1 00:00:02,240 --> 00:00:06,800 Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio. 2 00:00:09,280 --> 00:00:11,799 Speaker 1: What can I say about this week's podcast? I sit 3 00:00:11,880 --> 00:00:16,760 Speaker 1: down with Ray Dahio of Bridgewater Associates and you have 4 00:00:16,840 --> 00:00:19,560 Speaker 1: to hear the whole thing there. I can't even preface 5 00:00:19,600 --> 00:00:24,160 Speaker 1: it by describing it. He's Ray Dahio. It's awesome. I 6 00:00:24,200 --> 00:00:27,040 Speaker 1: will share a quick story about the first time I 7 00:00:27,080 --> 00:00:30,360 Speaker 1: met Ray. I had been reading various things. He had 8 00:00:30,400 --> 00:00:33,760 Speaker 1: been posted an early version of of Principles, and I 9 00:00:33,800 --> 00:00:39,040 Speaker 1: loved his idea of radical transparency and failure learning from 10 00:00:39,040 --> 00:00:43,400 Speaker 1: failure era mistakes. Failures, they are an opportunity to learn, 11 00:00:43,600 --> 00:00:46,400 Speaker 1: and we should not ignore our mistakes, but we should 12 00:00:46,440 --> 00:00:49,280 Speaker 1: own them and learn from them. And because of that, 13 00:00:49,320 --> 00:00:52,319 Speaker 1: I started doing my annual Mia culpus. I've been doing 14 00:00:52,320 --> 00:00:55,080 Speaker 1: it for about a decade. So I wanted when there 15 00:00:55,120 --> 00:00:58,200 Speaker 1: was an event, I wanted the opportunity to, uh say 16 00:00:58,240 --> 00:01:00,600 Speaker 1: thank you to him. I couldn't get you were near 17 00:01:00,680 --> 00:01:03,920 Speaker 1: the guy after he spoke, where a million institutional salespeople 18 00:01:03,920 --> 00:01:06,880 Speaker 1: all over him. I step outside and I'm just standing there, 19 00:01:06,959 --> 00:01:10,720 Speaker 1: kind of fuming, and I see the scrum coming towards me. 20 00:01:10,720 --> 00:01:14,280 Speaker 1: It's Ray and his assistant and all these salespeople and 21 00:01:14,400 --> 00:01:16,399 Speaker 1: it was sort of like an Andy Cap cartoon with 22 00:01:16,400 --> 00:01:19,520 Speaker 1: these guys all trying to get in there. Eventually he 23 00:01:19,800 --> 00:01:22,759 Speaker 1: is the scrum works its way, so he's like two 24 00:01:22,760 --> 00:01:26,440 Speaker 1: ft from me, and I just looked up and said, hey, Ray, 25 00:01:26,520 --> 00:01:28,280 Speaker 1: I don't have a business card for you. I just 26 00:01:28,319 --> 00:01:30,640 Speaker 1: wanted to say thank you. And he kind of swiveled 27 00:01:30,640 --> 00:01:32,920 Speaker 1: around and looked at me. Who are you. I introduced 28 00:01:32,959 --> 00:01:36,720 Speaker 1: myself and I tell him hey, because of your uh 29 00:01:36,959 --> 00:01:40,399 Speaker 1: concept of of owning mistakes and the value of failure, 30 00:01:40,720 --> 00:01:44,679 Speaker 1: I started posting my Mia Culpaz publicly. Here's where I 31 00:01:44,720 --> 00:01:46,760 Speaker 1: screwed up. Here is what I learned. And we just 32 00:01:46,920 --> 00:01:49,640 Speaker 1: chatted for two or three minutes, and you could feel 33 00:01:49,680 --> 00:01:52,800 Speaker 1: the white hot hate of all these salespeople who were 34 00:01:52,840 --> 00:01:56,680 Speaker 1: looking for uh entree for a commission business with Bridgewater 35 00:01:57,080 --> 00:01:59,800 Speaker 1: and I'm just chit chatting and saying thank you. So 36 00:02:00,200 --> 00:02:02,960 Speaker 1: he and his assistant get in the car with a 37 00:02:03,080 --> 00:02:07,280 Speaker 1: giant stack of papers and folders and stuff you know 38 00:02:07,320 --> 00:02:10,919 Speaker 1: they're throwing out immediately um and I basically said, gee, 39 00:02:10,960 --> 00:02:13,000 Speaker 1: I have to sit down and have a longer conversation 40 00:02:13,400 --> 00:02:16,560 Speaker 1: with that guy. He's pretty fascinating Well here it is 41 00:02:16,600 --> 00:02:21,000 Speaker 1: almost a decade later, with no further ado. My conversation 42 00:02:21,280 --> 00:02:28,160 Speaker 1: with Ray Dalio, my guests this week requires little in 43 00:02:28,160 --> 00:02:31,160 Speaker 1: the way of introduction from me. His name is Ray 44 00:02:31,280 --> 00:02:36,040 Speaker 1: Dalio and he is the founder, chairman, and outgoing CEO 45 00:02:36,600 --> 00:02:40,679 Speaker 1: of Bridgewater Associates, the world's largest hedge fund, managing over 46 00:02:40,680 --> 00:02:44,840 Speaker 1: a hundred and sixty billion dollars in assets for institutional clients. 47 00:02:45,320 --> 00:02:49,359 Speaker 1: Ray continues to work as Chief Investment officer there. According 48 00:02:49,440 --> 00:02:54,520 Speaker 1: to Fortune, Bridgewater is the fifth most important private company 49 00:02:54,600 --> 00:02:57,800 Speaker 1: in the United States. They have made more money for 50 00:02:57,840 --> 00:03:01,000 Speaker 1: their clients than any other fund in his stree. His 51 00:03:01,120 --> 00:03:05,520 Speaker 1: new book, Principles, is a New York Times bestseller. Ray Dalio, 52 00:03:05,720 --> 00:03:08,480 Speaker 1: Welcome to Bloomberg. Thanks nice to be here. I have 53 00:03:08,600 --> 00:03:12,680 Speaker 1: been looking forward to this conversation for so long. Let's 54 00:03:12,760 --> 00:03:18,720 Speaker 1: jump right in with Bridgewater just celebrated its forty anniversary. 55 00:03:18,840 --> 00:03:23,040 Speaker 1: How has the company's evolution surprised you since you first 56 00:03:23,120 --> 00:03:26,040 Speaker 1: launched the firm in the nineteen seventies. Well, it surprises me, 57 00:03:26,040 --> 00:03:28,680 Speaker 1: an every day, every different which way I mean. I 58 00:03:28,680 --> 00:03:31,040 Speaker 1: don't know how to summarize it. Uh, you know, I 59 00:03:31,080 --> 00:03:33,720 Speaker 1: started it out of a two bedroom apartment with a 60 00:03:33,720 --> 00:03:37,440 Speaker 1: guy played rugby with and I was just playing my game, 61 00:03:37,480 --> 00:03:39,600 Speaker 1: and I just never imagined that it would be anything 62 00:03:39,640 --> 00:03:42,000 Speaker 1: like this. So you go through to these different phases. 63 00:03:42,040 --> 00:03:45,080 Speaker 1: You know, first phases you have to take care of everything. 64 00:03:45,120 --> 00:03:48,000 Speaker 1: You have to hire people, you hire your pals. Then 65 00:03:48,040 --> 00:03:50,680 Speaker 1: you realize that you have to manage people, and then 66 00:03:50,720 --> 00:03:52,680 Speaker 1: you have to you know, I had to get the 67 00:03:52,680 --> 00:03:55,320 Speaker 1: file cabinets myself and all that. Then you get people 68 00:03:55,320 --> 00:03:57,920 Speaker 1: who get the file cabinets, and then you have to 69 00:03:57,960 --> 00:03:59,800 Speaker 1: manage them that. You know, it goes through all of 70 00:03:59,840 --> 00:04:03,400 Speaker 1: its phases, and now, um, I'm at the wonderful phase 71 00:04:03,680 --> 00:04:06,280 Speaker 1: of being able to transition out of the management and 72 00:04:06,320 --> 00:04:09,680 Speaker 1: make other people successful. So I'm now a phase in 73 00:04:09,760 --> 00:04:13,320 Speaker 1: my life which I'm describing as entering the third phase 74 00:04:13,360 --> 00:04:16,360 Speaker 1: of my life of transitioning so that I'm making other 75 00:04:16,360 --> 00:04:19,720 Speaker 1: people successful. So every phase is different, you know, lots 76 00:04:19,720 --> 00:04:22,440 Speaker 1: of surprises. So let me tell you what surprised me. 77 00:04:22,839 --> 00:04:25,200 Speaker 1: In principles, in the first part of the book that 78 00:04:25,279 --> 00:04:30,000 Speaker 1: describes your history, you had roles in the creation of 79 00:04:30,040 --> 00:04:34,440 Speaker 1: each of the following products tips, the inflation protected treasury bonds, 80 00:04:35,040 --> 00:04:40,920 Speaker 1: US dollar futures, index, risk parity China's stock market, and 81 00:04:41,040 --> 00:04:44,719 Speaker 1: chicken McNuggets. Let's discuss each of those, but I have 82 00:04:44,839 --> 00:04:47,880 Speaker 1: to start with the outlier, chicken McNuggets. What was your 83 00:04:47,960 --> 00:04:51,680 Speaker 1: role when chicken McNuggets, Well, you know, I was trading commodities. 84 00:04:51,720 --> 00:04:55,680 Speaker 1: And when I say trading commodities down at a very 85 00:04:55,400 --> 00:04:59,080 Speaker 1: basic level of understanding. You know, how many pounds of 86 00:04:59,120 --> 00:05:02,760 Speaker 1: feed went in to a chicken or beef, uh, and 87 00:05:02,880 --> 00:05:05,279 Speaker 1: how that would grow. I liked it because it was 88 00:05:05,400 --> 00:05:08,239 Speaker 1: very mechanical and there was not no greater fool theory. 89 00:05:08,360 --> 00:05:10,640 Speaker 1: You know. The value of the meat was whatever it 90 00:05:10,760 --> 00:05:13,880 Speaker 1: sold for at the counter. And at the time that time, 91 00:05:13,920 --> 00:05:18,000 Speaker 1: I had institutional clients who were uh, you know, hedging, 92 00:05:18,160 --> 00:05:21,159 Speaker 1: and McDonald's was a client of mine, and some chicken 93 00:05:21,200 --> 00:05:25,560 Speaker 1: producers were clients of money main processing. Yeah, and um 94 00:05:25,960 --> 00:05:28,680 Speaker 1: McDonald's wanted to They came up with the idea of 95 00:05:28,680 --> 00:05:31,680 Speaker 1: the chicken McNugget. But the big problem that they had 96 00:05:31,800 --> 00:05:34,599 Speaker 1: at the time is there was a lot of volatility 97 00:05:34,880 --> 00:05:38,839 Speaker 1: in prices, in chicken prices, mostly because there was grain prices. 98 00:05:38,839 --> 00:05:41,560 Speaker 1: A chick is a tiny thing, it doesn't cost much, 99 00:05:41,560 --> 00:05:44,640 Speaker 1: but it's all the grain, and so they were worried 100 00:05:44,640 --> 00:05:48,160 Speaker 1: about you put out these at a fixed price on 101 00:05:48,240 --> 00:05:51,479 Speaker 1: the menu, and then the price volatility could kill them. 102 00:05:51,720 --> 00:05:54,320 Speaker 1: So they wanted to buy chicken at a fixed price. 103 00:05:54,360 --> 00:05:56,919 Speaker 1: But nobody produced chicken at a fixed price because there 104 00:05:57,000 --> 00:05:59,800 Speaker 1: was no chicken futures market. So I went to the 105 00:06:00,360 --> 00:06:03,480 Speaker 1: Lane processing and I said, would you like to do this? 106 00:06:03,839 --> 00:06:07,839 Speaker 1: And I calculated how they could essentially hedge their cost 107 00:06:08,200 --> 00:06:11,560 Speaker 1: by buying corn and soy meal futures, and then they 108 00:06:11,600 --> 00:06:14,320 Speaker 1: locked in the price for chicken McNuggets. And I loved 109 00:06:14,360 --> 00:06:18,320 Speaker 1: really commodities then I love that story. It's so fascinating 110 00:06:18,360 --> 00:06:21,680 Speaker 1: how a little bit of financial engineering and lo and 111 00:06:21,680 --> 00:06:25,160 Speaker 1: behold you have a consistent price for chicken. It was cool. Yeah, 112 00:06:25,279 --> 00:06:28,520 Speaker 1: and you did um dollar futures index. Was that with 113 00:06:28,800 --> 00:06:33,640 Speaker 1: Paul Tutor Jones volatility and the dollar and then he figured, 114 00:06:33,800 --> 00:06:37,280 Speaker 1: let's put together a basket and uh so we put 115 00:06:37,320 --> 00:06:39,520 Speaker 1: together a basket. We designed it, how it would it work. 116 00:06:39,680 --> 00:06:42,640 Speaker 1: We did the same thing with the CRB futures. It's engineering. 117 00:06:42,880 --> 00:06:47,159 Speaker 1: You've got to understand engineering. You have to understand the mechanics. 118 00:06:47,320 --> 00:06:50,240 Speaker 1: It's a fair basic fundamental thing whatever you do. And 119 00:06:50,279 --> 00:06:53,440 Speaker 1: so we understood a lot about engineering. I put together 120 00:06:53,480 --> 00:06:56,720 Speaker 1: those products. What about your role in the development of 121 00:06:56,880 --> 00:07:01,960 Speaker 1: China's equity markets, Well, yeah, I into there. I started 122 00:07:01,960 --> 00:07:05,479 Speaker 1: going nineteen eighty four to China, and uh because not 123 00:07:05,480 --> 00:07:08,160 Speaker 1: not for business or anything, because it was an interesting place. 124 00:07:08,800 --> 00:07:12,760 Speaker 1: Um and a matter of fact, the company that invited me, Siddek, 125 00:07:13,200 --> 00:07:15,920 Speaker 1: was the only company in China that was allowed to 126 00:07:15,960 --> 00:07:20,400 Speaker 1: deal with the outside world. They called it a window company. Anyway, 127 00:07:20,840 --> 00:07:24,120 Speaker 1: as they started to in night nine, start to think 128 00:07:24,120 --> 00:07:27,760 Speaker 1: about we need financial markets. There were seven people who 129 00:07:27,840 --> 00:07:29,520 Speaker 1: were in a room and that it was sort of 130 00:07:29,560 --> 00:07:32,120 Speaker 1: a dingy hotel room, and they had to start to 131 00:07:32,160 --> 00:07:34,920 Speaker 1: think about the markets. And I got to know them 132 00:07:34,960 --> 00:07:37,520 Speaker 1: and we started to think about how they would develop 133 00:07:37,720 --> 00:07:40,880 Speaker 1: a stock market, a bond market, and so on. So 134 00:07:40,920 --> 00:07:43,000 Speaker 1: I got to be a participant in that, and that 135 00:07:43,120 --> 00:07:47,240 Speaker 1: was a blast. These people have become, you know, lifelong friends, 136 00:07:47,480 --> 00:07:52,920 Speaker 1: so you know, since that time until now, we've been friends. 137 00:07:52,920 --> 00:07:55,480 Speaker 1: And then they've gone on to develop the fabulous financial 138 00:07:55,520 --> 00:07:58,200 Speaker 1: markets that are there and I'm still there. So it's great. 