expected return of equities relative to the return on bonds and the return on cash to assess their relative values, and, more importantly, I look at the flows of who is buying what for what reasons to try to judge how cheap or expensive equities are. Right now the biggest issues that are on my mind are:

1) the inabilities of the ECB and the Bank of Japan to be stimulative and the limited ability of the Federal Reserve to be stimulative when 2) we have big wealth/values gaps and populism 3) going into a number of important elections around the world. That will lead to more fiscal policy moves that will affect markets (the way the Trump corporate tax cuts did). Additionally, 4) the rise of China and the economic, geopolitical, and possibly even military competitions with the US, will change the economic landscape in very important ways. So will 5) big data, artificial intelligence, and other "thinking-like" technologies.

It will be these factors that I feel I must pay the most attention to in thinking about our investments, but even more importantly our well-being.

Any plans on making your mobile app available to the rest of the world?

We will be putting it on Android and making it available in other countries in the next 3-6 months. (We've been seeing that the mobile app ("Principles in Action" available at the Apple app store now) is so well loved.)

Hi Ray, in your book you mentioned a lot about the use of different personality assessment tools to identify the strengths and weaknesses of Bridgwater employees. However, there's a big debate about those tests validity, how did you deal with this?

Scientifically. Think of these assessments as basically well-thought out questions which are going to be so much better than your or others' random questions in getting to know what someone is like. Since the random questions are the alternative to these thought-out questions that also have statistics behind them, it seems to me that most people are going to want to take them and see what they tell them about themselves and others.

I don't take these summaries as definitive, but I do take them worth of discussion with the people whose preferences they are profiling. I ask them whether these assessment results ring true to them and then have discussion with them about the results. I have used them in many thousands of interactions and have found them to be invaluable.

Because I find them so valuable and think that many people will also find them valuable in understanding themselves and others, I will be passing along the assessments we use in an "assessment center" for people to take or leave as they see fit. That will be available later this year. If you want me to let me know when it or any of our other tools are available, leave your email at principles.com.

Hi Ray, love reading your stuff, but one thing I just don't understand is your stance on China. China's culture is the exact opposite of Bridgewater's. They are radically non-transparent. Freedom of speech, religion, and even thought are nonexistent as exhibited by Tibet, Xinjiang, Taiwan, Hong Kong, etc. State sanctioned technology theft has been proven so many times (see Su Bin, AMSC, many more). They even stole the American Dream and called it the China dream lol. Their financial position is a house of cards on mountains of debt and least of all they are allies with North Korea! You often say that today is analogous to the 1930s - 40s. Well wouldn't that make China Nazi Germany then? We know that didn't go well for investors. My real question is how can you invest in this country that is in so many ways the opposite of what your principles embody? What makes you think they won't just do to you what they have done to so many other Western companies once they have your trade secrets?

I have been going to China since 1984, have come to know it well, and can assure you that the picture you paint of it is not the China that I know. It is certainly the case that the US is a culture that values the individual and individualism whereas China is a culture in which the core unit is the family, leadership is from the top-down, and knowing one's place and how to play it well is most important. It's more Confucian than "Communist dictatorship" than most Americans realize. I'm not arguing the pros and cons of it as much as wanting to convey that it is important not to bring our own biases to trying to interpret it.

This is worthy of a longer discussion at some other time because understanding China is now important and will rapidly get even more important.

Hi Mr. Dalio - I've been reading Principles and love it!

When I observe your presence in interviews, you seem very in-tune and respectful of the people with whom you're interviewing, and yet you also chide your former younger self for being arrogant (for example when you were testifying to congress in your early 30s). You seem the type who truly tries to get at understanding the meaning of the person speaking but can also balance putting forth your piece as an authority on the issues you speak about. I recently saw you keeping strong self-control and respect with an interviewer who was kind of crass (I want to say MSNBC but can't remember).

How long do you think you've had this kind of balance and do you find yourself trying to engage this way with people off camera as well? Is it something more recent or did you manage this kind of humble / balanced engagement with people since you were a younger guy in your 20s and 30s?

