“Principles are fundamental truths that serve as the foundations for behaviour that gets you what you want out of life.” -Ray Dalio
Mental models guide our understanding of the world, while principles guide our behaviour and decision-making processes. At their core, principles act as the operating system that governs our choices and actions.
In Ray Dalio’s book “Principles”, he emphasizes the importance of having a good set of principles in life. He states that without principles, we would be forced to react to every situation individually as if we were experiencing each of them for the first time.
When classifying situations into types and having good principles to deal with them, we can make better decisions more quickly and ultimately lead better lives.
Successful people operate by principles that help them achieve their goals, although these goals and principles may vary greatly from person to person.
The Oxford English Dictionary defines a principle as a fundamental truth. Since each of us has our own set of principles, either developed through experience or adopted from role models, discussing principles can be a delicate subject.
It is not enough to be a person of principle without giving much thought to the ones we choose to adopt. We must deduce the right principles for ourselves.
Setting the right principles is essential for determining our moral compass and achieving our end goals. Everyone has principles in some form, but only some people write them down, reflect on them, change them, or share them.
Principles for Business, Investing, Life and Learning
There are fundamental principles that can guide our decision-making process in the realms of business and investing, life, and learning.
These principles act as a core operating system behind our choices and actions, helping us make better decisions and lead more fulfilling lives.
Business and Investing Principles
Business and investing principles are essential guidelines and strategies that individuals and organizations adopt for their business activities and investment decisions.
These principles serve as a framework for making effective decisions, managing risks, and achieving overall success in the realms of business and investing.
- Invest for the long term.
- Build wealth through equity ownership, not just renting your time.
- Prioritize capital preservation and avoid significant losses.
- Ensure proper compensation for risks taken.
- Ignore market volatility as a measure of risk.
- Stay patient and avoid impulsive decisions.
- Consider potential second-order effects and higher-level impacts.
- Diversify investments to protect against ignorance.
- Invest in companies with strong competitive advantages.
- Focus on businesses within your circle of competence.
- Be a business analyst, not a market or macroeconomic analyst.
- Avoid trying to predict market trends or economic variables.
- Don’t fall in love with an investment; be adaptable and opportunity-driven.
- Allow compound interest to work uninterrupted.
- Be patient and avoid constantly checking stock prices.
- Value time as a critical asset for investors.
- Recognize that good businesses benefit from time, while poor ones suffer.
- Seek long-term gains over immediate gratification.
- Build business models that avoid trouble and competition.
- Minimize transaction costs and avoid unnecessary actions.
- Don’t assume cheap stocks cannot become cheaper.
- Make a few good decisions and let them run.
- Be fearful when others are greedy and greedy when others are fearful.
- Use market volatility as an opportunity.
- Don’t anchor to the price you initially bought a stock at.
- Focus on valuing companies through case studies.
- Avoid relying on growth to justify present value.
- Be cautious of forecasts; they reveal more about the forecaster than the future.
- Understand the two types of depreciation: wear and tear, and change.
- Don’t base investment decisions on correlations.
Life Principles
Life principles are personal beliefs and guidelines that shape our attitudes, actions, and overall approach to life.
They act as a moral compass, helping us make decisions, overcome challenges, and live a meaningful and purposeful life. It is important to prioritize these principles over short-term tactics or strategies.
- Value preparation over the will to win.
- Be a lifelong learner through reading and curiosity.
- Enjoy both the journey and the destination.
- Be adaptable and versatile in your approach to life.
- Recognize the importance of luck and be prepared for it.
- Minimize risk through thoughtful decision-making.
- Embrace reality and deal with it.
- Cultivate acceptance and avoid worrying about things beyond your control.
- Protect your reputation and integrity.
- Be aware of the dangers of hubris and boredom.
- Embrace accountability and take risks under your own name.
- Address problems early; don’t let them fester.
- Focus on what truly matters, not trivial concerns.
- Avoid getting lost in minutiae and overlook the obvious.
- Understand that short-term safety can lead to long-term risks.
- Be bold in your choices and actions.
- Maintain control over your time by saying no when necessary.
- Engage in long-term games with long-term people.
- Cultivate independent thought and rationality.
- Choose the more challenging path when faced with equal choices.
- Bet heavily on good ideas with favourable odds.
- Recognize the value of inactivity in achieving success.
- Remember that people have different perspectives and values.
- Avoid associating with individuals of questionable character.
- Distance yourself from cynics and pessimists.
- Choose your associations wisely.
- Treat others as you would like to be treated.
- Recognize the futility of hatred.
- Ignore status-seekers and focus on wealth creation.
Learning Principles
Learning principles are fundamental guidelines that facilitate knowledge acquisition and enhance our understanding of the world.
They establish a framework for comprehending how individuals gain knowledge, cultivate skills, and establish connections between diverse information.
Although numerous theories and models of learning exist, several universally acknowledged principles encapsulate the fundamental concepts underpinning effective learning experiences.
- Invest in yourself through learning and personal growth.
- Hold opinions lightly and be open to change.
- Seek out and reconcile conflicting evidence.
- Challenge and update your beliefs regularly.
- Build on existing knowledge through first principles.
- Ask “why” to deepen understanding.
- Think both forward and backward to solve problems.
- Develop fluency in mental models across disciplines.
- Embrace personal evolution as life’s greatest reward.
- Push your limits to gain strength and growth.
- Set high expectations to cultivate great capabilities.
- Find solutions to weaknesses rather than dwelling on them.
- Learn through reading, doing, and observing.
- Accelerate judgment development through experience and foundational skills.
- Solve obvious problems before tackling esoteric ones.
- Focus on remembering essential information over obscure details.
- Be cautious of misinformation and sloppy thinking.
- Trust your data and reasoning over the crowd’s opinions.
- Base your decisions on arithmetic, not optimism.
- Be honest with yourself and avoid self-deception.
- Resist the desire for false precision and certainty.
- Strive for approximate accuracy rather than precise errors.
- Make decisions based on expected value calculations.
These 90 principles can serve as a valuable guide in making rational decisions in business and investing, life, and learning.
By internalizing and applying these principles, we can improve our decision-making process and lead more successful and fulfilling lives.
—
This post was previously published on medium.com.
***
All Premium Members get to view The Good Men Project with NO ADS. Need more info? A complete list of benefits is here.
Compliments Men Want to Hear More Often | Relationships Aren’t Easy, But They’re Worth It | The One Thing Men Want More Than Sex | ..A Man’s Kiss Tells You Everything |
—–
Photo credit: NEOM on Unsplash