139 00:07:58,280 --> 00:08:00,720 Speaker 1: You know what I like is I like meaningful work 140 00:08:00,720 --> 00:08:03,400 Speaker 1: and meaningful relationships. I like work that I can get 141 00:08:03,440 --> 00:08:06,800 Speaker 1: my head into and I'm having an impact that's great, 142 00:08:07,160 --> 00:08:09,880 Speaker 1: and I love the meaningful relationships. If you could do 143 00:08:09,920 --> 00:08:12,000 Speaker 1: this with people you like over a period of time, 144 00:08:12,360 --> 00:08:16,000 Speaker 1: that's even the greatest reward. That phrase meaningful work and 145 00:08:16,080 --> 00:08:20,840 Speaker 1: meaningful relationships comes up in Principles over and over, not 146 00:08:21,000 --> 00:08:24,560 Speaker 1: just in the history but in the Life Principles part, 147 00:08:24,720 --> 00:08:28,680 Speaker 1: and it seems to be applied in the Work Principles part. 148 00:08:29,280 --> 00:08:33,160 Speaker 1: Tell us what led you to those two elements? Well, look, 149 00:08:33,440 --> 00:08:37,160 Speaker 1: I want it. I mean personally, I want the meaningful 150 00:08:37,160 --> 00:08:39,520 Speaker 1: work that I get excited about to be on a mission, 151 00:08:40,120 --> 00:08:42,760 Speaker 1: and then I love the meaningful relationships. It's as much 152 00:08:42,800 --> 00:08:45,840 Speaker 1: important to me as whatever business with success. And if 153 00:08:45,880 --> 00:08:48,520 Speaker 1: you put those two things together, being on a mission 154 00:08:48,520 --> 00:08:51,520 Speaker 1: with people who you love and that great mission mission, 155 00:08:52,000 --> 00:08:56,560 Speaker 1: it's um double rewards. And then it also reinforces each 156 00:08:56,559 --> 00:08:59,840 Speaker 1: other because if you're if you're doing in the meaningful 157 00:09:00,000 --> 00:09:02,640 Speaker 1: work and you have the meaningful relationships, you can be 158 00:09:02,679 --> 00:09:05,680 Speaker 1: tough with each other and you um, you know, you 159 00:09:05,720 --> 00:09:09,040 Speaker 1: get the devotion. The people who work at Bridgewater, a 160 00:09:09,080 --> 00:09:10,720 Speaker 1: lot of them who work there for a long time, 161 00:09:11,000 --> 00:09:13,280 Speaker 1: they would never think of working anywhere else because it's 162 00:09:13,320 --> 00:09:16,200 Speaker 1: like an extended family. You have to understand that money 163 00:09:16,240 --> 00:09:19,920 Speaker 1: as a reward, UH, is not a very satisfying reward 164 00:09:20,040 --> 00:09:23,360 Speaker 1: really in comparison to the meaningful relationships if you do. 165 00:09:23,520 --> 00:09:26,800 Speaker 1: Studies have been done on happiness right, and they said, 166 00:09:26,840 --> 00:09:30,080 Speaker 1: there's very little correlation between the amount of money that 167 00:09:30,120 --> 00:09:32,800 Speaker 1: you have passed a certain basic point. Once the basis 168 00:09:32,800 --> 00:09:36,080 Speaker 1: have covered, there's a diminishing returns, not much correlation. The 169 00:09:36,200 --> 00:09:40,880 Speaker 1: number one thing in source of happiness across countries everywhere 170 00:09:41,360 --> 00:09:44,079 Speaker 1: is a sense of community. So if you have both 171 00:09:44,120 --> 00:09:46,920 Speaker 1: of those things great or So I wanted those meaningful 172 00:09:46,920 --> 00:09:49,920 Speaker 1: work and reading for relationships, and then in order to 173 00:09:50,000 --> 00:09:53,480 Speaker 1: have those, I wanted to be radically truthful and radically 174 00:09:53,520 --> 00:09:56,559 Speaker 1: transparent with each other. Because if I'm going to have 175 00:09:57,120 --> 00:09:59,880 Speaker 1: a relationship with you or the people around me, I 176 00:10:00,040 --> 00:10:03,480 Speaker 1: need to have an idea meritocracy in which we are 177 00:10:03,960 --> 00:10:09,040 Speaker 1: radically truthful and radically transparent. And that's how the culture began, 178 00:10:09,120 --> 00:10:11,920 Speaker 1: and that's how what the culture is. You know, in 179 00:10:11,960 --> 00:10:15,760 Speaker 1: a nutshell, the culture is an idea meritocracy in the words, 180 00:10:15,760 --> 00:10:18,640 Speaker 1: the best ideas win out, UH, in which we're going 181 00:10:18,679 --> 00:10:24,280 Speaker 1: for meaningful work and meaningful relationships through being radically truthful 182 00:10:24,440 --> 00:10:28,080 Speaker 1: and radically transparent and that's been the key to the success. 183 00:10:28,559 --> 00:10:33,199 Speaker 1: Let's talk a little bit about mistakes. You describe mistakes 184 00:10:33,240 --> 00:10:37,960 Speaker 1: as opportunities to learn and improve, saying, the key to 185 00:10:38,080 --> 00:10:43,480 Speaker 1: success in life is learning how to fail well. Discuss well. 186 00:10:44,200 --> 00:10:47,080 Speaker 1: I think in order to be successful you have to 187 00:10:47,080 --> 00:10:50,120 Speaker 1: do five things. Basically, First, you have to know what 188 00:10:50,200 --> 00:10:52,960 Speaker 1: your goals your dreams are, and on the way to 189 00:10:53,000 --> 00:10:56,120 Speaker 1: going after those goals and dreams, you're going to encounter 190 00:10:56,520 --> 00:11:00,840 Speaker 1: your failures and your mistakes. A lot people think that 191 00:11:00,840 --> 00:11:04,640 Speaker 1: that's painful. Uh, those are your learning opportunity. So I 192 00:11:04,720 --> 00:11:10,040 Speaker 1: was saying pain plus reflection equals progress. In other words, 193 00:11:10,160 --> 00:11:14,600 Speaker 1: reflect what would you have done differently. So first step goals. 194 00:11:14,880 --> 00:11:18,800 Speaker 1: Second step problems on the way to goals, not tolering them. 195 00:11:19,120 --> 00:11:22,160 Speaker 1: Third step, you have to diagnose those problems to get 196 00:11:22,160 --> 00:11:25,160 Speaker 1: at the root causes. Many of those times, the root 197 00:11:25,240 --> 00:11:28,360 Speaker 1: causes is you how you're handling it. So you've got 198 00:11:28,360 --> 00:11:32,520 Speaker 1: to learn a lesson. Most people learn lessons through painful mistakes, 199 00:11:32,720 --> 00:11:37,480 Speaker 1: So I associate painful mistakes with learning. Okay, so first 200 00:11:37,520 --> 00:11:41,480 Speaker 1: goals problems. Then diagnose those problems to the root cause, 201 00:11:42,040 --> 00:11:44,840 Speaker 1: make a design of what you're going to do differently 202 00:11:44,840 --> 00:11:47,240 Speaker 1: In the future when the next one comes along. Those 203 00:11:47,280 --> 00:11:50,400 Speaker 1: are the principles I wrote down those principles. That's what 204 00:11:50,480 --> 00:11:53,800 Speaker 1: the book is mostly about, this collection of principles. So 205 00:11:54,640 --> 00:11:58,560 Speaker 1: number four, design ways of getting around them. Number five, 206 00:11:59,160 --> 00:12:02,280 Speaker 1: do those things pushed through the results. You keep doing 207 00:12:02,280 --> 00:12:04,360 Speaker 1: this over and over and over again, you're going to 208 00:12:04,440 --> 00:12:08,679 Speaker 1: be successful. I have another um little formula that basically 209 00:12:08,720 --> 00:12:14,240 Speaker 1: means that if you have your dreams, plus you embrace reality, 210 00:12:14,280 --> 00:12:17,920 Speaker 1: and you learn from reality, your painful realities, and you 211 00:12:17,960 --> 00:12:21,320 Speaker 1: have enough determination so you keep learning, you will inevitably 212 00:12:21,360 --> 00:12:23,440 Speaker 1: have a successful life. So those are the That's what 213 00:12:23,520 --> 00:12:27,360 Speaker 1: I mean. The value in learning is from mistakes, because 214 00:12:27,400 --> 00:12:31,040 Speaker 1: mistakes cues the fact that you learned something that that 215 00:12:31,200 --> 00:12:36,120 Speaker 1: something is wrong. But you need quality reflection. And when 216 00:12:36,120 --> 00:12:38,400 Speaker 1: I started, when I did this over a period of time, 217 00:12:38,679 --> 00:12:45,480 Speaker 1: my whole attitude started to change. I began to view mistakes, problems, failures. 218 00:12:45,720 --> 00:12:49,040 Speaker 1: I began to view them as puzzles that they were 219 00:12:49,080 --> 00:12:52,360 Speaker 1: curious to me. And if I could solve the puzzle, 220 00:12:52,679 --> 00:12:55,320 Speaker 1: I would get a gem. And the gem I would 221 00:12:55,360 --> 00:12:58,480 Speaker 1: get would be a lesson or a principle of what 222 00:12:58,600 --> 00:13:01,000 Speaker 1: I would do differently in the future. And I wrote 223 00:13:01,040 --> 00:13:04,439 Speaker 1: that down. So a big thing for me, well for 224 00:13:04,840 --> 00:13:07,920 Speaker 1: I don't know, twenty five years, is to write down 225 00:13:08,240 --> 00:13:11,920 Speaker 1: the my principles every time I'm making a decision, writing 226 00:13:11,960 --> 00:13:14,959 Speaker 1: down those principles. And then I found out I can 227 00:13:15,000 --> 00:13:18,080 Speaker 1: convert those principles to decision rules, and I could have 228 00:13:18,120 --> 00:13:21,480 Speaker 1: the computer help me make those decisions because it would reflect. 229 00:13:21,840 --> 00:13:25,160 Speaker 1: And that changed my life. So one of the things 230 00:13:25,200 --> 00:13:28,600 Speaker 1: you wrote that really stood out to me about a 231 00:13:28,640 --> 00:13:33,200 Speaker 1: related topic, you you said you fear boredom and mediocrity 232 00:13:33,360 --> 00:13:36,640 Speaker 1: more than failure, and the line was great is better 233 00:13:36,679 --> 00:13:41,080 Speaker 1: than terrible, but terrible is better than mediocre. Is that 234 00:13:41,200 --> 00:13:44,720 Speaker 1: related to this idea well making mistakes or is it 235 00:13:44,760 --> 00:13:46,600 Speaker 1: really just I don't want to be bored I want 236 00:13:46,600 --> 00:13:49,360 Speaker 1: meaningful work. Well, i'd say it's probably half and half. 237 00:13:49,400 --> 00:13:52,840 Speaker 1: I mean, in other words, I want flavor in my life, right, 238 00:13:53,440 --> 00:13:57,200 Speaker 1: you know, And I don't mind getting banged up a 239 00:13:57,200 --> 00:13:59,800 Speaker 1: little bit on the way to learning. And I love learning. 240 00:13:59,880 --> 00:14:03,600 Speaker 1: I love the evolution. So boredom is the thing that 241 00:14:03,920 --> 00:14:07,080 Speaker 1: is the worst for me. So pain, I can, you know, 242 00:14:07,160 --> 00:14:09,840 Speaker 1: I can deal with some pain. I find even the 243 00:14:09,880 --> 00:14:14,640 Speaker 1: benefit of the pain. It's become almost like failure equals success. 244 00:14:15,160 --> 00:14:18,000 Speaker 1: That's that sounds like a weird thing, fail little process 245 00:14:18,000 --> 00:14:21,280 Speaker 1: in the middle, right, failure equal success. But because I've 246 00:14:21,280 --> 00:14:26,280 Speaker 1: gotten re cued programmed, essentially, what that failure means is 247 00:14:26,360 --> 00:14:30,640 Speaker 1: failure means learning, and that's exciting to me. And then 248 00:14:30,880 --> 00:14:34,280 Speaker 1: it produces success, and that's exciting to me. And that 249 00:14:34,840 --> 00:14:39,200 Speaker 1: changing my instinctual reaction, my need jerk reaction to failure 250 00:14:39,280 --> 00:14:41,520 Speaker 1: gives me a more exciting life and gives me a 251 00:14:41,560 --> 00:14:44,280 Speaker 1: more successful life. So let's talk a little bit about 252 00:14:44,320 --> 00:14:49,280 Speaker 1: that pain and that radical transparency. You write about a 253 00:14:49,320 --> 00:14:54,520 Speaker 1: memo that your staff gave you about quote, raise intractable 254 00:14:54,560 --> 00:14:58,160 Speaker 1: people problem, and I'll spare the details, it's in the book, 255 00:14:58,560 --> 00:15:01,040 Speaker 1: but they really call you out. They really take you 256 00:15:01,080 --> 00:15:05,720 Speaker 1: to task for the way you're interacting with staff. How 257 00:15:05,720 --> 00:15:08,520 Speaker 1: did this peer review affect you? What did this dude 258 00:15:08,520 --> 00:15:12,440 Speaker 1: to impact that philosophy that you've developed. Well, I always, 259 00:15:12,560 --> 00:15:15,480 Speaker 1: I always really wanted that that kind of feedback because 260 00:15:15,520 --> 00:15:17,960 Speaker 1: I wanted to work with independent thinkers who would speak 261 00:15:18,040 --> 00:15:21,120 Speaker 1: up just like I could, radically straightforward. But as the 262 00:15:21,120 --> 00:15:23,360 Speaker 1: company got to get a little bit bigger, and I 263 00:15:23,440 --> 00:15:25,560 Speaker 1: think it was probably like maybe we had eighty five 264 00:15:25,640 --> 00:15:30,920 Speaker 1: people or so then and that straightforwardness was making people 265 00:15:31,080 --> 00:15:35,720 Speaker 1: feel comfortable uncomfortable and I didn't know that. So they 266 00:15:35,760 --> 00:15:38,480 Speaker 1: called me out to dinner and they and they give 267 00:15:38,520 --> 00:15:40,920 Speaker 1: me this memo and they explained to me that I'm 268 00:15:40,960 --> 00:15:44,960 Speaker 1: having this effect of, I don't know, demoralizing people, upsetting people. 269 00:15:45,360 --> 00:15:47,600 Speaker 1: And I didn't want to have that effect, like these 270 00:15:47,640 --> 00:15:50,200 Speaker 1: are the meaningful relationships I wanted to have it. So 271 00:15:50,440 --> 00:15:53,400 Speaker 1: it paused me um to make me think, well, what 272 00:15:53,480 --> 00:15:56,440 Speaker 1: do I do? That's an intractable problem. Am I gonna 273 00:15:56,480 --> 00:15:59,960 Speaker 1: not be as straightforward with them? Can't they be straightforward 274 00:16:00,080 --> 00:16:02,800 Speaker 1: with me? And how am I going to change that? 275 00:16:02,840 --> 00:16:05,840 Speaker 1: Let me interrupt your sect? You're the boss. How these 276 00:16:05,840 --> 00:16:09,080 Speaker 1: people who are feeling wow? Ray really ripped me a 277 00:16:09,080 --> 00:16:12,040 Speaker 1: new one today. Did you really feel they can come 278 00:16:12,080 --> 00:16:14,400 Speaker 1: up to you and say, hey, Ray, even though you're 279 00:16:14,440 --> 00:16:16,840 Speaker 1: the founder and boss, here, here's what you're doing wrong 280 00:16:16,880 --> 00:16:19,200 Speaker 1: and you better cut it out well. In the markets, 281 00:16:19,640 --> 00:16:22,440 Speaker 1: and as an entrepreneur, you've got a bet against the 282 00:16:22,440 --> 00:16:26,360 Speaker 1: consensus and be right. Otherwise you're not any value in 283 00:16:26,360 --> 00:16:29,920 Speaker 1: the markets. The consensus is built into the price, and 284 00:16:29,960 --> 00:16:32,200 Speaker 1: you've got a bet against it and be right. You 285 00:16:32,240 --> 00:16:35,760 Speaker 1: have to be an independent thinker, and you're not sure 286 00:16:35,800 --> 00:16:39,479 Speaker 1: that you're going to be right. So for always, Uh, 287 00:16:39,560 --> 00:16:41,560 Speaker 1: you know, I've gotten my head handed to me enough 288 00:16:41,640 --> 00:16:45,120 Speaker 1: times that I'm scared about being wrong, and as a 289 00:16:45,200 --> 00:16:48,720 Speaker 1: result of that, I want to work with independent thinkers. 