Tony Robbins interviews billionaire Ray Dalio -author of Principles

hey everyone Tony Robbins here for Facebook live listen I'm very excited this morning to be able to visit with you and have the privilege to introduce you to a man who is a personal hero for me personally and I think for so many individuals he's an incredibly humble man who comes from humble roots and yet over four decades he's built is his life and his businesses to Heights that most people could never even imagine I'm talking about a man who is considered by many be one of the greatest investors in history certainly the most successful hedge fund manager in history he's returned more money to investors than anyone in the history of investing in that category fifty seven billion dollars since 1975 to give you an idea so not only is he one of the greatest investors people call him The DaVinci of investing he's been called the Steve Jobs of investing but the reason that Ray is so unique is he's also an unbelievable entrepreneur his company Bridgewater that he built starting when he was 26 in a two-bedroom apartment has now been built into an organization that manages a hundred and sixty billion dollars fortune says that it's one of the five most important corporations private companies in the United States it shapes a great deal of how our world works and the man who created it and built it both the entrepreneur who built Bridgewater and the man who is one of the greatest investors all time is joining us because today is the launch of his new book it's called principles life and business by Ray Dalio the quote on the cover is from Bill Gates of course it says Ray Dalio has provided me with invaluable guidance and insights that are now available to you in principles this book is part biography it's part the principles of what is made is life so incredible and it's part really what you do to grow in business and when you read about his life you learn investment principles as well he is one of the greatest books I've read and so I wanted to promote it and get you all to get a copy of it so go get it immediately but Ray was kind enough to fly down here he's doing tons of media in New York it's the opening day and he's here to do this face book wide with a survey thanks for joining us oh man thank you for having me that's privilege it's really been wonderful to get to know you as a friend and see the impact of what you do a little bit more on the inside and you've been very kind and helping me get information to people how they can change their financial lives you know I interviewed 50 of the brightest financial people in the world and when I sat down with you you became one of my absolute favorites like you know just because you built a machine you've thought about finance so different than everyone else but I want to start and you've done through principles this book is all about I'd like to start with the beginning the early days because when someone sees someone as successful as you are at business and investing they look at you like you're from another planet but you really come from very humble roots we talk about your childhood and Long Island your parents and what got you hooked on investing in the first place my my dad was a jazz musician my mom was a stay-at-home mom I got hooked on investing because I was a caddy I had odd jobs when I was growing up you know I would had a paper route cut lawns and did all that and then I got into catting when I was 12 and the markets were hot at the time and I thought that you know I won't take my catting money and play the markets and well I mean of course it wasn't that big a deal like everybody's talking about the market yeah yeah yeah and so the first stock I bought was the only company I've ever heard of that was selling for less than $10 $5 a share and it was the only reason I bought it is I figured I could buy more sure so four goes up I would make more money that was a dumb strategy right okay and I tripled my money because it was it was not smart it was dumb but I got lucky because it got acquired by somebody who some company that was then took it over and it was about to go bankrupt and then I got hooked Yeah right and I loved the game and of course you tripled your money and you were making what five dollars a bag yes six dollars a bag though right and so every time I'd get fifty dollars I would then go to buy another share stock or something you know a few shares of stock and that was what it was like and I got hooked Yeah right did you ever want to be anything other than somebody in the financial markets an investor an owner well I was always my favorite game right I mean I could have been a lot of other things yes I mean I you know I could have been an architect or whatever I don't know but the markets always once you get hooked tell me why this book now I mean you're giving the secrets basically of what dilk Bridgewater a lot of the principles of how you've grown that company from look one of the top five but successful companies United States private companies why now why are you sharing this now and why the level of depth that you're getting here well I'm first I'm doing it to help other people be successful I didn't originally want to even be public about though that's why I'm asking ya well what happened in 2011 because we made a lot of money in the financial crisis we got a lot of attention and we have a very unusual way of operating and that makes us successful yes and it got attention and so that led me to put these principles that we're operating by on the on out yes and three million people three and a half million people downloaded them and I got a lot of thank-you notes and so on yes and now I'm at a stage in my life where I'm moving from the second stage of my life to the third stage of my life I believe basically I think of it as we're operating in three stages and the first stage you're dependent on others yeah and you're working in the second stage of your life others are dependent on you and your work and you know you're working then you're trying to be successful yes as you move into this third stage the greatest thing that you could do and you know it so well is to help others to be successful yes so my joy is not to be successful anymore yeah it is to help others be successful and this is my year of transition 2017 is that year of transition so I wanted to take that compendium and pass it along these are recipes that I've learned over a period of time every time I encountered something and I thought how would I make a decision I took the time to write down the criteria that I would use to make that decision yes so they became written principles and then I found that everything changed when I wrote them down because other people then could look at them and we could say what are our principles yes and we could be clear on what we could be with each other and got all decisions from it and all decisions and then eventually I learned that I could take some of these decisions all our investment decisions and a lot of the people decisions and put them into algorithms yes and have the computers make decisions with me so it changed everything when I wrote them down so that this is basically think of it almost as a recipe book right yes for if you encountered this thing here's the principles I wrote for dealing with that thing and