Practice English Speaking&Listening with: This Is Why Only Few People Get Rich | Ray Dalio

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The most common mistake of investing

Competing in the markets is more

difficult than competing in the olympics

The way that i feel it is life is like

an adventure

I mean if you knew everything it

wouldn't be nearly as good

So the ambiguity is part of it it's part

of the game

Each one of us would approach that

differently

for me have the greatest life I can have

well pain is a heck of a teacher when

you get the

pleasure then you just keep doing what

you're doing. But it doesn't teach you to

change.

You know pain when you put your hand on

a hot stove

or do anything that got you into a

position

teaches you maybe about how to approach

it differently and also

pain teaches you about how reality works.

Reality is reality we're given reality

a lot of people say they want to fight

what reality is

You know what was me and

Stop thinking about it being differently

Just understand

like why did that thing happen to me and

how do I put it in perspective

I remember a case that changed me

profoundly

so I started my business in 1975

investing you know it's easy to be wrong

in investing that's part of the game. But

in 1980

81 I calculated that american banks had

lent a lot more money to

countries than those countries weren't

going to be able to pay back. Therefore

have a big debt default and that would

cause an economic crisis.

And then in mexico defaulted in august

1982

So that prediction sort of wow came

right

and I thought we were going to go into

an economic spiral a depression a

big debt crisis and I couldn't have been

more wrong

That was the exact bottom in the stock

market and I lost money I lost money for

myself I lost money for my clients

I had to let everybody in my company go

I was so broke I had to borrow four

thousand dollars for my dad.

pay some of my family bills so I mean it

was a lot of pain.

It's like nature doesn't care about you

It cares about

the universe. And so when you have those

experiences just

understand how reality works and also

how to approach it better that's smart

I think. It made me

think about how I could maintain that

upside you know risk goes with return I

didn't want to

have an ordinary life so I still wanted

the big

upside return but how could I do that?

At the time I reflected it I felt it was

like the following.

I'm on one side of a jungle and i'm on

this one side of the jungle

in order to imagine you could have great

success

if you can cross the jungle alive to get

to the other side but in the jungle

are all sorts of terrible things that

could kill you and and so on.

And you have a choice you can have this

ordinary life

or you can try to cross the jungle now

each one of us would

approach that differently for me have

the greatest life I could have.

So how would you cross that jungle

And what I learned was that

the best way to cross that jungle would

be

with a team of people people who I cared

about they cared about with

me who could see things that I couldn't

see

and I could see things that they

couldn't see and that way

you could be effective together

so that's what I did that's how it

worked and what I also learned through

that thing

is like I don't want to get out of the

jungle I don't want to get to the other

side

Because the actual act of being in it

with them

and to do those things is itself

rewarding.

So I think pain is the best teacher

Because

it gave me the fear of being wrong

without me losing my

audacity. In other words it gave me an

open-mindedness.

It made me start to think how do I deal

with what I don't know.

it made me find the smartest people I

could find who disagreed with me

to start to understand their thinking. I

brought in the smartest people I could

find who were independent thinkers

who would disagree with me and I learned

this is an important thing to learn.

Whatever success

I had came more from my knowing how to

deal with my

not knowing than from anything I knew

in other words what you know in your

head

is only a small percentage of what the

important things and the right things to

know

is, And so to be able to go

outside of one's head and to take in the

best

of the best of the best wherever it

comes and then

use that to make decisions and all of

that

came from that painful very painful

mistake.

I wouldn't have known how to have great

upside

while having acceptable risks I'm

confident

that I wouldn't have learned that if I

didn't have that kind of experience

and that was the exact bottom

financially and so on in my life. From

that point

up to you know not long ago fortune

described Bridgewater as the fifth most

important private company in the country

in the u.s And so it was that pain

and reflecting well on that pain that

gave me

a greater ability to deal with what I

don't know.

The way that i feel it is life is like

an adventure

I mean if you knew everything it

wouldn't be nearly as good

so the ambiguity is part of it. it's part

of the game. It's just the way it is

and then experience that and to know how

to deal with ambiguity,

because the same rules apply you know

feel it.

feel it what's it like. How does it feel,

where are the pulls to how do you learn?

how do you learn how to approach it,

what's it like speak to others who have

been in there

in that spot before. Taste it and so on

our preferences change you know as

you're going through all those things so

you feel it out you learn about it.

You go to the things that you feel the

pull toward but in any case

to reconcile feelings with

thoughts to recognize feelings with

logic

and align them like each has to double

check for me.

Like if my feelings i'm yes i'm a big

feeling person

there is a subliminal mind that we have.

And so feelings and those things

are coming through that subliminal mind.

And it really has a big control.

Freud discovered that there's a

subliminal mind

and in that subliminal mind we just

don't

see it. Because it's not conscious it has

a big effect

meditation has had a big effect on me.