290 00:16:48,760 --> 00:16:51,680 Speaker 1: These are the people I respect who can then argue 291 00:16:51,720 --> 00:16:54,239 Speaker 1: back and forth and to try to raise our probabilities 292 00:16:54,240 --> 00:16:56,320 Speaker 1: of being right. So that's part of the process, right, 293 00:16:56,880 --> 00:17:01,440 Speaker 1: and so um that that type of straightforwardness, um is 294 00:17:01,480 --> 00:17:04,679 Speaker 1: not uh easy for people, but that's the way I've 295 00:17:04,680 --> 00:17:08,399 Speaker 1: always operated, That's the way we've operated, and we've institutionalized 296 00:17:08,440 --> 00:17:11,520 Speaker 1: operating that way. But at the time, some people found 297 00:17:11,560 --> 00:17:16,639 Speaker 1: really that uncomfortable. Um, So then we go back. Um, 298 00:17:16,680 --> 00:17:19,440 Speaker 1: I was, you know, in a position where I didn't 299 00:17:19,440 --> 00:17:21,760 Speaker 1: want to do that and I and I didn't also 300 00:17:21,840 --> 00:17:23,800 Speaker 1: not want I didn't want to stop doing it, So 301 00:17:23,840 --> 00:17:26,720 Speaker 1: what should I do? So I thought, I reflected on that, 302 00:17:27,080 --> 00:17:29,679 Speaker 1: and I came up with the idea of let me 303 00:17:29,800 --> 00:17:32,680 Speaker 1: just sit down with the people and decide how are 304 00:17:32,760 --> 00:17:35,480 Speaker 1: we going to be with each other. For example, if 305 00:17:35,520 --> 00:17:39,080 Speaker 1: I have critical thoughts about you, should I tell you 306 00:17:39,200 --> 00:17:41,560 Speaker 1: or should I hold them to myself? If you've got 307 00:17:41,560 --> 00:17:45,160 Speaker 1: critical thoughts about me, should you tell me or should 308 00:17:45,160 --> 00:17:50,720 Speaker 1: you hold them to yourself? If everybody intellectually really says no, no, 309 00:17:50,840 --> 00:17:54,080 Speaker 1: you want to know about those things, right, But emotionally 310 00:17:54,560 --> 00:17:57,880 Speaker 1: then they don't. Uh, they don't like it right. And 311 00:17:57,960 --> 00:18:02,560 Speaker 1: what we discovered really is the two use in everybody, 312 00:18:02,600 --> 00:18:06,919 Speaker 1: there are two use. There's this intellectual, thoughtful you that 313 00:18:06,960 --> 00:18:09,400 Speaker 1: would like to make decisions a certain way, and then 314 00:18:09,400 --> 00:18:12,639 Speaker 1: there's an emotional, subliminal you that you don't even understand 315 00:18:12,760 --> 00:18:16,080 Speaker 1: very well, and it's having a conflict. And so by 316 00:18:16,160 --> 00:18:19,080 Speaker 1: making it very clear with each other, we could establish 317 00:18:19,160 --> 00:18:21,919 Speaker 1: ways of being with each other. That really led me 318 00:18:22,000 --> 00:18:25,040 Speaker 1: to write down a lot of my work principles. In 319 00:18:25,119 --> 00:18:27,040 Speaker 1: other words, Okay, how are we going to be with 320 00:18:27,080 --> 00:18:29,760 Speaker 1: each other? I wrote those down in words, we put 321 00:18:29,800 --> 00:18:33,119 Speaker 1: those together, and then we moved forward. So we had that. 322 00:18:33,240 --> 00:18:38,400 Speaker 1: With that, we established what our unusual way of our operating, 323 00:18:38,400 --> 00:18:43,840 Speaker 1: our unusual culture was with this thoughtful disagreement, this idea meritocracy. 324 00:18:43,920 --> 00:18:46,840 Speaker 1: And it was like a contract. And people realized that 325 00:18:46,880 --> 00:18:49,880 Speaker 1: the struggling wasn't between me and them really as much 326 00:18:49,880 --> 00:18:52,800 Speaker 1: as it was between them and them. There their emotional 327 00:18:53,040 --> 00:18:55,800 Speaker 1: and their intellectual and that changed everything. So the writing 328 00:18:55,840 --> 00:19:00,440 Speaker 1: down the principles changed everything and the realization that everybody 329 00:19:00,480 --> 00:19:04,000 Speaker 1: has those struggles between their thoughtfulness and what they want 330 00:19:04,080 --> 00:19:07,000 Speaker 1: and their emotional self and then you work on getting 331 00:19:07,000 --> 00:19:09,399 Speaker 1: through that. And we found that typically it takes about 332 00:19:09,440 --> 00:19:12,560 Speaker 1: eighteen months to get to a place of, you know, 333 00:19:12,640 --> 00:19:15,480 Speaker 1: practicing this and getting comfortable with it. In order to 334 00:19:15,560 --> 00:19:19,080 Speaker 1: have an idea meritocracy, you have to do three things. First, 335 00:19:19,280 --> 00:19:21,600 Speaker 1: you have to put your honest thoughts on the table 336 00:19:22,160 --> 00:19:25,520 Speaker 1: for everybody to see, holding back, no holding back everybody 337 00:19:25,560 --> 00:19:28,440 Speaker 1: and everybody puts them on the table. Great, Okay, a 338 00:19:28,520 --> 00:19:31,000 Speaker 1: lot of people won't do that, but when you get practiced, 339 00:19:31,359 --> 00:19:32,919 Speaker 1: you don't want to do it any other way. So 340 00:19:32,960 --> 00:19:35,600 Speaker 1: you put your honest thoughts on the table. Second thing 341 00:19:36,160 --> 00:19:39,080 Speaker 1: is you have to know the art of thoughtful disagreement, 342 00:19:39,400 --> 00:19:42,960 Speaker 1: the art of thoughtful distance and challenge right in other words, 343 00:19:43,600 --> 00:19:48,200 Speaker 1: to view that as a curiosity that you also might 344 00:19:48,240 --> 00:19:50,960 Speaker 1: be wrong if there's disagreement, How do you know the 345 00:19:50,960 --> 00:19:54,800 Speaker 1: wrong party isn't you? So to separate oneself from one's 346 00:19:54,840 --> 00:19:57,800 Speaker 1: opinions and to be able to have a quality back 347 00:19:57,840 --> 00:20:01,040 Speaker 1: and forth motivated by curi city and the fear of 348 00:20:01,040 --> 00:20:03,119 Speaker 1: being wrong, so that you can take in and learn 349 00:20:03,520 --> 00:20:08,440 Speaker 1: that understanding the art of thoughtful disagreement is invaluable. So 350 00:20:08,520 --> 00:20:11,320 Speaker 1: you so that's the second thing, put your honest thoughts 351 00:20:11,320 --> 00:20:15,000 Speaker 1: on the tables. The first, UM have understand the art 352 00:20:15,000 --> 00:20:18,240 Speaker 1: of their thoughtful disagreement. We have protocols about how to 353 00:20:18,280 --> 00:20:20,679 Speaker 1: do that. And then at the end of the day, 354 00:20:20,760 --> 00:20:23,040 Speaker 1: when there's um you have to make a decision and 355 00:20:23,080 --> 00:20:27,320 Speaker 1: you still have disagreements, to have protocols to get around 356 00:20:27,320 --> 00:20:31,280 Speaker 1: those disagreements that you consider to be fair. I'd say 357 00:20:31,320 --> 00:20:34,960 Speaker 1: this is essential for me in all my relationships. So 358 00:20:35,119 --> 00:20:38,719 Speaker 1: it would be relationships with family, with friends, UM, you 359 00:20:38,720 --> 00:20:42,439 Speaker 1: know I need them to be straightforward with me. I 360 00:20:42,480 --> 00:20:45,920 Speaker 1: gotta be straightforward with them. We have to know how 361 00:20:45,920 --> 00:20:50,000 Speaker 1: to have thoughtful disagreement. And then everybody in any relationship 362 00:20:50,720 --> 00:20:54,400 Speaker 1: has to have protocols for getting around their disagreements if 363 00:20:54,400 --> 00:20:56,520 Speaker 1: they still remain. If you and your wife are having 364 00:20:56,520 --> 00:20:58,919 Speaker 1: a disagreement on something, you still have to have a 365 00:20:58,920 --> 00:21:02,600 Speaker 1: protocol for getting around out it. So by organizing that 366 00:21:02,720 --> 00:21:05,280 Speaker 1: and making it clear, we were able to have this 367 00:21:05,359 --> 00:21:11,000 Speaker 1: idea meritocracy, and everybody believes the idea meritocracy is then fair. 368 00:21:11,200 --> 00:21:14,520 Speaker 1: Imagine how it is different at every other place, you know, 369 00:21:14,600 --> 00:21:17,800 Speaker 1: the boss tells you what it is. People bottle people 370 00:21:17,840 --> 00:21:21,440 Speaker 1: bottle it up. Okay, they think, oh, he's making a mistake. 371 00:21:22,000 --> 00:21:25,080 Speaker 1: He would benefit from having that feedback. But they have 372 00:21:25,200 --> 00:21:28,160 Speaker 1: to bottle it up with which frustrates them. Therefore they 373 00:21:28,200 --> 00:21:31,199 Speaker 1: can't have a real ownership mentality and the organization that 374 00:21:31,280 --> 00:21:35,760 Speaker 1: they're with, and it undermines their relationship. That straightforwardness has 375 00:21:35,800 --> 00:21:39,480 Speaker 1: been fantastic in creating better work and better relationship. So 376 00:21:39,680 --> 00:21:42,000 Speaker 1: that's been the secret source. So let me do a 377 00:21:42,000 --> 00:21:46,840 Speaker 1: little radical transparency with you. In the book, you discussed 378 00:21:46,880 --> 00:21:51,199 Speaker 1: two things. We discussed the people problem and the social issues. 379 00:21:51,280 --> 00:21:54,560 Speaker 1: You talk about bipolar running in the family. And as 380 00:21:54,600 --> 00:21:58,240 Speaker 1: I read those two in sequence, I immediately said, Hey, 381 00:21:58,400 --> 00:22:00,280 Speaker 1: I wonder if Ray is a little bit on the 382 00:22:00,280 --> 00:22:03,440 Speaker 1: spectrum himself. So let me ask you. Have you ever 383 00:22:03,520 --> 00:22:08,200 Speaker 1: considered you're an independent thinker. Your perspectives are unique. You're 384 00:22:08,320 --> 00:22:11,639 Speaker 1: very different from the way the average person in finance operates. 385 00:22:11,640 --> 00:22:13,920 Speaker 1: Have you ever thought, hey, maybe I'm a little a 386 00:22:14,000 --> 00:22:17,440 Speaker 1: little different. Well no, but look, I'm sure i'm a 387 00:22:17,440 --> 00:22:20,000 Speaker 1: little different than you know. Who knows, I'm probably crazy 388 00:22:20,000 --> 00:22:22,679 Speaker 1: in a bunch of different ways. I've never been Uh, 389 00:22:22,840 --> 00:22:25,760 Speaker 1: nobody said that, but you know, like who knows. We 390 00:22:25,800 --> 00:22:28,879 Speaker 1: all have different spectrums. The thing I learned about it 391 00:22:28,920 --> 00:22:31,919 Speaker 1: is there's always a range of thinking. So think of 392 00:22:31,960 --> 00:22:35,480 Speaker 1: it as a thinking spectrum. And I don't know where 393 00:22:35,520 --> 00:22:38,440 Speaker 1: I am on that thinking spectrum. But some people, for example, 394 00:22:38,600 --> 00:22:42,080 Speaker 1: we'll see big pictures, some people will see detail. Some 395 00:22:42,160 --> 00:22:46,159 Speaker 1: people are creative, some people are reliable. One of the 396 00:22:46,160 --> 00:22:49,960 Speaker 1: things we've learned here is that everybody sees things differently, 397 00:22:50,280 --> 00:22:53,480 Speaker 1: like seeing on a spectrum of of seeing, and that 398 00:22:54,320 --> 00:22:58,359 Speaker 1: knowing how one thinks. UM, I tend to be more 399 00:22:58,400 --> 00:23:00,560 Speaker 1: of a big picture thinker, to to be more of 400 00:23:00,640 --> 00:23:03,879 Speaker 1: a you know, original thinker, that kind of thing. But 401 00:23:03,960 --> 00:23:07,640 Speaker 1: in terms of my reliability, like I'm have low reliability 402 00:23:07,720 --> 00:23:10,520 Speaker 1: whatever to know those things and then to have the 403 00:23:10,600 --> 00:23:14,600 Speaker 1: individuals um recognize them and then put together your team's 404 00:23:14,640 --> 00:23:17,439 Speaker 1: well because you need to do it all. Is this 405 00:23:17,480 --> 00:23:20,600 Speaker 1: what led you guys to doing the Briggs Myers personality 406 00:23:21,200 --> 00:23:23,840 Speaker 1: uh tests on everybody and making sure the teams all 407 00:23:23,920 --> 00:23:27,399 Speaker 1: had each of those boxes checked off. Yeah, and a 408 00:23:27,440 --> 00:23:30,879 Speaker 1: lot of tests and a lot of collecting data. Like 409 00:23:30,960 --> 00:23:34,159 Speaker 1: people come in there and they really do want to 410 00:23:34,200 --> 00:23:38,880 Speaker 1: know what their strengths and weaknesses are, because like, you know, 411 00:23:38,880 --> 00:23:40,960 Speaker 1: knowing a weakness, do you want to know a weakness? 412 00:23:41,240 --> 00:23:45,200 Speaker 1: You know, that's one of those emotional intellectual questions. Emotionally 413 00:23:45,440 --> 00:23:49,320 Speaker 1: a lot of people don't. Intellectually, if you know your weakness, 414 00:23:49,359 --> 00:23:51,800 Speaker 1: you can either convert it to a strength somehow, or 415 00:23:51,840 --> 00:23:54,639 Speaker 1: you can compensate for it by put working with somebody 416 00:23:54,680 --> 00:23:57,399 Speaker 1: who's got who's strong. We are you're weak. So knowing 417 00:23:57,440 --> 00:24:00,159 Speaker 1: your weakness is the key to success. And also from 418 00:24:00,200 --> 00:24:02,239 Speaker 1: an employer's point of view, what you want to do 419 00:24:02,280 --> 00:24:04,639 Speaker 1: is you want to know what their weaknesses are and 420 00:24:04,680 --> 00:24:06,840 Speaker 1: what their strange sources. You put them in the right role. 421 00:24:07,200 --> 00:24:10,199 Speaker 1: People tippy toe around this stuff and you know, you 422 00:24:10,200 --> 00:24:12,840 Speaker 1: know where we are. People want to get into it 423 00:24:12,920 --> 00:24:16,639 Speaker 1: and work it out, and so yeah, tests personality tests 424 00:24:16,920 --> 00:24:19,280 Speaker 1: give you a real sense of what your preferences are 425 00:24:19,320 --> 00:24:22,400 Speaker 1: and how you approach your thinking. They've been very helpful. 426 00:24:22,560 --> 00:24:25,320 Speaker 1: But all the data we collect, you know, like every 427 00:24:25,359 --> 00:24:28,480 Speaker 1: meeting of every day. We have a tool called the 428 00:24:28,480 --> 00:24:31,399 Speaker 1: dot Collector. If anybody wants to see it. If you 429 00:24:31,480 --> 00:24:34,399 Speaker 1: really don't want to understand all this in sixteen minutes, 430 00:24:34,440 --> 00:24:36,760 Speaker 1: it's on a ted talk go on a TED talk 431 00:24:36,800 --> 00:24:40,920 Speaker 1: I gave it, uh, and and it gives you something. 432 00:24:40,960 --> 00:24:43,679 Speaker 1: You're going to see a device in which people are 433 00:24:43,680 --> 00:24:47,080 Speaker 1: putting in what they think, uh, during a meeting where 434 00:24:47,119 --> 00:24:49,760 Speaker 1: all meetings are like this, and you'll see how they 435 00:24:49,840 --> 00:24:53,240 Speaker 1: think differently. It lights up in different colors and then 436 00:24:53,280 --> 00:24:57,439 Speaker 1: it explores why is that thinking different? Which creates a 437 00:24:57,480 --> 00:25:01,880 Speaker 1: self discovery and creates idea Merita Crown decision making. So 438 00:25:02,040 --> 00:25:04,080 Speaker 1: it's been evolved to that and it's you know, it's 439 00:25:04,080 --> 00:25:07,040 Speaker 1: been invaluable. Let's talk a little bit about the idea 440 00:25:07,560 --> 00:25:13,479 Speaker 1: of being a hyper realist. You wrote, understand how reality works, 441 00:25:14,080 --> 00:25:16,760 Speaker 1: then learn how to deal with it. Isn't that what 442 00:25:16,840 --> 00:25:20,600 Speaker 1: everybody's supposed to do? Most people? I don't think, do 443 00:25:20,880 --> 00:25:24,840 Speaker 1: I think people? A lot of people, UM feel bad 444 00:25:24,960 --> 00:25:30,360 Speaker 1: about reality, feel sorry that, uh, some realities are happening 445 00:25:30,359 --> 00:25:35,560 Speaker 1: to them, feel things are unfair. Um, they don't react 446 00:25:35,600 --> 00:25:40,120 Speaker 1: to harsh realities. Well they don't. Instead, you can instead 447 00:25:40,400 --> 00:25:45,600 Speaker 1: say reality is the thing I have to deal with 448 00:25:45,800 --> 00:25:49,440 Speaker 1: and I have to be clever and understand how does 449 00:25:49,560 --> 00:25:52,880 Speaker 1: reality work and how do I deal with it effectively? 