Ray Dalio released his book Principles last year. He is the seventeen billion dollars founder of Bridgewater Associates. I’ve compiled a list of lessons that I learned from Ray:
Test your assumptions with real data
Build a financial model and see how it fares out against 100 years of market data. If it does well, then there is a good chance that it’ll do well in the future. Always build models and use data to test any assumptions. Gut feeling is not enough. Believability test everything, that’s how you win.
Build simple models
The economy is defined by a line of productivity as well as small and large cycles. That economic model explains every boom and bust in history. Simple, isn’t it. Build models that simplify your life. That’s my key to understanding the quirks of life.