I've been meditating

since 1969 and then there's a conscious

logical mind

In your mind they're like everybody's

mind they're these kind of two minds

that are working I find that when I

align them

but at the same time to be able to get

their logic and be able to express

oneself

you know in algorithms or so is a good

thing. So when they're aligned

it's kind of a double check and it works

at both levels. So i think that's most

important.

Every time you put on a position in the

markets for example

I am never sure if it would be easy if I

knew

what I realized on those is doubting is

part of that process you can only be

sure a certain amount.

How do you get to the best triangulation

in other words take in from the smartest

people and your own thoughts, and so on.

So that you're making that understand

how reality works

and then try to make sure that none of

your

decisions are the ones that knock you

out of the game.

In other words like i've got an

expression for people who work for me

you can scratch the car but you can't

total the car.

So realize okay you don't win it all

you make your best bets but don't have

the one.

So you have to eliminate the killer ones

don't put yourself in a position that

you can have unacceptable.

Because you have enough killer ones odds

are one of them's gonna get you.

I approach it basically that way

you know try to make the diversification

try not to have any killer

eliminate all of those that are

unacceptable and then go for the

upside. I make the bet so that I won't

allow anyone that'll kill me

right and then I raise typically only

want to make bets that I feel good about

and I will have them stress tested my

bets by having other people stress test

it. Just imagine I don't know you're

playing a chess game

okay maybe you're a chess master but

okay what are you gonna do you have to

still make a move.

What's the best thing to do now imagine

you could ask the best chess masters in

the world

what you do and think about the pros and

cons and make your decision

maybe if everybody had a score card on

all their decisions

and then was being able to experience

essentially you try it one way you try

it the other way

and you start to see what's better and

you get punished one way

you get rewarded the other way naturally

you want to go in the direction you get

rewarded.

I just want to make the right the best

decision possible I don't care where it

comes from

like you might one thing another then

that's the beginning of trying to find

out what's correct

in the past. So a good partner is going

to disagree with you and you have to get

past it.

okay no I don't see it that way okay

let's figure it out

And then the score card i think probably

had the benefit

of that kind of notion I got a score

card okay I don't know like I'm not sure

okay bring it on please stress test me

oh that's great we have we're good

partners.

Like I say I think before that uh

1982-ish incident

I probably was a lot more okay

yeah you know I think it's right and

what I think is right and i'm a smart

guy and

so on so I was like you know that life

is a good teacher

two by four in the head you know and you

got a couple of those

and pain plus reflection equals progress.

I found that by writing down my

principles and the rules

and then testing how they would have

performed

over time and that's where the

algorithms came

so that I can basically just like a

machine

play it click click click click click

okay with execute the game plan

because I know what the experience is

like the experience is like you're

wrestling around with it you're losing

money the day you put on a trade

it doesn't go either straight up or

straight down and goes against you so

now I don't know you're losing money

okay how much should you lose what's

your game plan you've got to know your

game plan and stick to the game plan

and you can't be shaken out and yet the

emotions are going to cause you to doubt

yourself and plus

it brings you stress and all of that so

you have to execute a game plan that's

very well thought out then over time you

start to develop some better instincts.

Like if you're excited and you're going

along

be scared. If you're doing something

you're really worried about and nobody

else is doing it

maybe good. Don't be dissuaded see the

markets are very different than

consensus decision making.

It's counter consensus because the

consensus is built into the price

right so if everybody loves something

it's expensive.

And if everybody hates something it's

cheap. The most common mistake of

investing thinking that the investment

that did good is a good investment.

people rather more expensive the things

that quite often those markets that did

really really well became more expensive.

And everybody smart money is all the

time

comparing them and competing. So what

happens

is the naive money buys the thing that

was hot,

or is hot the thing that has been

terrible which might be the thing that's

beaten down.

So where most people say ah this is like

oh what a great company okay amazon is a

great company we got Amazon's a great

company

Who doesn't got that Amazon's a great

company and then okay

I'm gonna go on amazon okay

but if everybody's got this it's a great

company and it becomes

increment less great than they

anticipated bam

that baby goes down. So you have to

start to develop some of those instincts

or a game plan.

Here's another one that's really

important, diversify

because what I learned about this is

that

first of all all investments uh compete

and it's not easy to tell whether one

investment is better than the other

because if people could do that life

would be easy and everybody make a ton

of money

So and this is a competitive game that's

very difficult to compete in. So

it's very difficult to say which one's

better or worse

you could take experts and you could and

do all sorts of tests

and you'll find out that they can pick

that and you can't tell whether the

worst ones are going to be better.

So because of that you

understand that even picking the best

ones is difficult and particularly

if you're naive like we spend

hundreds of millions of dollars each

year on research

to try to give us an edge, okay now

you've got to compete with us.

Competing in the markets is more

difficult than competing in the olympics.

But there are more people who try harder

in order to do that. So it's a zero-sum

game. But

diversification that they're different

will reduce your risk without reducing

your return

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