Get What You Want Out of Life
Ray Dalio’s five-step method for reaching any goal
Ray Dalio established the largest hedge fund in the world, Bridgewater Associates and serves as its co-chairman and co-chief investment officer. He was raised in a middle-class Long Island neighborhood, and at the age of 12 he started trading stocks. He launched Bridgewater from his New York City apartment in 1975 and saw early success. However, he lost everything due to bad market predictions in 1982.
He learned from his mistakes not to be too sure of himself, to broaden his understanding of economic history, and to seek strategies that would allow him to achieve a good compromise between low-risk and great return. He attributes his success to the guiding principles he established as a result of this. To help people learn from his experiences, he put together “Principles.”
Many of the ideas that Dalio discusses form the foundation for his process for achieving success in any context. This involves five steps:
- Have clear goals.
- Identify and don’t tolerate the problems that stand in the way of your achieving those goals.
- Accurately diagnose the problems to get at their root causes.
- Design plans that will get you around them.
- Do what’s necessary to push these designs through to results.
Together, these five steps make up a loop, like the one here.
Have clear goals.
Aiming for anything will help you stay motivated and on track. If you don’t have a goal, you’ll likely wander aimlessly and never get anywhere.
For Dalio, wealth isn’t a worthy end in itself because it doesn’t do much to improve your life beyond the necessities. Instead, he suggests starting with your ultimate, non-monetary goals and then figuring out how to get there financially.
Pursuing too many objectives at once dilutes your focus and prevents you from achieving any of them.
Identify and don’t tolerate the problems that stand in the way of your achieving those goals.
The obstacles you face on your path to success are the problems you face. Dalio claims that in order to identify issues, one must put aside pride, conduct an honest self-examination, and develop an objective understanding of one’s own inadequacies.
You must be completely attentive to suggestions for improvement and honest about your own role in any setbacks. Also, when expressing your problems, be as specific as possible so that you can come up with effective remedies.
Accurately diagnose the problems to get at their root causes.
The issue you’re experiencing may be a symptom of the underlying source (what Dalio calls the “root cause”), which may have caused a domino effect. In a medical context, the disease itself is the true cause of your issues. You need to treat the sickness itself to alleviate the symptoms. In the same way, you can’t find lasting solutions to your issues until you pinpoint where they originated.
For many, the relief and satisfaction that comes from finally figuring out a tricky situation is worth the time and effort it takes to get it resolved as soon as possible. However, trying to fix the symptom instead of the underlying issue can lead to more complications. Refer to the following as a checklist to ensure that you get to the bottom of the problem.
Keep asking yourself, “Why didn’t things proceed as they should have?” until you locate the root cause of the issue.
Design plans that will get you around them.
Keep in mind that the goal of any problem diagnosis is to find solutions that will make the situation better. If not, we might as well not bother. According to Dalio, once you’ve identified the issue at hand, you should develop a comprehensive strategy that takes into account not only the immediate effects of your proposed solutions but also their second- and third-order knock-on effects.
If you come up with a new strategy, be sure to let everyone know about it. Keep in mind that just because you explain your strategy to others does not ensure they will support it.
Maintain brevity and directness of thought, but make sure everything you say serves your goal. The strategy needs to be comprehensible and motivating, while also serving to remind workers of the larger purpose of the company.
Do what’s necessary to push these designs through to results.
The next step, after making a plan, is to put it into action. Dalio recommends keeping strong work habits, keeping track of your progress, and being motivated as ways to succeed. Things like using checklists to keep on track, persevering in the face of setbacks, and rewarding oneself after achieving a goal are all examples of acts that fall under this category.
