Hedge fund billionaire Ray Dalio, the founder of $160 billion Bridgewater Associates, is passing on his famed principles to the youth — in the process hoping to help bridge society’s widening divisions.
In the expectation that kids today will likely inherit what could be a “much more difficult world,” the 70-year-old investor released on Tuesday a condensed, illustrated version of his 600-page best-seller, "Principles: Life and Work.”
Entitled "Principles for Success”, the 157-page format is what Dalio described as a book for “all ages.”
The billionaire has shared bits of the book with his 6-year-old grandson, and parents tell him that their 10- and 12-year-old kids are comprehending the material. Dalio insisted it's also ideal for adults in search of a quick read.
"A lot of people, parents with their kids and school teachers, asked for it, and other people were saying, 'You got your 600-page book, can you make it a quicker read?' That's what prompted it," Dalio told Yahoo Finance in a phone interview.
His original 600-page tome was translated in 34 languages, and sold more than 2.2 million copies worldwide.
Dalio runs the largest and most profitable hedge fund firm in the world, and has recently warned about the growing effects of income inequality. He attributes his success to the hundreds of principles he's accumulated throughout his life.
A self-described average student early in his life, Dalio believes a principles-based approach would have "created a more curiosity-based learning" for him, rather than being "forced to digest" the curriculum.
"I think the reality of life is so much different than the way you're taught," Dalio explained.
"In school, it's always, not to be yourself. They don't teach you to think for yourself. They don't teach you as much to fail by mistakes. They don't teach you everybody has strengths and weaknesses,” he said. “They don't teach you the ability to see it through other's eyes. And, these are the keys to success."
Failure as a lesson
Today, as a grandfather, he's worried about the younger generation, mainly since much of the learning process teaches students with the notion that failure is bad.
In the book, Dalio writes that the "most important" principle is to "think for yourself while being radically open-minded." He writes that a critical part of life involves encounters and decision-making, and with that comes failures and mistakes, then learning and growing from those experiences as you move forward.
"The fear of failure and the self-esteem loss that people have associated with failure stand in the way of their success," Dalio said.
"It's like, if you have a success, you don't learn anything from the success, really, because you already did the thing that gives you the success. You don't correct,” the billionaire said. “And, I've watched so many people have a fear of failure and a self-esteem problem with failure that stands in the way of them flourishing."
One of his "most fundamental" principles he highlights in the book is, "Knowing what is true is essential for making good decisions."
As he explained, “a lot of people confuse what they wish was true, and they let it stand in the way of what is true because they find it unpleasant to look at what's true. But, if you look at the unpleasant things, then you can deal with them," Dalio said.
He compared knowing what is true to a patient finding out that they have a terrible disease, so that they can treat and manage it.
"I have an expression, 'If you worry, you don't have to worry. If you don't worry, you need to worry. If you worry, you can take care of the thing,'" Dalio said.
The investor added that right now, people legitimately have a "problem in knowing what reality is." He attributed this major problem to two things: A desire to hold onto opinions, and fighting for them without seeing the other side.
"They'll never see things because people see things differently," he continued. "Everybody sees things differently. If you're holding onto your opinions, which could be wrong opinions, but you're holding onto them, they could be so easily stress-tested by trying to see it through the other's eyes. And, by also seeing it through the other's eyes, it allows you to move forward together, and we are not doing that."
‘There’s anger. You see it around the world.’
Dalio has been on a crusade against growing political polarization and a society in which the working and middle classes are falling behind. He attributes a lot of these problems to a society in which people are "yelling at each other" and "creating biased perspectives" and "such distortions."
It’s all a symptom of not being able to recognize the truth, Dalio explained. And while he hopes that will change, he sees a probability of it getting worse before it gets better — largely because of how multifacted the problem actually is.
"There's the wealth gap. There's the values gap. There's anger. You see it all around the world,” the billionaire said. “And history has shown that people respond with fighting by fighting, and then things are difficult."
As a result, the investor worries what the next economic downturn will be like, and the younger generation will inherit what is "likely to be a much more difficult world."
He added: "These are times that are good right now. This is the best of time, and look at the fighting." Rather than people coming together, they'll most likely become "more emotional and more antagonistic."
It goes back to a lesson in the book where he explains that the "two biggest barriers" everyone faces are ego and what he called "blind-spot barriers." The ego prevents one from acknowledging weaknesses, while the blind-spot exists because everyone sees things differently.
"Everybody has these opinions they are so attached to, and if there's a disagreement, how do you know you're not the wrong one? It would be so much better if everybody could see it through each others' eyes," he explained.
However, Dalio says that by surrounding oneself with insightful people, there can be thoughtful disagreement and learning through sharing different viewpoints. This concept is the "radically open-minded" approach Dalio often touts at his investment firm, Bridgewater Associates.
The key is working together, empathizing with one another, and using skills and strengths to solve a bigger problem.
"I think we are dealing with it now," he said. "We have enough resources right now to have so much more equal education, so much more equal opportunity, and being together, and approaching our challenges together, but I worry that the fight between people is going to cause the pie to shrink rather than expand and the division of the pie to be worse."
At present, he says that the top principle should be, "How do we work together above ourselves to see things through others' eyes to make [the pie] bigger and to divide it better with mutual caring?"
"Or, are we going to fight each other and make the pie shrink and be in a war with each other? We have the capacity to make our lives so much better," Dalio said, adding that "when the cause that you are fighting for is more important than the system for resolving your disputes, the system is in jeopardy.'"