450 00:25:53,280 --> 00:25:58,399 Speaker 1: And those two different mindsets are UM are enormous because 451 00:25:58,440 --> 00:26:02,600 Speaker 1: if you own that reality is reality. You know that's 452 00:26:02,640 --> 00:26:04,320 Speaker 1: what you have to deal with, and that you have 453 00:26:04,400 --> 00:26:07,240 Speaker 1: to find the way of dealing with it successfully. Then 454 00:26:07,280 --> 00:26:10,520 Speaker 1: it changes your whole attitude and your whole path really 455 00:26:11,040 --> 00:26:13,640 Speaker 1: to being successful. So let's talk a little bit about 456 00:26:13,640 --> 00:26:18,240 Speaker 1: a change in path that reality seems to have le 457 00:26:18,600 --> 00:26:23,520 Speaker 1: led you towards. You transitioned at work from I'm right 458 00:26:23,760 --> 00:26:26,800 Speaker 1: to to what I would describe as next level thinking. 459 00:26:27,280 --> 00:26:32,080 Speaker 1: How can I know if I'm right? Explain that transition. Oh, yeah, 460 00:26:32,119 --> 00:26:38,479 Speaker 1: it was in one UM I had calculated that foreign 461 00:26:38,480 --> 00:26:43,159 Speaker 1: countries borrowed enough money that they couldn't pay back American banks, 462 00:26:43,160 --> 00:26:45,400 Speaker 1: and that there was going to be a big banking crisis. 463 00:26:45,840 --> 00:26:48,640 Speaker 1: I did the numbers and um that at that time 464 00:26:48,680 --> 00:26:51,560 Speaker 1: that was extremely controversial view. I said, We're gonna have 465 00:26:51,600 --> 00:26:56,640 Speaker 1: a big debt crisis and h Then in August Mexico 466 00:26:56,720 --> 00:27:00,560 Speaker 1: defaulted on its debt and and so I, We're gonna 467 00:27:00,560 --> 00:27:03,800 Speaker 1: have a big economic crisis, and so I was asked 468 00:27:03,840 --> 00:27:06,639 Speaker 1: to appear on Wall Street Week and explain it. I 469 00:27:06,680 --> 00:27:09,879 Speaker 1: was asked to testify to Congress and so on. Uh, 470 00:27:09,920 --> 00:27:13,200 Speaker 1: this big economic crisis, bear market in stocks and everything. 471 00:27:13,960 --> 00:27:18,600 Speaker 1: August two, Mexico devaults and here I am, and I'm 472 00:27:18,640 --> 00:27:22,719 Speaker 1: getting all that attention. I was so wrong. That was 473 00:27:23,240 --> 00:27:27,920 Speaker 1: that was the exact bottom in the stock market August, 474 00:27:28,520 --> 00:27:31,600 Speaker 1: and you were on ru Kaiser basically forecasting a depression. 475 00:27:32,640 --> 00:27:35,639 Speaker 1: I couldn't have been more wrong right, and I lost 476 00:27:35,640 --> 00:27:40,280 Speaker 1: money in the markets. I uh, I was. I had 477 00:27:40,320 --> 00:27:42,680 Speaker 1: to let everybody in my company go. It was down 478 00:27:42,720 --> 00:27:45,119 Speaker 1: to me. I was so broke. I had to borrow 479 00:27:45,160 --> 00:27:47,920 Speaker 1: four thousand dollars to my dad to help take care 480 00:27:47,920 --> 00:27:51,200 Speaker 1: of my family. Okay, that was one of the most 481 00:27:51,200 --> 00:27:54,919 Speaker 1: painful experiences of my life, but it was one of 482 00:27:54,960 --> 00:27:58,240 Speaker 1: the most valuable experiences of my life because it changed 483 00:27:58,280 --> 00:28:02,000 Speaker 1: my approach to decision making. In other words, like you say, 484 00:28:02,040 --> 00:28:06,440 Speaker 1: it shifted my perspective from thinking I'm right to asking myself, 485 00:28:06,760 --> 00:28:10,480 Speaker 1: how do I know I'm right? And it gave me 486 00:28:10,600 --> 00:28:14,800 Speaker 1: the humility that I needed to balance with my audacity. 487 00:28:15,200 --> 00:28:18,760 Speaker 1: And that change in approach resulted in, you know, some 488 00:28:18,840 --> 00:28:21,880 Speaker 1: big decision making where did I go back to another job, 489 00:28:21,920 --> 00:28:24,000 Speaker 1: would I stay out there? And and how would I 490 00:28:24,040 --> 00:28:27,120 Speaker 1: do things differently in the future. And the first thing, 491 00:28:27,160 --> 00:28:30,280 Speaker 1: most important thing was to find the smartest people I 492 00:28:30,320 --> 00:28:33,480 Speaker 1: know who would disagree with me to understand their thinking, 493 00:28:33,520 --> 00:28:36,400 Speaker 1: to have that thoughtful disagreement. That's part of your fourth 494 00:28:36,440 --> 00:28:40,080 Speaker 1: step process. Right, Yeah, find smart people know when not 495 00:28:40,160 --> 00:28:43,760 Speaker 1: to have an opinion. That's a fascinating statement. When should 496 00:28:43,840 --> 00:28:47,720 Speaker 1: you not have an opinion? Well? A lot of times? Right, Well, 497 00:28:47,840 --> 00:28:51,360 Speaker 1: I mean opinions, particularly in in any is a zero 498 00:28:51,400 --> 00:28:54,520 Speaker 1: sum game. But so many people have opinions that they're 499 00:28:54,520 --> 00:28:58,440 Speaker 1: attached to and and they don't know whether they're they're right, 500 00:28:58,560 --> 00:29:02,000 Speaker 1: and and that bias is killing them. I think one 501 00:29:02,000 --> 00:29:07,400 Speaker 1: of the greatest tragedies of mankind is people stupidly holding 502 00:29:07,440 --> 00:29:11,360 Speaker 1: onto opinions that could be wrong, that they could so 503 00:29:11,480 --> 00:29:15,320 Speaker 1: easily put out there and stress test. And that emotional 504 00:29:15,360 --> 00:29:18,880 Speaker 1: attachment to these opinions is one of those things where 505 00:29:18,920 --> 00:29:21,560 Speaker 1: instead you could just say, let me get the best 506 00:29:22,400 --> 00:29:24,840 Speaker 1: thinking I can have. It doesn't even have to come 507 00:29:24,880 --> 00:29:26,600 Speaker 1: from me. Why does it have to come from you? 508 00:29:26,680 --> 00:29:29,560 Speaker 1: But that's a huge ego fail. If oh my god, 509 00:29:29,600 --> 00:29:31,560 Speaker 1: I'm wrong, I have to go to someone else. Isn't 510 00:29:31,560 --> 00:29:35,240 Speaker 1: that how people often operate? Right? And that's screwed up? Right, 511 00:29:35,280 --> 00:29:38,480 Speaker 1: you have two basic barriers. You have your ego barrier 512 00:29:38,720 --> 00:29:41,000 Speaker 1: and your blind spot barrier. Like do you want to 513 00:29:41,040 --> 00:29:43,160 Speaker 1: be right or do you want to be you want 514 00:29:43,160 --> 00:29:46,440 Speaker 1: to take your lousy opinion and and be attached to 515 00:29:46,520 --> 00:29:48,720 Speaker 1: it being right, Like I want to be right. I 516 00:29:48,720 --> 00:29:50,360 Speaker 1: don't care where it comes from. Just as long as 517 00:29:50,360 --> 00:29:53,160 Speaker 1: I'm right. That works better. And then and so that 518 00:29:53,280 --> 00:29:57,240 Speaker 1: ego barrier is terrible. And then there's the blind spot barrier. 519 00:29:57,320 --> 00:30:00,560 Speaker 1: Even people who don't um have you know, uh, the 520 00:30:00,600 --> 00:30:04,800 Speaker 1: ego of being attachment to be right see things differently, 521 00:30:05,040 --> 00:30:08,320 Speaker 1: the unknown unknowns so to speak. Yeah, well, right, um, 522 00:30:08,360 --> 00:30:11,320 Speaker 1: this range the spectrum that you're talking about. Somebody sees 523 00:30:11,360 --> 00:30:15,320 Speaker 1: something creatively, somebody sees detail, somebody We all see things 524 00:30:15,440 --> 00:30:18,840 Speaker 1: differently and to be and so you can't see at 525 00:30:18,880 --> 00:30:20,920 Speaker 1: all the big picture person may not be able to 526 00:30:20,960 --> 00:30:23,360 Speaker 1: see the details, or the detailed person can't see the 527 00:30:23,400 --> 00:30:26,640 Speaker 1: big picture. If you can light up all those different 528 00:30:26,640 --> 00:30:30,360 Speaker 1: ways of thinking and and you can bring that to bear, 529 00:30:30,520 --> 00:30:33,400 Speaker 1: you're going to make much better decisions. So that's one 530 00:30:33,400 --> 00:30:37,040 Speaker 1: of the reasons that great collective decision making is much 531 00:30:37,080 --> 00:30:42,360 Speaker 1: more powerful than just individual opinionated thinking. Sure, of course, 532 00:30:42,400 --> 00:30:46,479 Speaker 1: you're you're you're bringing in all the advantages of the 533 00:30:46,480 --> 00:30:50,320 Speaker 1: group and you're limiting the problems of the individual, and 534 00:30:50,440 --> 00:30:54,120 Speaker 1: that raises your probabilities of being right. So now you 535 00:30:54,200 --> 00:30:55,880 Speaker 1: mentioned four steps, so I want to get to the 536 00:30:56,120 --> 00:30:59,719 Speaker 1: step three and four, which are the principles and up 537 00:30:59,760 --> 00:31:03,400 Speaker 1: so I risk versus downside risk, right, So okay, So 538 00:31:03,680 --> 00:31:05,680 Speaker 1: some of the other things that I learned about is 539 00:31:06,000 --> 00:31:10,200 Speaker 1: how you know, risk goes with rewards, but how am 540 00:31:10,240 --> 00:31:13,760 Speaker 1: I going to change the ratio of risk to rewards? Right? 541 00:31:14,280 --> 00:31:17,080 Speaker 1: And I spent a lot more time with financial engineering 542 00:31:17,160 --> 00:31:21,080 Speaker 1: of understanding how to use correlations and certain ways of 543 00:31:21,200 --> 00:31:25,200 Speaker 1: really radically improving the ratio of returned to risk. So 544 00:31:25,240 --> 00:31:27,640 Speaker 1: it's explained in there. And what I called the holy 545 00:31:27,680 --> 00:31:31,080 Speaker 1: Grail of investing, it's um, you know, that was there. 546 00:31:31,480 --> 00:31:35,800 Speaker 1: And then I also learned, um that everything that happened 547 00:31:37,160 --> 00:31:40,800 Speaker 1: that happens practically has happened before for the most part, 548 00:31:41,360 --> 00:31:44,320 Speaker 1: and that the things that surprised me were the things 549 00:31:44,360 --> 00:31:47,720 Speaker 1: that just happened happened in my lifetime before, but they 550 00:31:47,840 --> 00:31:50,840 Speaker 1: but they happened before. Like one first time I had 551 00:31:50,880 --> 00:31:55,200 Speaker 1: a breakdown of the currency system, okay, and it was 552 00:31:55,280 --> 00:31:57,560 Speaker 1: first time in my lifetime then had happened. But I 553 00:31:57,600 --> 00:32:00,840 Speaker 1: looked in history, happened many times before. So so I 554 00:32:00,920 --> 00:32:05,000 Speaker 1: learned that I needed to make my rules timeless and universal, 555 00:32:05,120 --> 00:32:07,680 Speaker 1: in other words, that I would run them back through 556 00:32:07,680 --> 00:32:10,760 Speaker 1: the Great Depression, through the Weimar Republic see how those 557 00:32:11,120 --> 00:32:13,800 Speaker 1: rules would work, and if they wouldn't have worked well 558 00:32:13,800 --> 00:32:16,600 Speaker 1: in certain periods, then I had to explain why they 559 00:32:16,640 --> 00:32:19,240 Speaker 1: would work in those periods, because there were reasons for that. 560 00:32:19,680 --> 00:32:21,760 Speaker 1: So these are the things that came out of my 561 00:32:21,920 --> 00:32:28,080 Speaker 1: reflections as a result of you know, that two painful experience. 562 00:32:28,560 --> 00:32:32,200 Speaker 1: It's such a great example that if you pain plus 563 00:32:32,280 --> 00:32:36,360 Speaker 1: reflection equals progress. If you really reflect the most and 564 00:32:36,400 --> 00:32:38,960 Speaker 1: you look at how reality works and you think what 565 00:32:39,000 --> 00:32:42,120 Speaker 1: should you do differently, that's where the power of growth 566 00:32:42,440 --> 00:32:45,760 Speaker 1: comes from. So there's one other thing in the Principles 567 00:32:45,840 --> 00:32:48,720 Speaker 1: at Work section I have to talk to you about 568 00:32:48,800 --> 00:32:51,800 Speaker 1: because I just was so tickled by it. You spend 569 00:32:51,880 --> 00:32:56,320 Speaker 1: almost five pages on how to run a meeting effectively? 570 00:32:56,800 --> 00:33:00,120 Speaker 1: So what if that raises two issues you Obviously we 571 00:33:00,200 --> 00:33:03,719 Speaker 1: think meetings are important and a significant part of getting 572 00:33:04,160 --> 00:33:06,680 Speaker 1: work done as a group. But it made me wonder 573 00:33:06,920 --> 00:33:09,840 Speaker 1: what were the meanings like in the early days of Bridgewater. 574 00:33:10,080 --> 00:33:12,640 Speaker 1: Was it was it anarchy that led you to this 575 00:33:12,720 --> 00:33:16,760 Speaker 1: sort of insight or or what motivated a lot of 576 00:33:16,840 --> 00:33:23,320 Speaker 1: thought about making meetings more productive? Well, um, the meetings 577 00:33:23,360 --> 00:33:26,160 Speaker 1: are an important thing. And meetings means that there's a 578 00:33:26,160 --> 00:33:28,760 Speaker 1: collection of people who are in the room and they're 579 00:33:28,800 --> 00:33:32,440 Speaker 1: ideally leading to some sort of decision. Okay, you have 580 00:33:32,600 --> 00:33:34,800 Speaker 1: to say, how are you going to be with each 581 00:33:34,800 --> 00:33:38,640 Speaker 1: other in order to make decisions? Right? In other words, 582 00:33:38,720 --> 00:33:41,280 Speaker 1: you can go around the table. I was I'd go 583 00:33:41,320 --> 00:33:43,520 Speaker 1: around the table and then there was not much attention 584 00:33:43,760 --> 00:33:48,000 Speaker 1: paid to you know, who knows exactly what? Right? You know? 585 00:33:48,320 --> 00:33:51,320 Speaker 1: What do you think, Harry? What do you think, Sally? 586 00:33:51,800 --> 00:33:54,640 Speaker 1: And maybe they're not good at it and maybe they're 587 00:33:54,720 --> 00:33:58,560 Speaker 1: good at it at so um that's a problem. Or 588 00:33:58,720 --> 00:34:02,120 Speaker 1: you can have autocratic tocision making. You know, the autocratic 589 00:34:02,120 --> 00:34:05,400 Speaker 1: decision making means the boss kind of makes the decision 590 00:34:05,640 --> 00:34:10,080 Speaker 1: and then then you sort of decide and everybody walks out. 591 00:34:10,719 --> 00:34:15,160 Speaker 1: I wanted to have believability weighted decision making. Okay, believability 592 00:34:15,160 --> 00:34:18,480 Speaker 1: weighted decision making is, um, let's see you trying to 593 00:34:18,600 --> 00:34:22,360 Speaker 1: explain it quickly or not? Um, believability weighted decision making. 594 00:34:22,360 --> 00:34:26,560 Speaker 1: Imagine if you knew, um, the probability of each person 595 00:34:26,640 --> 00:34:30,480 Speaker 1: making a high quality decision and then you decided, UM, 596 00:34:30,560 --> 00:34:33,600 Speaker 1: that would be taken into consideration, and when you're making 597 00:34:33,640 --> 00:34:37,719 Speaker 1: the decision, you can actually have believability weighted voting to 598 00:34:37,840 --> 00:34:41,160 Speaker 1: make a decision, so that you put the weight more 599 00:34:41,160 --> 00:34:45,839 Speaker 1: heavily on those who have greater abilities to make those 600 00:34:45,880 --> 00:34:48,560 Speaker 1: types of decisions and at the same time, while you're 601 00:34:48,560 --> 00:34:51,680 Speaker 1: having this open minded discussion and at the same time 602 00:34:51,719 --> 00:34:54,439 Speaker 1: knowing what people know and knowing what they don't know 603 00:34:54,800 --> 00:34:57,880 Speaker 1: and being clear about that in terms of that decision making. 