Principles by Ray Dalio Book Summary and Notes

“Truth – more precisely, an accurate understanding of reality – is the essential foundation for producing good outcomes.” ― Ray Dalio
Ray Dalio and his new book, Principles, need little introduction. He has a net worth of over $18.9 billion+, made through the hedge fund he started. The book is a memoir of his life and breaks down his principles for success in clear-cut detail. Plus, Bill Gates endorses the book on the cover with this quote, “Ray has provided me with invaluable guidance and insights that are now available to you in Principles.”
Here are the biggest takeaways I got through reading the entire book.

Having met some of the richest and poorest people in the world, he can confidently say that happiness is not correlated with material success. You can be just as happy and fulfilled as a carpenter versus being the President of the United States.
Meaningful relationships and work are most important to him. That’s what he works for because all the money in the world can’t buy these items. Money can’t buy everything and doesn’t hold intrinsic value. Its value is in what it can purchase you.
Traveling and meeting poor, disabled, or local people helped Ray discover that greatness isn’t correlated with conventional forms of success. These interactions are as valuable as what he has learned from meeting the top entrepreneurs, scientists, and leaders of the world.
Judging someone before really seeing things through his or her eyes blocks you from understanding his or her circumstances.
Seeing how someone came to see things in a different perspective than you is invaluable.
You have more friends during good times. Bad times reveal who your true friends are.
Humans are shortsighted and more emotional than logical. They will sell too much when times are bad and buy too much when times are good. This is true for relationships just like it is for investing.
One of Ray’s employees made a costly mistake of forgetting to make a trade. This cost hundreds of thousands of dollars. Rather than firing him, which would have only promoted a culture for other employees of hiding their mistakes, re-created a mistake a log. This log tracked mistakes, which helped the company improve over time and not make the same mistakes.
You can have almost anything you want but you can’t have everything you want.
Timing is everything. He watched the richest man in the world go broke from the wrong timing while cornering the silver market.
Nothing is certain or a sure bet. He lost most of his net worth early on because of a supposed sure bet. He made the wrong investment decision from arrogance because he was always right, which put his firm out of business. This loss was the best thing to happen to him because it lead to always questioning if he is right rather than assuming it.
He used computer algorithms to help his investing. When the conclusion of the machines was different than his conclusion, he usually discovered he overlooked a factor the machine didn’t. But sometimes, he considered a new factor the machine didn’t, which he added to the algorithm. In this way, they taught each other. It was a great partnership. The machine could predict much better and faster than humans. But humans can use imagination and logic better than machines.
Always look for other possibilities even if it doesn’t look like anything else is possible in the near future. Ray needed high returns and low risk but it seemed the only options were high risk and high return or low risk and low return. He kept searching and eventually discovered the “Holy Grail” of investing.
Ray’s Holy Grail to investing can be applied to any business.