I run a 7-figure business. But for years I wasted millions making...

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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:🧵

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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: ↓

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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:

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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:

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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:

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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:

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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:

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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:

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"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."

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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:

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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.

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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.

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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…

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Thanks for reading!

If you enjoyed this, then follow me @dickiebush for more posts on digital writing and digital businesses.

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