604 00:34:58,160 --> 00:35:00,799 Speaker 1: So that was a very very important concept for me, 605 00:35:01,320 --> 00:35:04,319 Speaker 1: and then we wanted to build that out, you know, like, 606 00:35:04,360 --> 00:35:07,120 Speaker 1: how do we have believability weighted decision You use that 607 00:35:07,160 --> 00:35:10,319 Speaker 1: currently approach every every every meeting, ten people are sitting 608 00:35:10,320 --> 00:35:14,320 Speaker 1: around a conference table and their expertise and I'm assuming 609 00:35:14,360 --> 00:35:20,000 Speaker 1: credibility weighted believability rated is a function of their skill set, expertise, etcetera. 610 00:35:20,480 --> 00:35:23,360 Speaker 1: Everybody has a different right and they all have different waitings. 611 00:35:23,360 --> 00:35:25,440 Speaker 1: So at the end of the day, you say, I'm 612 00:35:25,440 --> 00:35:27,839 Speaker 1: going to make a decision, Okay, would you do this 613 00:35:28,080 --> 00:35:30,880 Speaker 1: after the thoughtful disagreement? Would you do this? And you 614 00:35:30,960 --> 00:35:34,160 Speaker 1: push a button on this iPad app that we developed 615 00:35:34,520 --> 00:35:37,000 Speaker 1: and UM and it will show not only what the 616 00:35:37,080 --> 00:35:40,040 Speaker 1: different people's votes were and how that vote tallied up, 617 00:35:40,239 --> 00:35:43,000 Speaker 1: but it will show a believability weighted vote. So I'm 618 00:35:43,000 --> 00:35:47,280 Speaker 1: gonna assume that that a straight yes no vote often 619 00:35:47,360 --> 00:35:50,920 Speaker 1: leads to a different result than the believability weight to vote. Well, 620 00:35:50,920 --> 00:35:53,720 Speaker 1: the yes no will get tallied up with the weight 621 00:35:53,960 --> 00:35:57,360 Speaker 1: of yes is and those and that that and so. 622 00:35:57,360 --> 00:36:00,399 Speaker 1: So for me, like I'm running a meeting, this really 623 00:36:00,400 --> 00:36:03,040 Speaker 1: what I wanted to have. I run the company. I 624 00:36:03,040 --> 00:36:05,600 Speaker 1: could do any kind of decision making I want, And 625 00:36:05,680 --> 00:36:08,799 Speaker 1: but the reason I want the believability decision is if 626 00:36:08,840 --> 00:36:11,520 Speaker 1: somebody knows more about a subject than I do, or 627 00:36:11,560 --> 00:36:15,920 Speaker 1: if I have three believable people disagreeing with me, um 628 00:36:16,080 --> 00:36:20,879 Speaker 1: and and about something, I don't want to just walk 629 00:36:20,960 --> 00:36:23,240 Speaker 1: off and do that thing because that would be pretty stupid. 630 00:36:23,600 --> 00:36:26,279 Speaker 1: So what I think to myself is, Okay, the right 631 00:36:26,320 --> 00:36:29,560 Speaker 1: way to make that decision is believability weighted. And then 632 00:36:29,560 --> 00:36:32,640 Speaker 1: when we come down to that, like if I'm thinking, um, 633 00:36:32,840 --> 00:36:36,719 Speaker 1: these people have that that view and I have another view, Uh, 634 00:36:36,760 --> 00:36:39,440 Speaker 1: there's a high probability I'm wrong. I need to even 635 00:36:39,520 --> 00:36:42,560 Speaker 1: delve into it. Why is it that? And so, by 636 00:36:42,600 --> 00:36:47,560 Speaker 1: operating by this believability weighted decision making. Um, it's fantastic. 637 00:36:47,880 --> 00:36:50,680 Speaker 1: I will make better decisions. We make better decisions as 638 00:36:50,719 --> 00:36:54,560 Speaker 1: a result of that. And also people feel empowered in 639 00:36:54,600 --> 00:36:57,839 Speaker 1: the rules. Rules are fair in other words, Okay, at 640 00:36:57,840 --> 00:37:00,600 Speaker 1: the end of the day, you know, just in the 641 00:37:00,680 --> 00:37:03,960 Speaker 1: United States, we might believe that democracy is fair. In 642 00:37:03,960 --> 00:37:08,320 Speaker 1: other words, that they might believe that, Um, I would 643 00:37:08,320 --> 00:37:11,200 Speaker 1: believe in a company, everybody doesn't. It doesn't make sense 644 00:37:11,200 --> 00:37:13,280 Speaker 1: to have one person on vote because it doesn't because 645 00:37:13,480 --> 00:37:16,160 Speaker 1: there's a difference. But to know that in a sense 646 00:37:16,200 --> 00:37:19,520 Speaker 1: that you earn believability points in a variety of fair ways, 647 00:37:19,880 --> 00:37:22,600 Speaker 1: and that it gets carried through so that you're making 648 00:37:22,600 --> 00:37:26,320 Speaker 1: your decision making is a decision making process that people 649 00:37:26,360 --> 00:37:28,720 Speaker 1: can believe in. It means they don't have to bottle 650 00:37:28,800 --> 00:37:31,719 Speaker 1: these things up and it makes for better decisions. That's 651 00:37:31,760 --> 00:37:35,719 Speaker 1: a pretty ego free approach to managing a company. Well, 652 00:37:35,840 --> 00:37:39,040 Speaker 1: this ego is a problem, right, I mean you basically, 653 00:37:39,200 --> 00:37:41,920 Speaker 1: I mean maybe the ego of you know, being excited 654 00:37:41,960 --> 00:37:44,160 Speaker 1: and doing great things and all of those types of things. 655 00:37:44,200 --> 00:37:46,640 Speaker 1: So maybe it's not totally bad, but I mean any 656 00:37:46,719 --> 00:37:49,319 Speaker 1: time that that ego is standing in the way if 657 00:37:49,320 --> 00:37:52,640 Speaker 1: you're making a good decision. It's it's terrible. It's it's 658 00:37:52,640 --> 00:37:54,640 Speaker 1: got to be controlled. You've got to do something different, 659 00:37:54,680 --> 00:37:56,720 Speaker 1: otherwise you're stand in the way of making a good decision. 660 00:37:57,160 --> 00:38:00,359 Speaker 1: Life is a matter you know of bets. Every you're 661 00:38:00,360 --> 00:38:02,880 Speaker 1: making a bunch of different bets, and think about it. 662 00:38:02,880 --> 00:38:07,359 Speaker 1: It's the accumulated stack of chips that you accumulate from 663 00:38:07,400 --> 00:38:09,960 Speaker 1: making all those life bets. So you don't want to 664 00:38:10,000 --> 00:38:12,920 Speaker 1: have something that's going to stand anyway. If you're playing poker, 665 00:38:12,960 --> 00:38:15,440 Speaker 1: if you were playing any game, you don't want to 666 00:38:15,480 --> 00:38:18,520 Speaker 1: have the ego stand in the way of making smart decisions. Right, 667 00:38:18,800 --> 00:38:21,799 Speaker 1: makes makes perfect sense to me. Let's talk a little 668 00:38:21,800 --> 00:38:25,799 Speaker 1: bit about markets and the economy. In the book Principles, 669 00:38:26,040 --> 00:38:31,279 Speaker 1: you describe back testing your trading intuition in order to 670 00:38:31,320 --> 00:38:35,760 Speaker 1: develop a system for interest rate, stock, currency, and precious metals. 671 00:38:36,239 --> 00:38:40,160 Speaker 1: Tell us how the idea of back testing intuition developed 672 00:38:40,320 --> 00:38:44,839 Speaker 1: and how you implemented that over the early history of Bridgewater. Well, 673 00:38:44,920 --> 00:38:48,040 Speaker 1: I've every I got in a habit of every time 674 00:38:48,040 --> 00:38:50,719 Speaker 1: I would put on a trade, I would write down 675 00:38:50,719 --> 00:38:54,719 Speaker 1: the criteria for putting on that trade, and I when 676 00:38:54,760 --> 00:38:56,839 Speaker 1: I would close out the trade and I'd read why 677 00:38:56,840 --> 00:38:58,600 Speaker 1: did I do it? And you know, how did that go? 678 00:38:59,080 --> 00:39:01,839 Speaker 1: Just as a learning as apparence, and I found that 679 00:39:01,920 --> 00:39:06,359 Speaker 1: if I wrote those criteria really clearly and I put 680 00:39:06,400 --> 00:39:10,719 Speaker 1: them into equations or algorithms, I could then see how 681 00:39:10,800 --> 00:39:12,839 Speaker 1: they would have performed in the past. Let me let 682 00:39:12,840 --> 00:39:15,760 Speaker 1: me interrupt you a brief second, from the beginning days 683 00:39:15,800 --> 00:39:19,040 Speaker 1: of Bridgewater, from your earliest days as a trader, you 684 00:39:19,080 --> 00:39:22,439 Speaker 1: were writing down here in my trade criteria, here's why 685 00:39:22,480 --> 00:39:24,880 Speaker 1: I expect this to work, and then you would do 686 00:39:24,920 --> 00:39:28,120 Speaker 1: a postmortem saying here's why this worked or here's why 687 00:39:28,160 --> 00:39:31,360 Speaker 1: this didn't. Yeah, very very early as long as I 688 00:39:31,360 --> 00:39:33,920 Speaker 1: can remember, and then that would be eventually reduced to 689 00:39:33,920 --> 00:39:37,719 Speaker 1: an algorithm. Well, what I discovered. I just did it 690 00:39:37,760 --> 00:39:40,040 Speaker 1: to reflect on the trade. But I discovered that if 691 00:39:40,080 --> 00:39:43,360 Speaker 1: I was clear enough, I could see how that decision 692 00:39:43,440 --> 00:39:47,120 Speaker 1: rule would have worked in the past, throughout history. And 693 00:39:47,280 --> 00:39:51,360 Speaker 1: that was enlightening, right, because then I could see I 694 00:39:51,400 --> 00:39:53,719 Speaker 1: could test it in all different countries I contested in 695 00:39:53,760 --> 00:39:57,200 Speaker 1: all different markets. Wow, that was enlightening. And then I 696 00:39:57,239 --> 00:40:00,360 Speaker 1: realized that if I could take that rule, that this 697 00:40:00,520 --> 00:40:04,360 Speaker 1: algorithm um, I could also have a process information on 698 00:40:04,400 --> 00:40:08,000 Speaker 1: a real time basis, so as information was coming in, 699 00:40:08,120 --> 00:40:11,160 Speaker 1: it could go through the rule and then tell me 700 00:40:11,680 --> 00:40:14,480 Speaker 1: essentially buy sell and do that. So I gained a 701 00:40:14,600 --> 00:40:18,320 Speaker 1: perspective and I gained a tool that was fantastic for 702 00:40:18,400 --> 00:40:21,600 Speaker 1: my decision making. And it was it was so invaluable 703 00:40:21,960 --> 00:40:24,600 Speaker 1: because the computer can do things that the mind can. 704 00:40:24,680 --> 00:40:27,800 Speaker 1: It can process a lot more information, a lot faster, 705 00:40:28,000 --> 00:40:31,239 Speaker 1: a lot more precisely, and a lot less emotionally. And 706 00:40:31,320 --> 00:40:34,200 Speaker 1: I so I could build those strategies. So that's how 707 00:40:34,239 --> 00:40:37,680 Speaker 1: I started to think about those decision rules and then 708 00:40:37,920 --> 00:40:42,120 Speaker 1: I found um, and that was great. So I built 709 00:40:42,160 --> 00:40:46,120 Speaker 1: these systems, these decision making systems that would work like 710 00:40:46,160 --> 00:40:48,360 Speaker 1: a GPS. Like if I'm driving in the car and 711 00:40:48,400 --> 00:40:52,000 Speaker 1: the GPSS turn right, turn left using those my criteria, 712 00:40:52,480 --> 00:40:54,719 Speaker 1: UM yeah, I could do that, or I could say no, 713 00:40:54,880 --> 00:40:57,040 Speaker 1: I think I should turn right. It's like having a 714 00:40:57,040 --> 00:41:00,000 Speaker 1: computer chess system next to you while you're playing chess 715 00:41:00,080 --> 00:41:03,920 Speaker 1: us but with your criteria. And then the reconciliation of 716 00:41:03,960 --> 00:41:07,359 Speaker 1: what the computer saying with what I'm saying, uh than 717 00:41:07,680 --> 00:41:10,799 Speaker 1: helped because sometimes if I would see it differently from 718 00:41:10,800 --> 00:41:13,719 Speaker 1: the computer, then I would say, well why would that be? 719 00:41:13,719 --> 00:41:16,880 Speaker 1: Because those were my rules, so how do what's going on? 720 00:41:17,440 --> 00:41:20,000 Speaker 1: And it could either be two thirds of the time 721 00:41:20,280 --> 00:41:23,200 Speaker 1: it was that the computer was seeing things that I 722 00:41:23,239 --> 00:41:26,719 Speaker 1: just wasn't because my mind is limited in capacity to 723 00:41:26,760 --> 00:41:28,319 Speaker 1: do it. But it would make sense when I would 724 00:41:28,360 --> 00:41:30,759 Speaker 1: dig in and then let's say one third of the 725 00:41:30,840 --> 00:41:33,719 Speaker 1: time I was seeing something that I hadn't properly put 726 00:41:33,760 --> 00:41:36,440 Speaker 1: into the system. And so by putting it into the 727 00:41:36,480 --> 00:41:40,160 Speaker 1: system and evolving in that way. Again, I'll emphasize that 728 00:41:40,480 --> 00:41:44,760 Speaker 1: writing down of principles, putting them in there and then 729 00:41:45,520 --> 00:41:50,400 Speaker 1: ideally encoding those principles into UH computer to make that 730 00:41:50,440 --> 00:41:54,200 Speaker 1: decision making UM. You know, has been invaluable. And that's 731 00:41:54,239 --> 00:41:58,920 Speaker 1: why that works so great with our investment decision making, 732 00:41:59,400 --> 00:42:03,920 Speaker 1: UM that it became really important for our people decision making, 733 00:42:03,920 --> 00:42:07,680 Speaker 1: our management decision making, in other words, for all decision making. 734 00:42:07,960 --> 00:42:09,839 Speaker 1: You can do this. It doesn't have to be just 735 00:42:09,920 --> 00:42:12,920 Speaker 1: investment decision making. And this is the thing I really 736 00:42:12,960 --> 00:42:16,279 Speaker 1: really want to pass along. UM. If you think that 737 00:42:16,360 --> 00:42:20,200 Speaker 1: you're making decisions, UM, and you just sort of slow 738 00:42:20,280 --> 00:42:23,520 Speaker 1: yourself down and you write those things down, it'll help 739 00:42:23,560 --> 00:42:26,600 Speaker 1: you clarify them and when the next time one of 740 00:42:26,640 --> 00:42:29,080 Speaker 1: those comes along, you can refer to it, and you 741 00:42:29,080 --> 00:42:32,600 Speaker 1: could also share it with other people so that you say, ah, God, 742 00:42:32,680 --> 00:42:35,400 Speaker 1: we understand each other why we're doing that, and you 743 00:42:35,400 --> 00:42:38,120 Speaker 1: can refine it, and then you can build on that 744 00:42:38,200 --> 00:42:41,839 Speaker 1: nowadays with and not just nowadays, we've been doing this 745 00:42:41,880 --> 00:42:44,360 Speaker 1: for twenty five years. You can build that in terms 746 00:42:44,400 --> 00:42:48,279 Speaker 1: of that uh, that systemized type of approach, and that's invaluable. 747 00:42:48,360 --> 00:42:50,680 Speaker 1: Let's stay with the investment thesis for a second, because 748 00:42:50,680 --> 00:42:53,800 Speaker 1: there's a quote from the book I have to share. 749 00:42:54,400 --> 00:42:57,399 Speaker 1: There are anxious times in every investor's career when your 750 00:42:57,480 --> 00:43:01,600 Speaker 1: expectations of what should be happening are in align with 751 00:43:01,640 --> 00:43:04,399 Speaker 1: what is happening, and you don't know if what you're 752 00:43:04,400 --> 00:43:09,759 Speaker 1: looking at our great opportunities or catastrophic mistakes. Is this 753 00:43:09,920 --> 00:43:12,759 Speaker 1: the sort of thing that the system helps you work 754 00:43:12,800 --> 00:43:15,760 Speaker 1: your way through. Yes, I mean I think you must 755 00:43:15,760 --> 00:43:20,520 Speaker 1: know the feeling, like every investor right, everybody else's wrong. Well, 756 00:43:20,560 --> 00:43:23,840 Speaker 1: but you don't know, you say, or am I missing something? 