I would say that I acquired the way of operating that you described in my 30s, and yes it is the same with people in all settings. I think I acquired it in the markets and in life because I found that to not be balanced and to not see all perspectives would be painfully costly. One might say that being this way was beaten into me by my interactions with reality. Also, meditating helped me a lot. And writing down my principles for dealing with situations helped me see how the same things would happen over and over again in an almost mechanical way that allowed me to look down on myself and my circumstances from a higher, more dispassionate level. I find a lot of people are caught within the circumstance that they're in and have challenges putting those in perspective and dealing with them in a principled way. I think that once one gets in the habit of looking at everything as "another one of those" (rather than each thing individually) and thinking about the principles for dealing with it, one naturally gets in the habit of operating the way you describe.

Hi, first of all I would like to thank you for all the knowledge you have shared with everyone. So I'm 14 years old. I got interested in finance around 12. I read lots of books and watched lots of videos. I did as much as I could to become educated At 13 I bought 14 shares of BABA. My plan for that is very long term. When I grow up I want to probably be an investment banker or financial analyst. Though I have always wanted to go bigger than that. I want to help as many people as I can. I aspire to be like you or buffet. Albeit the possibility of that is extremely low. Now what I came to ask is, what should I do from now on in my life to become successful. Just read more finance books and learn as much as I can untill college and then see where life takes me from there? By the way I'm reading principles for navigating big debt crises right now and I love it. Also what do you think about the Chinese economy and Alibaba? So yeah that's my questions sorry if it was long.

To me it sounds like you're halfway there at 14 years old and now the main thing that you need to do is play the game. I got hooked at about the same age and found that by loving the game I found my way because there's no path to progress that's as good as having actual experiences and reflecting on them.

What are your hobbies?

Scuba diving and ocean exploration, snowboarding, listening to great music particularly at festivals and concerts (I've been at the New Orleans JazzFest 25 out of the last 27 years), but maybe more than all of these is spending time with my grandkids.

Hi Ray, how old were you when you realize that the principles are exactly what you need and how did you understand it?

I was around 35 (about 35 years ago) when I started writing down my principles for decision making. I first started doing that whenever I would make an investment decision. I discovered that by writing down my criteria I could test how these criteria worked on other time frames in other countries which gave me great perspective. I then started to write down my criteria for all my decisions as I was making them and found that it was invaluable for crystallizing my thinking and conveying my thinking to others, especially those I worked with. In shaping my very unusual idea-meritocratic management system, this communication was invaluable because people wouldn’t have understood it otherwise. I also found that it changed and significantly improved my way of thinking because I could see things in a principled way, by which I mean that I could see that most everything happens over and over in slightly different ways so, rather than seeing a blizzard of individual things coming at me in a random way, I saw each thing as one of a particular type and I saw the patterns repeat for logical reasons. I was then able to convert these principles for decision making into algorithms that enormously improved my decision making. I urge you to write down your criteria/principles for making the decisions you are making because it will radically improve your decision making.

Hi Ray, the idea that most grabbed my attention from your book was the concept of the idea meritocracy. How scalable do you believe your ideas are with regards to it? Do you believe it can be scaled to serve the world? Do you believe it can be scaled to serve an individual? What tweeks or tools do you believe would be required to help the most people most of the time?

Certainly the idea of making businesses and individuals make better decisions more often is a dream worth having.

I believe that an idea meritocracy is very scalable if one puts the right protocols and tools into place. In my book about work principles, I explained a lot about how I did that for about 1600 people, but to get a real clear picture of it I urge you to delve into "Principles in Action" which is a free app on the iOS app store. It shows videos of actual cases within Bridgewater. I will also be passing along my tools, some of which are shown in the app. Of course, each organization should find its own way of having an idea meritocracy. However, the main thing is that the people that run the organization have an unwavering need to have this so that they will find their own ways of getting it.