Since life brings both ups and downs, struggling well didn’t just me your ups better; it also makes your downs less bad.

⁃ Always have something to struggle with.

Chapter 1

Embrace Reality and deal with it

People who create great things aren’t idle dreamers: they are totally grounded in reality.

Dreams + Reality + Determination = A Successful Life

Decide what you value most and choose the paths to achieve it.

When trying to understand anything you can use these perspectives:

0. Top down: by trying to find the one code/law that drives them all.

1. Bottom up: Study each specific case and the codes/laws that are true for them.

Don’t get hung up on your views of how things “should” be because you will miss out on learning how they really are.

The key is to fail, learn, and improve quickly.

Evolving is life’s greatest accomplishment and its greatest reward.

Remember “no pain, no gain”.

It is a fundamental law of nature that in order to gain strength I’ve had to push one’s limits, which is painful.

Pain + Reflection = Progress.

Go to the pain rather than avoid it.

Weigh second- and third- order consequences. For example with weight lifting, the first consequence is time spent and pain. If you only look at that, you wouldn’t want to exercise. But if you look at the second-order consequence - better health and a more attractive appearance - you’d want to. So apply this to everything; think about the second- and third- order consequences.

Own your outcome. Life doesn’t care whether you like your situation or not. It’s up to you to connect what you want with every you need to do to get it and then find the courage to carry it through.

The biggest mistake most people make is to not see themselves and others objectively, which leads them to bump into their own and others’ weaknesses again and again.

Successful people are those who can go above themselves to see things objectively and manage those things to shape change.

If you are open-minded and determined, you can get virtually anything you want.

Most people lack the courage to confront their own weaknesses and make the hard choices that this process requires. Ultimately, it comes down to the following five decisions:

1. Don’t confuse what you wish were true with what is really true.
2. Don’t worry about looking good - worry instead about achieving your goals.
3. Don’t overweigh first-order consequences relative to second-and third-order consequences.
4. Don’t let pain stand in the way of progress.
5. Don’t blame bad outcomes on anyone but yourself.

Chapter 2

Use the 5-step process to get what you want out of life.

1. Have clear goals.
2. Identify and don’t tolerate the problems that stand in the way of your achieving those goals.
3. Accurately diagnose the problems to get at their root cause.
4. Design plans that will get you around them.
5. Du what’s necessary to push these designs through to results.

Have clear goals

Prioritize: while you can have virtually anything you want, you can’t have everything you want.

Identify and don’t tolerate problems

View painful problems as potential improvements that are screaming at you.

Diagnose problems to get at their root cause

Focus on the “what is” before deciding “what to do about it”.

Distinguish proximate causes from root causes.

Design a plan

Go back before you go forward.

Push through to completion

Great planners who don’t execute their plans go nowhere.

Good work habits are vastly underrated.

Establish clear metrics to make certain that you are following your plan.

Chapter 3

Be radically open-minded.

You have to barriers to God decision-making. Your ego and your blind-spots.

To be effective you must not let your need to be right be more important than your need to find out what’s true. If your are too proud of what you know or of how good you are at something you will learn less, make inferior decisions, and fall short of your potential.

Blind spots: where your thinking doesn’t let you see clearly.

To be truly open minded:

• Sincerely believe that you might not know the best possible path and recognize that your ability to deal well with “not knowing” is more important than whatever it is you do know.

• Recognize that decision-making is a two step process: first take in all the relevant information, then decide.

• Don’t worry about looking good; worry about achieving your goal.

• Realize that you can’t put out without taking in.

• Only by empathizing can you properly evaluate another point of view.

• Remember that you’re looking for the best answer, not simply the best answer that you can come up with yourself.

Triangulate your view with believable people who are willing to disagree.

Plan for the worst case scenario to make it as good as possible.

Mediation can (might) help you become more open minded. Dalio does transcendental mediation.

Chapter 4

Understand that people are wired differently.

Be aware of your subconscious-of how it both can harm and help you, and how be consciously reflecting on what comes out of it, perhaps with the help of others, you can become happier and more effective.

Shapers: someone who comes up with unique and valuable visions and builds them out beautifully, typically over the doubts of others. They get both the big picture and the details right.

Shaper = Visionary + Practical Thinker + Determined.

They seem to share attributes like: intense curiosity, compulsive need to make sense of things, independent thinking, a need to dream big, and a practicality and determination to push through all obstacles to achieve their goals. And a knowledge of their own and others’ weaknesses and strengths so they can orchestrate teams to achieve them.