757 00:43:24,680 --> 00:43:26,640 Speaker 1: You know? Because every day it ticks. You know, It's 758 00:43:26,640 --> 00:43:29,360 Speaker 1: not like you buy and then you sell. It's that 759 00:43:29,440 --> 00:43:32,960 Speaker 1: you're sitting with that position and every day it's doing 760 00:43:33,000 --> 00:43:36,000 Speaker 1: this and somehow it's going the wrong way, and you 761 00:43:36,080 --> 00:43:39,960 Speaker 1: really don't know am I missing something or is the 762 00:43:40,000 --> 00:43:43,960 Speaker 1: market just about to catch up? The system helps you, right, 763 00:43:44,200 --> 00:43:48,839 Speaker 1: because the system consists of that computer betting machine. Right, 764 00:43:48,960 --> 00:43:51,920 Speaker 1: it's like that that that chess machine and so on, 765 00:43:52,480 --> 00:43:55,799 Speaker 1: and you also have it down that you know, I 766 00:43:55,960 --> 00:43:59,440 Speaker 1: structure it so that no one bet is such a 767 00:43:59,480 --> 00:44:03,040 Speaker 1: big thing, so you're played in large numbers, and so 768 00:44:03,160 --> 00:44:06,440 Speaker 1: you're executing it and you're looking at the reasons. So 769 00:44:06,600 --> 00:44:10,680 Speaker 1: it helps you through, helps me through those emotionally challenging 770 00:44:10,760 --> 00:44:13,480 Speaker 1: periods because you learned to gain perspective. You know how 771 00:44:13,520 --> 00:44:16,839 Speaker 1: bad it can go. That perspective is invaluable. So let's 772 00:44:16,880 --> 00:44:20,319 Speaker 1: give a specific example of that fork in the road 773 00:44:20,360 --> 00:44:23,560 Speaker 1: where it either could have been a catastrophe or an opportunity. 774 00:44:23,920 --> 00:44:26,680 Speaker 1: I have to bring up in two thousand and eight, 775 00:44:26,880 --> 00:44:32,319 Speaker 1: when most funds were down thirty, your flagship fund was 776 00:44:32,440 --> 00:44:37,759 Speaker 1: up four and then fast forward to your returns for 777 00:44:37,880 --> 00:44:42,439 Speaker 1: pure Alpha one where plus fort pure OFFA two, which 778 00:44:42,520 --> 00:44:47,080 Speaker 1: is a more modest portfolio, is plus twenty eight, and 779 00:44:47,120 --> 00:44:51,720 Speaker 1: then the fairly conservative Old Weather portfolio was up eighteen percent. 780 00:44:52,360 --> 00:44:56,439 Speaker 1: I'm looking at these as an example of that great 781 00:44:56,480 --> 00:45:01,520 Speaker 1: opportunity versus great catastrophe. Would these returns been possible without 782 00:45:01,560 --> 00:45:06,359 Speaker 1: that process? No, Again, where they come from. You have 783 00:45:06,480 --> 00:45:10,040 Speaker 1: to think differently, You have to think independently, you have, 784 00:45:10,280 --> 00:45:13,160 Speaker 1: and then you also have to know that you could 785 00:45:13,200 --> 00:45:17,239 Speaker 1: be wrong. Right, Okay, it's two thousand and eight going 786 00:45:17,320 --> 00:45:21,480 Speaker 1: to be my two all over again? What what did 787 00:45:21,520 --> 00:45:24,920 Speaker 1: I do differently? So the things that I did differently 788 00:45:25,200 --> 00:45:28,399 Speaker 1: accounted for why we could do that comfortably? You know 789 00:45:28,800 --> 00:45:34,719 Speaker 1: that element comfortably comfortable, comfortable, much more comfortably, much more 790 00:45:34,800 --> 00:45:38,280 Speaker 1: comfortably could have been otherwise done. What sort of self 791 00:45:38,320 --> 00:45:41,760 Speaker 1: doubts were plaguing you in oh eight? Were you thinking, hey, 792 00:45:41,800 --> 00:45:43,839 Speaker 1: this is eighty two all over again? Did that enter 793 00:45:43,880 --> 00:45:47,200 Speaker 1: your head? Yes? Of course, right, is that that experience? 794 00:45:47,239 --> 00:45:49,680 Speaker 1: Am I going to be terribly wrong? Because here it is, 795 00:45:49,719 --> 00:45:52,640 Speaker 1: I'm calculating that we can have a meltdown, that we 796 00:45:52,680 --> 00:45:55,440 Speaker 1: can have that that whole exercise. But you had a 797 00:45:55,560 --> 00:45:58,640 Speaker 1: very different system assisting you at that time, right, I 798 00:45:58,680 --> 00:46:02,279 Speaker 1: had something like twenty five years more experience with that 799 00:46:02,440 --> 00:46:06,160 Speaker 1: other memory in my mind of all of those other 800 00:46:06,800 --> 00:46:09,920 Speaker 1: you know, lessons I learned in compensating ways and so 801 00:46:10,000 --> 00:46:12,959 Speaker 1: on and so so it would be like going into 802 00:46:13,000 --> 00:46:16,319 Speaker 1: the hurricane the next time, where the hurricane kicks the 803 00:46:16,320 --> 00:46:18,520 Speaker 1: hell out of you the first time, and then you 804 00:46:18,880 --> 00:46:21,279 Speaker 1: build systems and things and you go through and you 805 00:46:21,320 --> 00:46:24,640 Speaker 1: still say, oh, is this scary hurricane? And I hope 806 00:46:24,680 --> 00:46:27,359 Speaker 1: I'm well enough protected. But that's what it was like, 807 00:46:27,520 --> 00:46:34,120 Speaker 1: not knowing exactly, but having enough cautions and and diversifications 808 00:46:34,239 --> 00:46:39,960 Speaker 1: and calculations and triangulations and so on, which a girdered. Essentially, 809 00:46:40,480 --> 00:46:44,279 Speaker 1: um are decision making and going through that. So I 810 00:46:44,360 --> 00:46:47,440 Speaker 1: referenced the Old Weather portfolio. Let's let's talk about that 811 00:46:47,480 --> 00:46:51,200 Speaker 1: a little bit. Um. Essentially, you create the idea of 812 00:46:51,520 --> 00:46:57,239 Speaker 1: risk parity earlier, and then from two thousand and three, Um, 813 00:46:57,480 --> 00:47:00,400 Speaker 1: you set up the Old Weather portfolio where you were 814 00:47:00,440 --> 00:47:03,600 Speaker 1: the only clients. How did this scale up? What is 815 00:47:03,640 --> 00:47:06,560 Speaker 1: it dollars or something like that these days? How did 816 00:47:06,560 --> 00:47:11,800 Speaker 1: that scale up from raised pocket money to a full 817 00:47:12,200 --> 00:47:16,000 Speaker 1: institutional product. Well, I, you know, this was now the 818 00:47:16,040 --> 00:47:18,360 Speaker 1: stage that I had money that I was going to 819 00:47:18,480 --> 00:47:21,520 Speaker 1: be from my family beyond me. So I put together 820 00:47:21,560 --> 00:47:24,400 Speaker 1: a trust and I had to think, um, I'm not 821 00:47:24,440 --> 00:47:28,239 Speaker 1: going to be around to make tactical decisions and you know, 822 00:47:28,360 --> 00:47:31,160 Speaker 1: making money in the market alpha's zero sum game. You 823 00:47:31,200 --> 00:47:33,440 Speaker 1: don't know who's going to do it. What is the 824 00:47:33,520 --> 00:47:39,080 Speaker 1: perpetual excellent portfolio? What should that strategic asset allocation be right? 825 00:47:39,440 --> 00:47:42,480 Speaker 1: What is the mix of assets? And um I knew 826 00:47:42,520 --> 00:47:45,880 Speaker 1: how markets behaved in relationship to each other. Every market 827 00:47:47,400 --> 00:47:51,360 Speaker 1: is the present value of expected future cash flows discount 828 00:47:51,360 --> 00:47:54,240 Speaker 1: of present value of those cash flows, and those factors 829 00:47:54,280 --> 00:47:59,320 Speaker 1: are the main drivers are inflation and growth. And so 830 00:47:59,640 --> 00:48:03,600 Speaker 1: um I I knew how one market would go up 831 00:48:03,600 --> 00:48:06,520 Speaker 1: in another market would go down depending on the circumstances. 832 00:48:07,239 --> 00:48:10,040 Speaker 1: Maybe we wouldn't know what those circumstances of the future 833 00:48:10,080 --> 00:48:12,879 Speaker 1: would be, but we did know that they would move 834 00:48:12,960 --> 00:48:16,200 Speaker 1: around depending on those circumstances. So I didn't know how 835 00:48:16,239 --> 00:48:20,280 Speaker 1: to engineer for balance. And I knew that I could 836 00:48:20,640 --> 00:48:26,120 Speaker 1: um that they have comparable comparable risk assets are approximately 837 00:48:26,160 --> 00:48:29,040 Speaker 1: comparably good. If you think about let's say stocks, and 838 00:48:29,080 --> 00:48:32,359 Speaker 1: you compare them with bonds, what a stock is is 839 00:48:32,480 --> 00:48:37,160 Speaker 1: a leveraged equity, right, because the average company has a 840 00:48:37,239 --> 00:48:41,479 Speaker 1: debt um ratio debt equity ratio of one to one, 841 00:48:41,960 --> 00:48:44,759 Speaker 1: So it's leveraging that up. And the one thing I 842 00:48:44,800 --> 00:48:47,319 Speaker 1: think that you know of investing, and this has been 843 00:48:47,360 --> 00:48:51,200 Speaker 1: true throughout history is that cash has to have a lower, 844 00:48:51,239 --> 00:48:54,920 Speaker 1: lower expected return than other asset classes, because if it doesn't, 845 00:48:55,080 --> 00:48:58,040 Speaker 1: the whole system implodes. Another word, central banks put cash 846 00:48:58,040 --> 00:49:00,759 Speaker 1: on deposit. People with better idea has come alonger in 847 00:49:00,800 --> 00:49:03,040 Speaker 1: a higher return. If that doesn't work that way and 848 00:49:03,080 --> 00:49:05,759 Speaker 1: they are all a learning learning lower returns, the whole 849 00:49:05,760 --> 00:49:09,399 Speaker 1: thing implodes. So the notion is how to achieve that 850 00:49:09,560 --> 00:49:14,720 Speaker 1: right balance? And that's what motivated me to for myself put, um, 851 00:49:14,760 --> 00:49:17,279 Speaker 1: you know, most of my um money that I was 852 00:49:17,320 --> 00:49:20,960 Speaker 1: passing along structured that way, and I just, um, you know, 853 00:49:21,040 --> 00:49:23,239 Speaker 1: I told it to other clients. You know, here's how 854 00:49:23,320 --> 00:49:26,200 Speaker 1: you do it, and um, then they wanted us to 855 00:49:26,239 --> 00:49:29,080 Speaker 1: do it for them. And that's what we've been you know, 856 00:49:29,160 --> 00:49:32,400 Speaker 1: doing since we have been speaking with Ray Dalio. He 857 00:49:32,520 --> 00:49:36,239 Speaker 1: is the founder and chief investment officer of Bridgewater Associates. 858 00:49:36,480 --> 00:49:38,960 Speaker 1: He is also the author of the New New York 859 00:49:38,960 --> 00:49:42,880 Speaker 1: Times bestseller Principles. I strongly suggest you go out and 860 00:49:42,960 --> 00:49:45,920 Speaker 1: read it. If you enjoy this conversation, be sure and 861 00:49:46,000 --> 00:49:48,840 Speaker 1: check out our podcast extras. Will we keep the tapes 862 00:49:48,960 --> 00:49:52,759 Speaker 1: rolling and continue to talk about all things investing. Be 863 00:49:52,840 --> 00:49:55,719 Speaker 1: sure and check out my daily column on Bloomberg view 864 00:49:55,760 --> 00:49:59,360 Speaker 1: dot com. You could follow me on Twitter at Ridholts. 865 00:49:59,480 --> 00:50:02,680 Speaker 1: You are now tweeting, aren't you? And your your Twitter 866 00:50:02,760 --> 00:50:07,960 Speaker 1: handle is at Dahlio at ray Dahlio at ray Dahio. UM. 867 00:50:08,000 --> 00:50:11,680 Speaker 1: We love your comments, feedback and suggestions right to us 868 00:50:11,719 --> 00:50:16,040 Speaker 1: at m IB podcast at Bloomberg dot net. I'm Barry Ridholts. 869 00:50:16,120 --> 00:50:32,200 Speaker 1: You're listening to Masters in Business on Bloomberg Radio. Welcome 870 00:50:32,239 --> 00:50:34,360 Speaker 1: to the podcast, Ray, Thank you so much for doing this. 871 00:50:34,440 --> 00:50:37,600 Speaker 1: I've been looking forward to this for so long, UM, 872 00:50:37,600 --> 00:50:39,520 Speaker 1: and I'm really excited. I wish we had you for 873 00:50:39,560 --> 00:50:43,200 Speaker 1: another two hours. Of course, I have a million questions 874 00:50:43,280 --> 00:50:47,040 Speaker 1: for you that we didn't get to. Um. There's a 875 00:50:47,040 --> 00:50:49,239 Speaker 1: handful of things that that I have to ask you 876 00:50:49,320 --> 00:50:53,640 Speaker 1: before you get to our our favorite questions, starting with 877 00:50:53,880 --> 00:50:57,279 Speaker 1: I'm sure I'm gonna mangle this person's name. Wang o 878 00:50:57,480 --> 00:51:02,640 Speaker 1: ishans philosophy, Um, when Sean? When is she Sean? Okay? 879 00:51:04,440 --> 00:51:09,760 Speaker 1: The unwise worry over nothing, the capable worry about the future, 880 00:51:10,640 --> 00:51:16,160 Speaker 1: and heroes go for unattainable goals. Explain that philosophy because 881 00:51:16,280 --> 00:51:22,279 Speaker 1: I find that fascinating. Well, won't she Sean? Is very 882 00:51:22,840 --> 00:51:26,040 Speaker 1: very important? Man? In China? Some would say the number 883 00:51:26,040 --> 00:51:32,280 Speaker 1: two men in China, and um he was important shaper 884 00:51:32,320 --> 00:51:36,360 Speaker 1: of the Chinese economy for the last thirty years or so, 885 00:51:36,600 --> 00:51:40,680 Speaker 1: and then he was put in responsibility of eliminating corruption 886 00:51:40,719 --> 00:51:47,200 Speaker 1: in China. And UM he's a very anyway, quite a 887 00:51:47,200 --> 00:51:51,719 Speaker 1: remarkable man, and he always uh see things at the 888 00:51:51,840 --> 00:51:57,080 Speaker 1: higher level, you know, uh, the timeless and universal laws 889 00:51:57,800 --> 00:52:01,560 Speaker 1: of human nature and and so on. So when there 890 00:52:01,560 --> 00:52:05,279 Speaker 1: are ever discussions with him, uh, you know, uh, they 891 00:52:05,320 --> 00:52:10,359 Speaker 1: immediately rise to those highlight levels and discuss, you know, 892 00:52:10,400 --> 00:52:12,919 Speaker 1: how does reality work and how's it worked that way 893 00:52:12,920 --> 00:52:17,239 Speaker 1: through time? So, um, you know that's uh, that's why. 894 00:52:17,960 --> 00:52:21,600 Speaker 1: So uh, there's a sentence in the book that looks 895 00:52:21,680 --> 00:52:27,040 Speaker 1: like it's derived from that philosophy, which is, um, a 896 00:52:27,120 --> 00:52:29,840 Speaker 1: hero I'm gonna paraphrase. I'm gonna give the exact quote. 897 00:52:30,880 --> 00:52:35,360 Speaker 1: A hero is an ordinary person who has achieved something extraordinary, 898 00:52:35,840 --> 00:52:39,000 Speaker 1: something beyond the normal range of achievement. And I think 899 00:52:39,040 --> 00:52:43,960 Speaker 1: the exact quote is extraordinarily successful. People are not successful 900 00:52:44,040 --> 00:52:49,319 Speaker 1: because they are extraordinary. Is that related to you? My 901 00:52:49,480 --> 00:52:52,280 Speaker 1: son in two thousand fourteen gave me a book called 902 00:52:52,320 --> 00:52:57,360 Speaker 1: Hero of a Thousand Faces. Joseph Campbell, Joseph Campbell read 903 00:52:57,400 --> 00:53:01,120 Speaker 1: the book, very very famous book Assigned in College is 904 00:53:01,160 --> 00:53:05,440 Speaker 1: now all over like highly highly regarded, and it's so 905 00:53:05,560 --> 00:53:10,440 Speaker 1: interesting because what it does is it characterizes a particular 906 00:53:10,480 --> 00:53:13,000 Speaker 1: type of person who evolves to have a particular type 907 00:53:13,040 --> 00:53:16,439 Speaker 1: of life. And when we say hero um, like they said, 908 00:53:16,920 --> 00:53:20,680 Speaker 1: it doesn't mean um, you know, some unique particular person. 