Five habits that made billionaire Ray Dalio successful

Ray Dalio has been called “Wall Street’s Oddest Duck” for his highly unusual approach to management, but no one has ever questioned his brilliance. He turned his company Bridgewater Associates into the world’s largest hedge fund, with $160 billion in assets, and amassed a personal fortune estimated at around $15.2 billion. Dalio runs Bridgewater according to the theory of “radical transparency”, which means that all meetings and interviews are recorded and archived, and any level of employee is encouraged to criticise another if necessary. Every Bridgewater employee is given a copy of the 123-page manual he wrote on leadership. Here we have summarised some excerpts from a section in which Dalio outlines his habits:

Working for himself and not what others wanted him to do

Dalio writes that he hated school as a boy because he could not fi nd practical applications for things he was forced to memorise. He decided that he wanted to be successful, requiring him to be motivated. And to be motivated, he had to work for himself.

Coming up with the best independent opinions he could to advance his goals

When he started investing as a kid, he began cutting out coupons from Fortune magazine that could be mailed in for annual reports for Fortune 500 companies. He gathered as many as possible and took an amateur shot at fi guring out the market. It’s the same attitude he’s taken toward managing his employees.

Surrounding himself with smart people and learning from them

Dalio says that as a novice investor, he started asking the opinion of anyone he deemed a somewhat savvy investor — his stockbroker, the people he caddied for, and even his barber. “I never cared much about others’ conclusions — only for the reasoning that led to these conclusions,” he writes. “ Through this process, I improved my chances of being right, and I learned a lot from a lot of great people.”

Being wary of overconfidence and limiting exposure to high-risk situations

Dalio has grown Bridgewater so tremendously because he lowers his risk as much as possible before making a decision. “Sometimes when I know that I don’t know which way the coin is going to fl ip, I try to position myself so that it won’t have an impact on me either way. In other words, I don’t make an inadvertent bet,” he writes.

Reflecting on how he made decisions and figuring out why they led to either success or failure

A major portion of Dalio’s manual is dedicated to decision-making and analysis of results. He says that learning to appreciate failure early on was very valuable for him: “I learned that each mistake was probably a refl ection of something that I was (or others were) doing wrong, so if I could fi gure out what that was, I could learn how to be more effective.”.