More importantly: they can hold conflicting thoughts simultaneously and look at them from different angles.

“If you’ve learned anything from this book I hope it’s that everyone has strengths and weaknesses, and everyone has an important role to play in life. Nature made everything and everyone for a purpose. The courage that’s needed the most isn’t the kind that drives you to prevail over others, but the kind that allows you to be true to your truest self, no matter what other people want you to be.”

Your greatest challenge will be having your thoughtful higher-level you manage your emotional lower-level you. The best way to do that is to consciously develop habits that will make doing the things that are good for you habitual.

Chapter 5

Learn how to make decisions effectively.

Recognize that:

1. The biggest threat to good decision making is harmful emotions, and

2. Decision making is a two-step process (first learning and then deciding).

The key is having the higher-level perspective to make fast and accurate judgments on what the real risks are without getting bogged down in details. Remember:

• One of the most important decisions you can make is who you ask questions of.
• Don’t believe everything you hear. Don’t mistake opinions for facts.
• Everything looks bigger up close.
• New is overvalued relative to great.
• Don’t oversqueeze dots. (A ‘dot’ is one of the infinite number of things that come at you every day).

Keep in mind both the rates of change and the levels of things, and the relationships between them.

Something might be ‘getting better’, but not at an acceptable rate or to an acceptable level. Everything important in your life needs to be on a trajectory to be above the bar and headed toward excellent at an appropriate pace.

Remember the 80/20 rule and know what the key 20 percent is.

The rule states that you get 80 percent of the value out of something from 20 percent of the information or effort.

Understanding this saves you from getting bogged down in unnecessary detail once you’ve gotten most of the learning you need to make a good decision.

Be an imperfectionist. Perfectionists spend too much time on small differences at the expense of the important things.

Knowing when not to bet is as important as knowing what bets are probably worth making.

Shortcuts for becoming a great decision maker:

• Simplify!
  • “Any damn fool can make it complex. It takes a genius to make it simple.”
• Use principles.
  • All “cases at hand” are just “another one of those”, and identifying which “one of those” it is, and then applying well-though-out principles for dealing with it will allow you to massively reduce the number of decisions you have to make and will lead you to make much better ones. The key to doing this well is:
    • Slow down your thinking so you can note the criteria you are using to make your decision.
    • Write the criteria down as a principle.
    • Think about those criteria when you have an outcome to assess, and refine them before the next “one of those” comes along.

Convert your principles into algorithms and have the computer make decisions alongside you.

If you can do that, you will take the power of your decision making to a whole other level.

Indirectly, right after stating this, Dalio says that you must learn how to code. I quote:

“Algorithms work just like words in describing what you would like to have done, but they are written in a language that the computer can understand. If you don’t know how to speak this language, you should either learn it or have someone close to you who can translate for you. Your children and their peers must learn to speak this language because it will soon be as important or more important than any other language.”

So basically, the path is as follows: Thinking -> Principles -> Algorithms -> Great Decisions.

Later, Dalio actually directly writes: ”… and that computer coding will become as essential as writing”.

A point that is important to make is the specific use technology has at Bridgewater - “At bridgewater, we use our systems much as a driver uses a GPS in a car: not to substitute for our navigational abilities but to supplement them”.

Be cautious about trusting AI without having a deep understanding.

Dalio gives a great example of this: Computers have no common sense. They may misinterpret our waking up in the morning and having breakfast as if we were hungry because we wake up.

He ends the chapter with the following:

In order to have the best life possible, you have to:

1. know what the best decisions are and

2. have the courage to make them.

This marks the end of the Life Principles, which is the first half of the book. The second half is Work Principles.

The Work Principles are basically the Life Principles, just applied to groups of people instead.

Work Principles Intro

Putting comfort ahead of success products worse results for everyone.

Idea Meritocracy = Radical Truth + Radical Transparency + Believability-Weighted Decision Making.

To have an Idea Meritocracy:

1. Put your honest thoughts on the table.
2. Have thoughtful disagreement.
3. Abide by agreed-upon ways of getting past disagreement.

I decided that I would skim the work principles, because like I said, they are simply an application of the Life Principles to managing a company.

The following is the remainder of my notes on the book Principles:

“It is a fundamental law of nature that you get stronger only by doing difficult things.”

Learn to fail. And learn to do it well.

“The fastest path to success starts with knowing what your weaknesses are and staring hard at them.”

“Self-reflectiveness is the quality that most differentiates those who evolve quickly from those who don’t. Remember: Pain + Reflection = Progress.”

“It’s up to you to decide what you want to get out of life and what you want to give.”