909 00:53:20,719 --> 00:53:23,120 Speaker 1: It means that a person goes down a particular path 910 00:53:23,760 --> 00:53:27,320 Speaker 1: and they achieve some extraordinary things and they get themselves 911 00:53:27,320 --> 00:53:30,800 Speaker 1: in a position where others are more important to them 912 00:53:30,800 --> 00:53:35,160 Speaker 1: than themselves. Okay, And there's a journey and he and 913 00:53:35,480 --> 00:53:38,080 Speaker 1: you go through that journey, and he recounts that journey. 914 00:53:38,320 --> 00:53:40,520 Speaker 1: It would take me too long here to recount the book. 915 00:53:40,600 --> 00:53:43,560 Speaker 1: But you know, first you have a taste for adventure. 916 00:53:43,680 --> 00:53:47,000 Speaker 1: You like adventure. You go out and with those adventures 917 00:53:47,239 --> 00:53:50,279 Speaker 1: you have your successes and your failures, and you know 918 00:53:50,400 --> 00:53:54,440 Speaker 1: your fights and so on, and you learn and inevitably, uh, 919 00:53:54,600 --> 00:53:58,480 Speaker 1: you have your crash, your big crash, he calls it 920 00:53:58,760 --> 00:54:01,920 Speaker 1: um the abyss or or the belly of the whale. 921 00:54:01,960 --> 00:54:05,960 Speaker 1: Experience that big crash and how that big crash, how 922 00:54:06,000 --> 00:54:09,960 Speaker 1: you handle it is the defining characteristic the um in 923 00:54:10,080 --> 00:54:14,600 Speaker 1: that big crash um. Some people have a metamorphosis. They 924 00:54:14,719 --> 00:54:18,720 Speaker 1: change in important ways. Most importantly, they gain the fear 925 00:54:18,800 --> 00:54:21,480 Speaker 1: of that crash, They gave wisdom and so on, and 926 00:54:21,520 --> 00:54:24,960 Speaker 1: then they continue on. Some people get off the field, 927 00:54:25,280 --> 00:54:27,040 Speaker 1: they have the big crash, they said, I don't want 928 00:54:27,040 --> 00:54:29,960 Speaker 1: to do this anymore, and they don't have a metamorphosis, 929 00:54:30,239 --> 00:54:32,520 Speaker 1: or if they don't have a metamorphosis, they crash again, 930 00:54:32,520 --> 00:54:35,799 Speaker 1: and they keep crashing. And so once they start to 931 00:54:35,920 --> 00:54:39,440 Speaker 1: learn those lessons, they begin to find out that they 932 00:54:39,480 --> 00:54:42,240 Speaker 1: can be more and more successful. I know that happened 933 00:54:42,239 --> 00:54:46,120 Speaker 1: to me. I crashed two changed my whole attitude about 934 00:54:46,200 --> 00:54:49,680 Speaker 1: decision making meta. It was my metamorphosis. And you go 935 00:54:49,760 --> 00:54:51,840 Speaker 1: on and you play your game and you have your fights. 936 00:54:52,280 --> 00:54:54,640 Speaker 1: And when you do this, and you do this with others, 937 00:54:55,040 --> 00:54:58,040 Speaker 1: the others in the mission becomes more important to you 938 00:54:58,360 --> 00:55:01,239 Speaker 1: than you in and of itself. And you get to 939 00:55:01,320 --> 00:55:04,640 Speaker 1: a later stage in life, and at that later stage 940 00:55:04,640 --> 00:55:07,799 Speaker 1: in life, you want them to be successful. You have 941 00:55:07,920 --> 00:55:10,799 Speaker 1: a bunch of battles that you fought. Oh you could 942 00:55:10,840 --> 00:55:13,760 Speaker 1: do that again. You can be successful again. The rewards 943 00:55:13,840 --> 00:55:16,279 Speaker 1: of being successful again is you know, is not the 944 00:55:16,360 --> 00:55:19,960 Speaker 1: same as the rewards of helping other people be successful. 945 00:55:20,280 --> 00:55:22,240 Speaker 1: And so when he gave it to me two thousand 946 00:55:22,200 --> 00:55:25,319 Speaker 1: and fourteen, like, you know, I don't like I don't 947 00:55:25,320 --> 00:55:27,920 Speaker 1: like public attention. I stayed away from public attention. I 948 00:55:27,920 --> 00:55:29,960 Speaker 1: don't like it. And then I'm thinking, I've got this 949 00:55:30,080 --> 00:55:33,600 Speaker 1: particular these principles that have helped me. And then I 950 00:55:33,719 --> 00:55:36,800 Speaker 1: and I think, okay, should I return the boon because 951 00:55:36,800 --> 00:55:39,600 Speaker 1: he describes the returning the boon, and returning the boon 952 00:55:39,680 --> 00:55:42,000 Speaker 1: means sort of returning the think the gifts that you 953 00:55:42,120 --> 00:55:45,279 Speaker 1: learned along the way to help others, and so like 954 00:55:45,719 --> 00:55:49,600 Speaker 1: as you're asking, it's not that the success is not 955 00:55:49,719 --> 00:55:52,600 Speaker 1: because of me. The success is not because of anybody 956 00:55:52,960 --> 00:55:55,960 Speaker 1: as much as it is the principles that are learned 957 00:55:56,000 --> 00:55:59,040 Speaker 1: along the way, the recipes that other people can have 958 00:55:59,320 --> 00:56:03,040 Speaker 1: in order to make them successful. And so that was 959 00:56:03,080 --> 00:56:05,839 Speaker 1: the you know, that's the lesson. That's the time us. 960 00:56:05,880 --> 00:56:08,640 Speaker 1: So I gave um Hero of a Thousand Faces to 961 00:56:08,880 --> 00:56:12,439 Speaker 1: n Sean because he's a hero, he's a classic hero, 962 00:56:12,880 --> 00:56:15,440 Speaker 1: and he's at a particular stage in his life, and 963 00:56:15,520 --> 00:56:18,080 Speaker 1: I thought that that would be uh, you know, helpful 964 00:56:18,120 --> 00:56:20,520 Speaker 1: to him. And I do find it helpful to a 965 00:56:20,520 --> 00:56:22,120 Speaker 1: lot of people, and a lot of people find it 966 00:56:22,360 --> 00:56:25,439 Speaker 1: helpful and interesting perspective, which is why you, as you say, 967 00:56:25,719 --> 00:56:28,640 Speaker 1: it's being read all over right. In fact, the book 968 00:56:28,680 --> 00:56:33,040 Speaker 1: has been described as the basis for every major piece 969 00:56:33,080 --> 00:56:37,200 Speaker 1: of literature film. It's just the classic narrative heroes journey 970 00:56:37,400 --> 00:56:43,480 Speaker 1: and kudos to Campbell star Wars. Exactly right, exactly, So, 971 00:56:43,760 --> 00:56:46,120 Speaker 1: since let's talk a little bit about returning the boon. 972 00:56:46,440 --> 00:56:50,799 Speaker 1: You've been exploring philanthropy as well as you have a 973 00:56:50,840 --> 00:56:55,239 Speaker 1: fascination with ocean exploration. How do you see the next 974 00:56:55,239 --> 00:56:59,400 Speaker 1: phase of your life? Um, working in those areas, be 975 00:56:59,480 --> 00:57:03,200 Speaker 1: it film for topic, anything involving um, what you're doing 976 00:57:03,239 --> 00:57:06,839 Speaker 1: now with os Yeah, the big picture, you know. So 977 00:57:07,000 --> 00:57:10,120 Speaker 1: three phases in one's life. I think first phase is 978 00:57:10,160 --> 00:57:12,399 Speaker 1: you're dependent on others and you're learning, you're a kid. 979 00:57:13,200 --> 00:57:18,480 Speaker 1: Second phase, Uh, you're working, others are dependent on you, 980 00:57:18,480 --> 00:57:22,680 Speaker 1: You're trying to be successful. The transition from the second 981 00:57:22,680 --> 00:57:25,440 Speaker 1: phase to the third phase is returning the boon, passing 982 00:57:25,480 --> 00:57:28,480 Speaker 1: along what you learned so that others can be successful 983 00:57:28,520 --> 00:57:31,120 Speaker 1: without you and you're free to live and free to die. 984 00:57:31,160 --> 00:57:34,320 Speaker 1: As they describe it, that's absolutely right. So that's where 985 00:57:34,880 --> 00:57:37,440 Speaker 1: I am so now is in that the main thing 986 00:57:37,480 --> 00:57:41,439 Speaker 1: about this other phrases, everybody's good without me, and I'm 987 00:57:41,480 --> 00:57:44,560 Speaker 1: free of obligation and I can have fun. Now where 988 00:57:44,600 --> 00:57:46,720 Speaker 1: do I want to go have fun? I love the markets. 989 00:57:46,760 --> 00:57:48,720 Speaker 1: I love the game. I will play the markets since 990 00:57:49,640 --> 00:57:52,800 Speaker 1: until I die, because that's a game I played all along. 991 00:57:52,880 --> 00:57:55,120 Speaker 1: I love it. I'll continue to do that. That will 992 00:57:55,160 --> 00:57:57,520 Speaker 1: be my main activity that and I'll continue to do 993 00:57:57,600 --> 00:58:00,600 Speaker 1: that at Bridgewater and as long as they find me useful, 994 00:58:00,720 --> 00:58:03,880 Speaker 1: I'll continue to do that. Uh. And then but there's 995 00:58:03,920 --> 00:58:06,560 Speaker 1: all the other joys of life. Life is a giant 996 00:58:06,600 --> 00:58:09,640 Speaker 1: s Morgensborg of of exciting things. And part of that, 997 00:58:09,680 --> 00:58:12,560 Speaker 1: as you say, is philanthropy. In other words, Um, you know, 998 00:58:12,560 --> 00:58:15,120 Speaker 1: I came from nothing. I'll end up with nothing at 999 00:58:15,160 --> 00:58:17,200 Speaker 1: the end of the day. And yet so to think 1000 00:58:17,240 --> 00:58:20,680 Speaker 1: about who this could be used by for in important 1001 00:58:20,720 --> 00:58:25,040 Speaker 1: ways is fantastic, right. So that that all, you know. 1002 00:58:25,120 --> 00:58:27,280 Speaker 1: Then there's the approach of how do I do that? 1003 00:58:27,720 --> 00:58:29,480 Speaker 1: You know? And well, you know, we do it as 1004 00:58:29,520 --> 00:58:33,160 Speaker 1: a family activity. Different people have to uh find their passions, 1005 00:58:33,360 --> 00:58:37,400 Speaker 1: so different people have different passions. For me, one of 1006 00:58:37,400 --> 00:58:41,560 Speaker 1: the things that's passion uh for me is nature. I 1007 00:58:41,640 --> 00:58:44,800 Speaker 1: love nature. I learned from lent nature. It's a big thing. 1008 00:58:45,200 --> 00:58:49,360 Speaker 1: And I particularly um uh found the ocean to be 1009 00:58:49,480 --> 00:58:53,480 Speaker 1: unbelievable because think about it, Um, there's a there's a 1010 00:58:53,480 --> 00:58:58,560 Speaker 1: sheet that's the ocean UH layer, and that basically UH 1011 00:58:58,840 --> 00:59:02,000 Speaker 1: is about half the world surface above it. The highest 1012 00:59:02,000 --> 00:59:06,480 Speaker 1: point everest is equal to the greatest s depth, So 1013 00:59:06,560 --> 00:59:11,720 Speaker 1: it's symmetrical, right, So there's a world under that sheet, um, 1014 00:59:11,760 --> 00:59:16,480 Speaker 1: except of the world's surface is the ocean. So the 1015 00:59:16,480 --> 00:59:20,480 Speaker 1: ocean space is about twice as large as all the 1016 00:59:20,520 --> 00:59:23,680 Speaker 1: world that we know that's above the ocean, and it 1017 00:59:23,720 --> 00:59:29,240 Speaker 1: hasn't explored, and it's unbelievably fascinating. It's unbelievably valuable in 1018 00:59:29,480 --> 00:59:34,840 Speaker 1: in so many ways. So enabling ocean exploration and exploring 1019 00:59:34,960 --> 00:59:37,600 Speaker 1: to go down there with scientists and all of that 1020 00:59:37,880 --> 00:59:42,200 Speaker 1: I do find particularly enthralling. And I like to contribute 1021 00:59:42,200 --> 00:59:45,160 Speaker 1: to people doing that. So I find my ways of 1022 00:59:45,360 --> 00:59:48,240 Speaker 1: you know, ways of doing that. Blue Planet is going 1023 00:59:48,280 --> 00:59:51,720 Speaker 1: to be coming out. Blue Planet to Okay, it's gonna 1024 00:59:51,760 --> 00:59:54,720 Speaker 1: come out soon. Um. What we did is we put 1025 00:59:54,760 --> 00:59:58,280 Speaker 1: scientists on it and and with we have an exploration 1026 00:59:58,320 --> 01:00:00,760 Speaker 1: I have an exploration ship, put those scientists on it, 1027 01:00:00,840 --> 01:00:03,760 Speaker 1: and let them then do things and help to make 1028 01:00:03,800 --> 01:00:05,960 Speaker 1: people aware and bring them to that. That's one of 1029 01:00:06,000 --> 01:00:08,640 Speaker 1: the things. But we do different things. My wife is 1030 01:00:09,040 --> 01:00:16,400 Speaker 1: particularly UM affected by UM what are called UM disconnected 1031 01:00:16,400 --> 01:00:20,720 Speaker 1: and disc and disengaged youth high school students in Connecticut 1032 01:00:20,920 --> 01:00:25,200 Speaker 1: unbelievable UM disconnected meaning they're either not going to school 1033 01:00:25,640 --> 01:00:29,440 Speaker 1: or not taking classes. That's right. So disengaged means they 1034 01:00:29,480 --> 01:00:32,520 Speaker 1: go to school, but they're not really participating. They're you know, 1035 01:00:32,640 --> 01:00:34,720 Speaker 1: just they don't study the test, they don't try much. 1036 01:00:35,600 --> 01:00:40,040 Speaker 1: Disconnected is they don't know where they are. Two of 1037 01:00:40,080 --> 01:00:43,160 Speaker 1: the high school students in Connecticut are one of those. 1038 01:00:43,760 --> 01:00:47,600 Speaker 1: And that's what kind of futures are are they gonna have? 1039 01:00:47,640 --> 01:00:49,240 Speaker 1: Where are they going to be? They're gonna be on 1040 01:00:49,280 --> 01:00:52,160 Speaker 1: the streets and so on, And she relates very much 1041 01:00:52,200 --> 01:00:54,560 Speaker 1: to those in terms of that tragedy. So that's where 1042 01:00:54,560 --> 01:00:58,680 Speaker 1: her focus of activity is for philanthropy and so UM 1043 01:00:58,760 --> 01:01:01,800 Speaker 1: and and so we have different focuses, but we share 1044 01:01:01,840 --> 01:01:04,840 Speaker 1: those things as activities. I share that four sons, we 1045 01:01:04,880 --> 01:01:07,800 Speaker 1: share them as activities. That's been my approach, and that's 1046 01:01:07,840 --> 01:01:11,400 Speaker 1: been a thrill. You know, it's the right thing to 1047 01:01:11,480 --> 01:01:14,440 Speaker 1: do at my stage of my life. So I know 1048 01:01:14,480 --> 01:01:16,760 Speaker 1: I only have you for another seven or eight minutes. 