This week I finished the chapter 3 of Principles. It's not easy to read this content. because there are too many economical words.
Dalio's Abyss
This chapter focuses on the author's investing history during 1979-1982. Due to Dalio's excellent academic scores in HBS(Harvard Business School) and successful experiences from his early investment, he becomes very self-confident and a little arrogant. By the way, he witnessed how his friend who was the richest man in the USA before lost money during the process of investing silver. Then Dalio made a prediction on the American economy in the near future. He said in one of his essays in 1981:
The enormity of our debt implies that the depression will be as bad or worse than witnessed in the thirties.
However, the reality was the opposite as Dalio's prediction. The economy of the USA at that time was very prosperous. He almost lost all his money, and every employee left his company.
Finding a path to be right
After the big depression of Dalio's own, he still decided to take risks for ambitious goals. One lesson he had to learn is that how to know his opinions or thinkings are right. His solution is studying from successful and smart people, and keep being "radically open-minded to allow others to point out what he might be missing".
And the detailed solutions from the original text of his book are below:
- Seek out the smartest people who disagreed with me so I cound try to understand their reasoning.
- Know when not to have an opinion.
- Develop, test, and systemize timeless and universal principles.
- Balance risks in ways that keep the big upside while reducing the downside.
Currently, I only understand the first item, the other three items are still not understood by me completely. So let the reading adventure help me understand and apply these actions in the future.
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