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A few days ago, we published on our YouTube channel, Investing by Learning, the biography of Reid Alió, the founder of Bridgewater Associates, the largest hedge fund in history. But beyond all his achievements and his immense fortune, which in 2018 Forbes ranked 25th on a list of 400 names, Alió also stands out for his philanthropy and his book, Principles, through which he has decided to share his knowledge and way of life.
The analysis and overcoming of mistakes, the building of valuable personal and professional relationships, and even the balance between risk and reward are part of the many ideas that Alió develops in this latest work, which can help you see things from another perspective. But I want to focus on the fundamental things that Alió discusses in his book.
Secondary principles are intelligent ways of handling things that happen again and again in similar situations. But how are these principles acquired? They are acquired through experiences and mistakes throughout my life. Alió says, "The most valuable things I have learned are that it was the results of the mistakes I reflected on that..." They helped me form principles so I wouldn't repeat the same mistakes, and these are some of the fantastic lessons Ray Dalio has given us.
First, it's essential to accept reality, but that doesn't mean giving up on your dreams; quite the opposite. Being aware of limitations and the existing context is the best way to allow your desires to come true. Valio has a formula: dreams plus reality plus determination equals success. Second, making mistakes is not only allowed but almost an obligation.
Mistakes, problems, and weaknesses will always be in your path. Knowing and analyzing them is a crucial step in achieving goals. The key, as Reid Al-Yo mentioned in a fantastic TED Talk, is how we act in the face of mistakes. What matters isn't the circumstances, but how we behave in the face of them.
And one of the great examples of Dalio's own mistakes is the following: in the early 1980s, the investor publicly stated that the global economy was headed for a severe depression. What happened was just the opposite: the US economy began one of its greatest periods of growth, which would last almost Eighteen years later, after the consequences of that mistake, Valió lost his employees and had to borrow money from his parents to resolve this blunder.
But beyond the error itself, the failure acted as a catalyst. In retrospect, "My failure was one of the best things that ever happened to me because it gave me the humility I needed to balance my aggressiveness," the investor stated. Third, ego and blind spots are two barriers to overcome, especially if one wants to improve decision-making.
The first refers to the inability to identify our own weaknesses and the rejection of having them pointed out by others, and this only makes us weaker. Blind spots are related to cooperation with others. One believes they can see everything, but the complete picture is only revealed with the help of others.
Fourth, for this, it is key to be radically open- minded. By surrounding himself with people who disagreed with the Dalai Lama, he was able to better understand all aspects of a situation and make better decisions accordingly. This is a concept that could be related to the investor's system of labor relations, which he calls meritocracy.
The founder of Bridgewater Associates believes a meritocratic system plus radical transparency in the workplace ensures the best ideas prevail and that you gain valuable relationships along the way. Fifth, the balance between risk and reward: Dalio is n't afraid of failure, but he is terrified of a boring life.
He understands that one cannot take every risk in the world, but neither can one be complacent. To have the best possible life, according to each person's standards of what a possible life is, the investor argues that you must know how to balance risk and reward. Sixth, the five-step process: Dalio has designed a five-step process so that you don't betray yourself or your own principles on the path to achieving what you truly want.
These five steps are valid for any situation, and the more you repeat them, the greater your personal evolution will be. These five steps are as follows: First, have clear objectives. Second, identify the problems, not the pain points. They will usually be painful, but you have to face them. Third, before going for the solution to your problems, analyze them and identify their origin in order to resolve the underlying causes effectively.
Fourth, design a good plan to Solving problems, the fifth step, executing the plan may seem like a final, somewhat obvious step, but it's useless to have gone through the five-step process described above if you don't actually implement the plan you've designed. Again, as we discussed at the end of Reid Al's biography, I highly recommend reading his book, " Principles." It's a fantastic book, one of the best I've ever read, and one of the few successful books on personal development, wealth, and investing written by someone who is truly successful, someone who has experienced overwhelming personal growth, a true investor, and a truly wealthy person.
Read it, draw your own conclusions, and put it into practice. As always, if you find this type of video valuable, give us a thumbs up, share it on your social networks, and subscribe to our channel if you haven't already. Remember that we have a date next Saturday, March 21st, with the seminar "How to Invest in the Stock Market for Non-Experts." I'll leave a link with the details below this video.
Review its content, analyze our value proposition and the financial offer. If you hurry, you can take advantage of the current pre-sale promotion. Check it out and see if it makes sense for you. And if you think you can leverage my experience, sign up and we'll see each other on March 21st. See you soon!
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