1049 01:01:17,360 --> 01:01:19,720 Speaker 1: Let me get to some at least a few of 1050 01:01:19,760 --> 01:01:23,160 Speaker 1: some of my favorite questions before we run out of time. 1051 01:01:23,960 --> 01:01:27,400 Speaker 1: Tell us the most important thing people don't know about 1052 01:01:27,480 --> 01:01:33,920 Speaker 1: your background? Um that I'm that I. Um, you know, 1053 01:01:34,040 --> 01:01:36,520 Speaker 1: I have a very modest background, and I have a 1054 01:01:36,640 --> 01:01:41,640 Speaker 1: very bad rope memory. UM. So I don't think I 1055 01:01:41,680 --> 01:01:48,120 Speaker 1: have much in the way of natural advantages. That bad 1056 01:01:48,160 --> 01:01:50,200 Speaker 1: memory led you to writing things down? Is that the 1057 01:01:50,240 --> 01:01:53,040 Speaker 1: weakness led to the principles. Um. I think to some 1058 01:01:53,120 --> 01:01:56,600 Speaker 1: extent that contributed to me writing them down. Yeah, I 1059 01:01:56,640 --> 01:01:59,800 Speaker 1: think it was a factor. Um. And although it was 1060 01:02:00,000 --> 01:02:03,520 Speaker 1: of the factors more than the clarity and so on. Um. 1061 01:02:03,560 --> 01:02:08,800 Speaker 1: But yeah, and I was a lousy student. I hated school. UM. 1062 01:02:09,040 --> 01:02:13,680 Speaker 1: Got into uh, you know CW Post College on probation, 1063 01:02:14,080 --> 01:02:18,640 Speaker 1: you know. Um. So there's nothing I think that's an 1064 01:02:18,640 --> 01:02:22,560 Speaker 1: important thing to know about a number of people that. UM. 1065 01:02:22,600 --> 01:02:25,120 Speaker 1: A lot of people think that people at the top 1066 01:02:25,680 --> 01:02:29,200 Speaker 1: are just naturally special people, and you know it's easy 1067 01:02:29,360 --> 01:02:32,840 Speaker 1: for them and all. And that's not true. I've come 1068 01:02:32,880 --> 01:02:37,600 Speaker 1: to know the most powerful, most successful people in the world, 1069 01:02:38,080 --> 01:02:40,280 Speaker 1: and I could tell you they all struggle and they 1070 01:02:40,280 --> 01:02:43,200 Speaker 1: all have weaknesses. They just know how to struggle well 1071 01:02:43,280 --> 01:02:45,720 Speaker 1: and they learn along the way. Know how to struggle 1072 01:02:45,760 --> 01:02:48,200 Speaker 1: well and learn along the way. Okay, tell us about 1073 01:02:48,280 --> 01:02:52,440 Speaker 1: some of your early mentors who guided your career. Um, 1074 01:02:52,480 --> 01:02:57,479 Speaker 1: if anyone, you know, uh, I didn't not very much 1075 01:02:57,560 --> 01:03:00,320 Speaker 1: in terms of like mentors, particular mentors that I would 1076 01:03:00,320 --> 01:03:04,320 Speaker 1: go to. It's because of how I kind of learned, um, 1077 01:03:04,400 --> 01:03:09,280 Speaker 1: which is I have to learn myself through experiences, you know. Uh. So, 1078 01:03:09,600 --> 01:03:14,280 Speaker 1: I mean there are people I admire a lot. Um 1079 01:03:14,320 --> 01:03:16,760 Speaker 1: so I think that they had probably an influence to 1080 01:03:16,840 --> 01:03:20,000 Speaker 1: watch Paul Volker. Let me let me to watch Paul 1081 01:03:20,080 --> 01:03:26,080 Speaker 1: Voker since through my lifetime, um, since nineteen seventy one 1082 01:03:26,120 --> 01:03:28,280 Speaker 1: when he was the Under Secretary of the Treasury for 1083 01:03:28,400 --> 01:03:31,960 Speaker 1: Monetary Affairs all through the eighties, and to watch him 1084 01:03:32,000 --> 01:03:36,360 Speaker 1: as a highly respected person. I look around me and 1085 01:03:36,960 --> 01:03:41,360 Speaker 1: I see people who I admire. I admire Mike Bloomberg. 1086 01:03:41,520 --> 01:03:44,720 Speaker 1: I think Mike Bloomberg, for example, in building a business 1087 01:03:44,800 --> 01:03:48,520 Speaker 1: and dealing with government, becoming a government official and a philanthropist, 1088 01:03:48,760 --> 01:03:52,320 Speaker 1: has been extraordinarily effective in all of those different ways. 1089 01:03:52,680 --> 01:03:55,600 Speaker 1: And it might not encourage him write down his principles, 1090 01:03:55,600 --> 01:03:58,280 Speaker 1: his recipes for success, because when we like to know those. 1091 01:03:58,640 --> 01:04:00,560 Speaker 1: And so there are a lot of people you know 1092 01:04:00,640 --> 01:04:03,800 Speaker 1: in the markets. Paul Tutor Jones a friend of mine, 1093 01:04:04,040 --> 01:04:08,200 Speaker 1: and so I admire him, and UM I Enmirement's character 1094 01:04:08,520 --> 01:04:11,120 Speaker 1: and I admire you know, how he makes decisions, and 1095 01:04:11,160 --> 01:04:13,920 Speaker 1: we talk a lot about that. So and I've had, 1096 01:04:13,960 --> 01:04:16,120 Speaker 1: you know, many people, I don't want to name drop 1097 01:04:16,160 --> 01:04:19,080 Speaker 1: too much, but a lot of people in their own ways. 1098 01:04:19,360 --> 01:04:22,160 Speaker 1: Seeing what they're like and interacting them, I think had 1099 01:04:22,200 --> 01:04:25,160 Speaker 1: an influence on me. I wouldn't say that I've had 1100 01:04:25,680 --> 01:04:29,520 Speaker 1: any classic mentors along the way. So you mentioned Joseph 1101 01:04:29,560 --> 01:04:32,320 Speaker 1: Campbell's Men of a Thousand Faces. What are some of 1102 01:04:32,400 --> 01:04:37,880 Speaker 1: your other favorite books? Well, UM, two others UH come 1103 01:04:37,920 --> 01:04:43,400 Speaker 1: to mind. UH A River from eden Um which is 1104 01:04:43,440 --> 01:04:49,400 Speaker 1: written by Richard Dawkins, which is about evolution. Okay, evolution 1105 01:04:50,120 --> 01:04:53,680 Speaker 1: is the greatest force in the world, in the universe, 1106 01:04:54,360 --> 01:04:59,960 Speaker 1: and uh Man is a very small part of evolution. 1107 01:05:00,840 --> 01:05:04,800 Speaker 1: And to watch how evolution works, those of the universal 1108 01:05:04,960 --> 01:05:08,800 Speaker 1: laws of life that we then really have to deal 1109 01:05:08,840 --> 01:05:12,360 Speaker 1: with UM is fascinating. It's a brief book. It's great. 1110 01:05:12,880 --> 01:05:18,120 Speaker 1: Another UH brief book and remarkable books is uh Lessons 1111 01:05:18,160 --> 01:05:23,600 Speaker 1: of History written by um uh Will Durant and his wife. 1112 01:05:23,640 --> 01:05:26,480 Speaker 1: I think it was Ariel Durant who were probably the 1113 01:05:26,520 --> 01:05:29,440 Speaker 1: greatest historians of the United States has had. They've covered 1114 01:05:29,480 --> 01:05:33,760 Speaker 1: five thousand years of history, five thousand years on written 1115 01:05:33,800 --> 01:05:36,760 Speaker 1: in five thousand pages. And then they take and they 1116 01:05:36,920 --> 01:05:39,680 Speaker 1: created a book called Lessons of History, which is a 1117 01:05:39,760 --> 01:05:44,160 Speaker 1: hundred and four pages. I like these high power short books, 1118 01:05:44,320 --> 01:05:48,920 Speaker 1: um and um, and it takes those themes through history 1119 01:05:49,200 --> 01:05:51,880 Speaker 1: and you know, sort of distills them down through their eyes. 1120 01:05:52,720 --> 01:05:55,880 Speaker 1: Very interesting. But you know, UM, I don't know. There 1121 01:05:55,880 --> 01:05:58,439 Speaker 1: are a lot of interesting too many, too many, too 1122 01:05:58,480 --> 01:06:02,480 Speaker 1: many interesting books to read, and not enough time, not 1123 01:06:02,720 --> 01:06:06,560 Speaker 1: enough time really for sure. UM. If a millennial or 1124 01:06:06,640 --> 01:06:09,360 Speaker 1: recent college graduate came to you and said they're looking 1125 01:06:09,400 --> 01:06:13,000 Speaker 1: for considering getting into finance, what sort of career advice 1126 01:06:13,440 --> 01:06:17,040 Speaker 1: might you give them? Well, Um, first of all, know 1127 01:06:17,160 --> 01:06:22,200 Speaker 1: your nature, know what your polls are, get go to 1128 01:06:22,280 --> 01:06:29,280 Speaker 1: your polls. Then expect your problems and your failures, approach 1129 01:06:29,360 --> 01:06:34,800 Speaker 1: those well and with equanimity, and then take those problems 1130 01:06:34,800 --> 01:06:37,760 Speaker 1: and that failures and diagnose them and evolve in that 1131 01:06:37,800 --> 01:06:41,160 Speaker 1: five step process. I would say that you will and 1132 01:06:41,400 --> 01:06:46,400 Speaker 1: recognize that what you're going after will change and evolve 1133 01:06:46,480 --> 01:06:50,520 Speaker 1: as you evolve to higher levels, So you know, follow 1134 01:06:50,560 --> 01:06:53,560 Speaker 1: your passion. I would say, yeah, here's here's maybe the 1135 01:06:53,600 --> 01:07:01,600 Speaker 1: simplest dreams plus embracing reality, knowing how it works well 1136 01:07:02,480 --> 01:07:07,800 Speaker 1: and knowing how to deal with it, plus determination. So 1137 01:07:07,880 --> 01:07:10,320 Speaker 1: you do that over and over and over will give 1138 01:07:10,400 --> 01:07:14,080 Speaker 1: you a successful life and a lot of evolution. And 1139 01:07:14,120 --> 01:07:17,640 Speaker 1: our final question, what is it that you know about 1140 01:07:17,680 --> 01:07:22,000 Speaker 1: the world of markets and economies and investing today that 1141 01:07:22,080 --> 01:07:24,560 Speaker 1: you wish you knew forty years ago when you were 1142 01:07:24,600 --> 01:07:30,040 Speaker 1: first lunching Bridgewater? Oh? Well, so many things. I guess. 1143 01:07:30,080 --> 01:07:34,680 Speaker 1: Maybe the thing that I think is the most common mistake, UM, 1144 01:07:35,560 --> 01:07:40,800 Speaker 1: is that people think that investments that have done well 1145 01:07:40,880 --> 01:07:47,320 Speaker 1: are good investments rather than more expensive. In other words, 1146 01:07:47,400 --> 01:07:52,760 Speaker 1: that um, if it did well lately, they like it okay. 1147 01:07:52,840 --> 01:07:55,560 Speaker 1: So that you you have to be you have to 1148 01:07:55,600 --> 01:07:59,080 Speaker 1: know what something is really worth. And uh, I guess 1149 01:07:59,080 --> 01:08:05,800 Speaker 1: another thing, UM that I learned that is that um, 1150 01:08:05,800 --> 01:08:09,680 Speaker 1: every price, every day's price, is a function of buying 1151 01:08:09,720 --> 01:08:13,320 Speaker 1: and selling. And if you know who the buyers and 1152 01:08:13,360 --> 01:08:16,400 Speaker 1: the sellers are, and you know their quantities and you 1153 01:08:16,479 --> 01:08:22,320 Speaker 1: know their motivations, it helps a lot more than the theoretical, 1154 01:08:23,080 --> 01:08:27,559 Speaker 1: uh notion of what equilibrium values should be. Since we're 1155 01:08:27,600 --> 01:08:33,519 Speaker 1: talking about philanthropy, you set something up with principles um 1156 01:08:33,560 --> 01:08:37,679 Speaker 1: and Amazon dot com. Go to principles dot com slash 1157 01:08:37,720 --> 01:08:40,920 Speaker 1: giving and tell us what that leads to. For a 1158 01:08:41,000 --> 01:08:46,960 Speaker 1: number of years, I've given philanthropic people, charitable people donations 1159 01:08:47,040 --> 01:08:52,040 Speaker 1: to their favorite charities as a holiday gift. Uh. And 1160 01:08:52,800 --> 01:08:55,200 Speaker 1: well that's because there's just so much wasteful giving, you know, 1161 01:08:55,200 --> 01:08:56,720 Speaker 1: and give them a sweater and whatever, and you have 1162 01:08:56,800 --> 01:08:58,840 Speaker 1: to wrestle with what they're going to give it. And 1163 01:08:58,920 --> 01:09:02,599 Speaker 1: this is really and appreciated gift. And most importantly, it 1164 01:09:02,640 --> 01:09:06,360 Speaker 1: gets converts a lot of waste into getting people who 1165 01:09:06,400 --> 01:09:08,920 Speaker 1: need it the most the most amount of money. So 1166 01:09:09,320 --> 01:09:13,680 Speaker 1: the amount of money that is given for giving candy 1167 01:09:13,720 --> 01:09:16,640 Speaker 1: in the holiday season is greater than the amount of 1168 01:09:16,680 --> 01:09:20,600 Speaker 1: money that goes for the American Heart Association, annual budgets 1169 01:09:20,640 --> 01:09:25,040 Speaker 1: of American Heart Association, American Cancer Society, and Habitat for 1170 01:09:25,160 --> 01:09:28,479 Speaker 1: Humanity combined. And and so I figure if I can 1171 01:09:28,520 --> 01:09:30,960 Speaker 1: pass that along, it's a great idea. A lot of 1172 01:09:30,960 --> 01:09:34,120 Speaker 1: people like it. So I'm suggesting it and not what 1173 01:09:34,200 --> 01:09:36,680 Speaker 1: I did for for the book to help to explain that, 1174 01:09:36,720 --> 01:09:39,679 Speaker 1: and also, um, you know pass it along. Is that 1175 01:09:39,840 --> 01:09:42,599 Speaker 1: for everybody who buys the book, I'll donate ten dollars 1176 01:09:42,640 --> 01:09:45,160 Speaker 1: to their favorite charity. And I set it up in 1177 01:09:45,800 --> 01:09:49,759 Speaker 1: through this length that you just referrincibles dot com slash giving. 1178 01:09:49,840 --> 01:09:52,880 Speaker 1: Is that right? Yeah? Okay, And so every purchase of 1179 01:09:52,920 --> 01:09:57,280 Speaker 1: the book through Amazon, ten dollars goes to they designated 1180 01:09:57,360 --> 01:09:59,479 Speaker 1: charity and you donate the money to that change. That's right, 1181 01:09:59,800 --> 01:10:03,760 Speaker 1: And it's so easy, so you know, buy book, go on. 1182 01:10:04,040 --> 01:10:06,960 Speaker 1: I think the website's got like a million, two hundred 1183 01:10:06,960 --> 01:10:09,160 Speaker 1: thousand charities or whatever, so it's easy to click in 1184 01:10:09,520 --> 01:10:12,360 Speaker 1: to get to the charity of your choice and you 1185 01:10:12,520 --> 01:10:16,280 Speaker 1: and it just gets there, right. And so so I'm 1186 01:10:16,320 --> 01:10:19,400 Speaker 1: doing it not only because I know appreciate this kind 1187 01:10:19,439 --> 01:10:21,479 Speaker 1: of giving and I appreciate the people who are operating 1188 01:10:21,520 --> 01:10:25,040 Speaker 1: that way, but I also would like to get people 1189 01:10:25,320 --> 01:10:27,960 Speaker 1: to see how easy it is and get the idea 1190 01:10:28,040 --> 01:10:30,800 Speaker 1: coming along. So because I think if if we could 1191 01:10:30,840 --> 01:10:33,960 Speaker 1: tilt a little bit of holiday giving so people think 1192 01:10:33,960 --> 01:10:37,040 Speaker 1: it's a good idea, um, then it'll make a lot 1193 01:10:37,080 --> 01:10:39,840 Speaker 1: of difference. So that's what I'm doing that's terrific. Thank 1194 01:10:39,880 --> 01:10:43,439 Speaker 1: you ready, this has been absolutely fascinating. We have been 1195 01:10:43,479 --> 01:10:47,800 Speaker 1: speaking with Ray Dalio of Bridgewater Associates. If you enjoy 1196 01:10:47,920 --> 01:10:50,320 Speaker 1: this conversation, be sure and look up an intro Down 1197 01:10:50,360 --> 01:10:53,360 Speaker 1: an Inch on Apple iTunes and you can see any 1198 01:10:53,439 --> 01:10:57,080 Speaker 1: of our other hundred and seventy or so such conversations. 1199 01:10:57,760 --> 01:11:00,960 Speaker 1: We love your comments, feedback and suggestion. Write to us 1200 01:11:01,000 --> 01:11:04,760 Speaker 1: at m IB podcast at Bloomberg dot net. I would 1201 01:11:04,800 --> 01:11:07,599 Speaker 1: be remiss if I did not thank my crack staff 1202 01:11:07,920 --> 01:11:12,800 Speaker 1: who helped put together these conversations. Mendina Parwana is my producer, 1203 01:11:13,000 --> 01:11:17,920 Speaker 1: slash audio engineer. Taylor Riggs is our producer booker. Mike 1204 01:11:17,960 --> 01:11:21,080 Speaker 1: Patnick is our head of research. I'm Barry Retults. You've 1205 01:11:21,080 --> 01:11:24,160 Speaker 1: been listening to Masters in Business on Bloomberg Radio.