I run a 7-figure business.
But for years I wasted millions making horrible decisions.
So I spent 100+ hours studying Ray Dalio to learn his best mental models for decision-making.
Here's what I found:🧵
In 1982, Ray Dalio invested $1M ($3.26M today) into Mexico.
Dalio expected a debt crisis and believed Mexican banks had over-leveraged by lending more than could be repaid.
Dalio predicted that Mexico would default on its debt.
But things didn't go to plan: ↓
Dalio expected a debt crisis and believed Mexican banks had over-leveraged by lending more than could be repaid.
Dalio predicted that Mexico would default on its debt.
But things didn't go to plan: ↓
In August 1982, Mexico defaulted ("Tequila Crisis").
But the broader U.S. economic recession Dalio anticipated didn't materialize.
As a small firm of 8-10, Bridgewater was on the brink.
This defining moment helped Dalio develop one of his best decision-making frameworks:
But the broader U.S. economic recession Dalio anticipated didn't materialize.
As a small firm of 8-10, Bridgewater was on the brink.
This defining moment helped Dalio develop one of his best decision-making frameworks:
VIDEO
Dalio developed the "Believability-Weighted Decision Making" model.
In this thread, I’ll cover:
• What it is
• Why it works
• How you can master it
Let’s dive in:
In this thread, I’ll cover:
• What it is
• Why it works
• How you can master it
Let’s dive in:
Before deciding on anything, Ray Dalio finds the most credible people in the field:
• For finance, it was Warren Buffett
• For accounting, it was David Einhorn
• For spirituality, it was Laurence Freeman
Here are 3 reasons why this works:
• For finance, it was Warren Buffett
• For accounting, it was David Einhorn
• For spirituality, it was Laurence Freeman
Here are 3 reasons why this works:
1. Overconfidence is a mind-killer.
Economist Daniel Kahneman says overconfidence is our biggest bias as humans.
Dalio knew his brain's "fight or flight" response made him fear being wrong.
The solution? Dalio used thoughtful disagreement:
Economist Daniel Kahneman says overconfidence is our biggest bias as humans.
Dalio knew his brain's "fight or flight" response made him fear being wrong.
The solution? Dalio used thoughtful disagreement:
VIDEO
2. Ego is the enemy.
At Bridgewater, Dalio cultivated a culture where flaws were badges of honor, not shame.
Dalio said great decision-making is a battle to overcome biases by balancing our frontal and subliminal minds.
Here's the science behind it:
At Bridgewater, Dalio cultivated a culture where flaws were badges of honor, not shame.
Dalio said great decision-making is a battle to overcome biases by balancing our frontal and subliminal minds.
Here's the science behind it:
VIDEO
3. Dalio wanted Bridgewater to be an "idea meritocracy."
The best ideas win, regardless of where they came from.
• Constant feedback
• Independent thinkers
• Radical transparency
Dalio shares 3 steps to create a successful idea meritocracy:
The best ideas win, regardless of where they came from.
• Constant feedback
• Independent thinkers
• Radical transparency
Dalio shares 3 steps to create a successful idea meritocracy:
VIDEO
"Pain + Reflection = Progress"
• Meetings at Bridgewater are recorded.
• Employees are encouraged to experiment.
• Employees are rated on their openness to criticism.
Actively seeking out dissent and stress-testing your views is like a "mental workout."
• Meetings at Bridgewater are recorded.
• Employees are encouraged to experiment.
• Employees are rated on their openness to criticism.
Actively seeking out dissent and stress-testing your views is like a "mental workout."
Dalio says anyone can improve their decision-making by:
1. Writing down criteria for decisions.
2. Consulting multiple experts for ideas.
3. Committing to "radical open-mindedness."
Our instinct is to defend our ideas, but this is a mental bias most take too long to overcome:
1. Writing down criteria for decisions.
2. Consulting multiple experts for ideas.
3. Committing to "radical open-mindedness."
Our instinct is to defend our ideas, but this is a mental bias most take too long to overcome:
The results speak for themselves.
Since its founding, Bridgewater's Pure Alpha fund has averaged 12% annual returns (industry avg is 5-8%).
It's made money in 25 of the last 28 years, including 2008. All while managing $154 billion.
Since its founding, Bridgewater's Pure Alpha fund has averaged 12% annual returns (industry avg is 5-8%).
It's made money in 25 of the last 28 years, including 2008. All while managing $154 billion.
TL;DR of Dalio's "Believability-Weighted Decision-Making" model:
• Accept your flaws
• Seek domain experts
• Promote thoughtful disagreement
• Create a culture of candid transparency
In short:
Surround yourself with the smartest people who will challenge you.
• Accept your flaws
• Seek domain experts
• Promote thoughtful disagreement
• Create a culture of candid transparency
In short:
Surround yourself with the smartest people who will challenge you.
That's it!
I study mental models to help me build my digital business.
But most people don't know I made my first $10k online as a ghostwriter.
This ultimately helped me escape the Wall Street rat race.
Become a Premium Ghostwriter in 5 steps here: x.premiumghostwritingblueprint.com/?el=dickie_aut…
I study mental models to help me build my digital business.
But most people don't know I made my first $10k online as a ghostwriter.
This ultimately helped me escape the Wall Street rat race.
Become a Premium Ghostwriter in 5 steps here: x.premiumghostwritingblueprint.com/?el=dickie_aut…
Thanks for reading!
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If you enjoyed this, then follow me @dickiebush for more posts on digital writing and digital businesses.
Then, I'd appreciate it if you jumped back to the top and reposted the first post to share it with others:
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