‘Pain + Reflection = Progress’: 13 brilliant quotes from hedge-fund legend Ray Dalio

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“The main reason I write the daily observations is because, I want to know where I’m wrong”

At the 2011 Bloomberg Markets 50 Summit, Dalio stated that he receives feedback and criticism from a wide range of investors every day.

A hedge-fund manager stated that “the main reason for his daily observations is that he wants to know where he is wrong.” So, very often it helps him if someone tells something, and he wants to make a varied bet without any controversy.

“I pay about a third in taxes, I give away about a third, and I follow the law.”

In 2011, Dalio appeared on PBS in Charlie Rose’s program to talk about the principles of his firm, Bridgewater.

“I think I did everything right,” he said. “I did well when others didn’t. I would make a fifth of the profits. I pay about a third in taxes, I make about a third, And I obey the law. And if I am doing something, they think it is wrong, I want to know. ”

“He who lives by the crystal ball will eat shattered glass.”

Speaking on a panel at the New York Times Deal Book Conference in 2012, Dalio warned that the timing forecast of the Federal Reserve’s raising rates is perhaps a foolish one.

Dalio said that, “he who lives by the crystal ball will eat shattered glass.”

“Inflation and growth are the two main drivers of asset class returns.”

Dalio once sat on the Council of Foreign Relations with CNBC’s Maria Bartiromo to offer some advice to the average investor. At that time, he explained how the prices of asset class returns affected by inflation and growth.

He said, “inflation and growth are the two primary drivers of asset class returns.”

” When growth is slower than expected, then the price of shares decreases. When inflation is relatively high, then bonds decrease. When inflation is lower than expected, then bonds rise. ”

 “Demand is best measured in terms of spending.”

“Demand is best measured in terms of spending,” said Dalio in the Council on Foreign Relations in 2012. “You know, I think in traditional economics, it is a mistake to count it in terms of the number of products.

“Pull in your belt, spend less, and pay off past commitments “

In an interview with Barone in 2012, Dalio stated that there are three types of deleveraging:

Austerity: “Pull in your belt, spend less, and pay off past commitments ”
Debt restructuring: “Creditors are underpaid or paid over a more extended time period or at a lower interest rate”

Printing of money: “Usually happens when interest rates are near zero, since you can no longer lower interest rates”

He said a beautiful deleveraging can only balance the three options.

 “Almost everything is like a machine.”

Dissimilar many hedge-fund managers who are stuck to their computer screens day and night monitoring movements in markets, Dalio spends most of his time trying to figure out how economic and financial events fit together into a coherent framework Occur.

“Nearly everything resembles a machine,” he revealed to The New Yorker in 2011. “Nature is a machine. A family is a machine. The life cycle resembles a machine.”
He added “And afterward everything else I see as fundamentally an issue. So how accomplishes the machine work that you have a financial crisis? How is the work going to end? What is the idea of that machine? And What is human instinct? ” And how might you grow a network of people to run a business? ”

 

“I don’t get stuck in the moment.”

Speaking on CNBC’s Squawk Box morning Show in 2012, Dalio said: “I don’t get stuck in the moment.”

“I think a lot of people are responsive … They see things in a short-term way when they are directly against it. If it didn’t happen earlier in your life, you’re not paying attention, you don’t seem like it is possible. But almost all the important events have never happened before in your life… The monetary system broke down… Oil shock… It did not happen before…

When I am watching it, I feel that these things happen in such a way that they happen again and again … and then I have a blueprint for this … and this rule if it happens So that’s going to happen because it’s all done before that. ”

 
“Pain + Reflection = Progress”

Dalio told Business Insider in May 2017 that he had a theory for success.

He said, “Pain plus reflection equals progress,”.

“Pain, when we are in a moment of pain, we do not reflect, but after that moment of pain, at whatever point someone makes a mistake, about anything, it is not just the market, it is the life.  Probably a message there. ”

The average man “tends to buy high and sell low.”

In September 2017, an interview with Business Insider CEO Henry Blodgett, Dalio said: “The average guy becomes a lot more responsive if you look at the purchases and sales that they make. When something grows, they are more likely to buy this They think, ah, it’s a good investment. They don’t know how to measure it in terms of oh, is it a more expensive investment that is more likely to go down? ”
He said: “This is what they attract. They go to buy high and sell low, and so an average man should not play this game in such a way…”

“To be successful, you’re betting against consensus, and you have to be right.”

“To be successful, you’re placing bets against consensus, and you have to be right,” Dalio said in an interview with Business Insider CEO Henry Blodget in September 2017.

He said: “Consensus is the built-in price. So, because consensus is the built-in price, and assets price themselves in such a way that they are all competing, and they are of equal value in a certain sense. There is a risk premium of equity over cash and bonds, whatever they are, but basically, they all price this way. So, like it’s going to a sports team or in other words betting or horse racing. ”

“In case you’re not failing, you’re not pushing your limits, and in case you’re not pushing your limits, you’re not maximizing your potential.”

He wrote on Facebook in July 2018, “The challenges you face will test and strengthen you”.

“In case you’re not coming up short, you’re not pushing your cutoff points, and in case you’re not pushing your cutoff points, you’re not maximizing your latent capacity.”

“Listening to uninformed people is worse than having no answers.”

“Find out who is responsible for whatever you want to understand and then ask them,” he wrote on his Facebook in October 2018.

“Listening to uninformed people is worse than having no answers.”