Ray Dalio: Principles, Failure, and the Formula for a Successful Life [From the Archive]

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This isn't your average business podcast and he's not your average host. This is the James Altucher Show.

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Presenting the Archive. Classic episodes that remain timeless. The raw, unfiltered conversations from the early days in which people shared their failures and showed us exactly how they rebuilt everything from the ground up.

**James Altucher** (1:37)
Are you ready?

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Ready!

**James Altucher** (1:38)
All right. I've got...
Ray Dalio in the house at the James Altucher Show. Ray Dalio is known probably best for running the largest hedge fund in the world with $150 billion in assets. Forbes has you listed at net worth of $17 billion. But I really wanna talk about Let's talk. a little bit about your book, Principles, which are the life and work principles plus a little bit of memoir by which you kind of guide your life and build your business and so on. So welcome to the show, Ray.

**Ray Dalio** (2:09)
Thanks. Appreciate you having me.

**James Altucher** (2:11)
Ray, it's a great book. I highly recommend anyone read this. Actually, you know what? I have just a side question to start out with. How accurate do you think Forbes is about people? Not about you specifically, but just in general?

**Ray Dalio** (2:22)
Probably not very.

**James Altucher** (2:24)
Because like how do they come up with that number? Do they add up fees or something?

**Ray Dalio** (2:26)
No, no, no, no. And I guarantee it's not that number, but you're exactly right. I think they do the best and nobody wants to get into it. And so it's a little bit awkward, right?

**James Altucher** (2:38)
Right. But anyway, enough of that. We're going to focus on principles. You started Bridgewater in the 70s.
I really want to fast forward to the critical point right in the beginning when you made a mistake on your financial predictions of what was going to happen in the case of defaults in Mexico and so on. And you basically went, I mean, obviously your business is hugely successful, but initially that after several years, you went broke. Like your business was done at the age of 34 And I can tell you from my own experience, when that happened to me, I kind of just psychologically couldn't handle it. And what I'm really interested in is how you then said, okay, you were in a very similar position to me. You had two kids, you had a mortgage, and you said, okay, I'm just going to keep on going forward and rebuilding. And you don't really address as much in here, the psychology it takes to do that, because I think that's immensely difficult.
I think most people don't survive those moments.

**Ray Dalio** (3:44)
No, I think you're faced with choices, right? I mean, okay, you still have to decide what you're going to do. Am I going to put on the tie and get on the train and commute to Wall Street and do that thing? Or what am I going to do, right? So you face the choices and you just have to calm down and then you have to think carefully and you have to make a choice. And those are the times where it tests your values, what matters most to you, right? So for me, doing my own thing and whatever it meant, I had to do that and I had to figure out how to do it, right? So like in the book, I sort of explain, I can't do this crashing anymore.
It's not good for my family, it's not good. So how do I change? What did I do? And it made profound changes in my life.
It gave me the humility I need to balance with my audacity.
It made me really, really worry about being wrong and the consequences of being wrong. And it made me find ways of dealing with it so that I wouldn't have those experiences again without giving up my upside. In other words, I wanted all the upside, but the upside came with the downside. In other words, you take more risk, you may have more upside, you may have a downside. So how do you do that? So for me, I had to calm myself down and think, how do I do that? And one of the things, like I say, that fear of being wrong was a blessing, one of the greatest blessings that ever happened to me, because it taught me an open-mindedness. Made me think, how do I know I'm right?