then those have been vetted and I just figure those people anybody who reads it can decide for themselves does that make sense or not make sense because I don't want people to follow my principles I want people to know whatever their principles are come up with theirs yes so I'm just trying to pass them along and and like I'll be asking you later what are your principles yes and let's just get the best principles there that help us so if I felt it was my obligation to do that at this phase in my life it's beautiful well it's also by doing it you leverage yourself you can have the impact without being there because you're empowering people to know how to make the best decision possible I always say success is the result of good judgment you have good judge make the right decisions you're gonna succeed good judgment is the result often of experience and experience is often result of bad judgment as you look exactly exactly I think the two things you need to be do to be successful yes you have to come up with the best decisions and you have to cut the courage to make them yes and I think the real problem about most people with the best decisions is that they think it's in their heads and most people tragically are attached to opinions in the heads and they don't put them out in stress test them so the thing that I learned was really to take those ideas put them out there in a certain way and stress test them whatever success I've had in life has what had more to mind knowing how to deal with my not knowing yes then anything I know and that taught me a lot more and it taught me how to take in what others have and that was you know a key thing so this is really about how to do that well you know let's talk about how that came about for you because I think you know when you when I went around and interviewed people when you've watched somebody on CNBC everybody knows the markets going they're gonna tell you with absolute certainty right and the one I interviewed the best investors on earth you obviously been one of the ah there's this not only humility it's not like a false community of like I don't know if I'm right and I have to prepare I have to have an asset location that I'm wrong I'm still gonna do well it's a different mindset but tell me it really came from failure that you looked at this because you were somewhat you know proud and maybe your own description was arrogant at one point let's let's go back early on you know early days you've got into the commodities business and I know you were trading your own accounts and you had some experience of a pork bellies that got your attention and then you told me when we first met about when we went off the gold standard and how wrong you were tell me about those two situations and how did they inform or change your mindset to say no matter how certain I am I'm gonna stress this test with people that are smart but have a different point of view than I do well you know in the market to know to beat the markets you have to have an independent point of view and that's different from the consensus because the consensus is built into the price and you've got to be right and you're going to be wrong a fair amount of and therefore I learned just what you said the power of mistakes yes however learning of mistakes and so there's the pork belly example of course that was one of those that I wrote about in the book and then there was the gold standard and I walk I was clerking on the floor of the New York Stock Exchange 1971 the US the world doesn't take our money anymore and President Nixon gets on the television and he says that the link to gold is broken and what that meant at the time is that money as we thought about it was just like checks in a checkbook and what mattered was the money that was in the bank the gold that was the gold yeah and though all of a sudden that stopped and I thought that the stocks basically the money has attached to nothing it's what it is today and everybody's got used to but then it's all of a sudden it's worth nothing I used to turn it in a big old my turn and get zero right and I walked on the floor of the New York Stock Exchange and I'm stock market was going to go down and it went up okay and and what I realized then that when I went back and I studied history that although it never happened in my lifetime before it happened before and so the greatest surprises that I learned about are things that never happened in our lifetimes before yes but they happened before everything has happened before everything is repeat cycle so that but the that had the biggest effect on me was 1982 I want to talk about that okay 1982 okay I had calculated that American banks had lent a lot of money to a bunch of countries that would not be able to pay back Latin American and emerging countries that couldn't pay back and it was a sort of a crazy point of view but Mexico defaulted you're right about that part right about that part you're not right if you're not making money in the market okay so they default August 19 August 1982 and I thought the stock market's gonna go down and the stock market went up because that reserve these things changes and whatever and I learned okay so I was you didn't just miss you were like publicly humiliated you what happened you had company at the time you have you lost all your toes I had to lose I lost all the people who work for me I had to let it lie to you like family yes and then I you know the story I don't mean - no no no but but but right you it's in the book so I lost all these people I cared about I was very publicly wrong and how employees were left when you were done me so I had to make a choice am I gonna put on a tie and go to world Wall Street and do have a job or not and I'd to borrow $4,000 from my dad to help pay for my family bills Wow and that was one of the most painful experiences that I had to had and if after you've been in business what he ear says right yeah Wow and he was already and it was one of the best experiences I ever had why and it was one of the best experiences because it changed my attitude about decision making I learned okay I went from thinking I'm right to asking myself how do I know I'm right right yes and it and and that gave me an open mindedness and I've learned by the way when I know a lot of very successful people and I learned that they crashed at some point almost everybody's crashed they Joseph Campbell and his book calls it hitting the going into the abyss and as they and that crashing is really the best thing for them yes because they either have a metamorphosis or they don't and I learned pain plus reflection equals progress right yes in other words that those moments and then quality reflections so I learned that I needed to have an idea meritocracy in other words experiment oh okay an idea meritocracy is when the best ideas went out so it's not autocracy it's not I'm in charge and I'm making the decisions that's not democracy everybody's equal if the people the best ideas are the ones that are the ones that influence where you go right well to use an example think about it this way supposing you have some sickness and you go to a doctor okay you can go to one doctor you can go to three doctors if you can triangulate among believable people and then you're faced with the choice how are you going to deal with that situation so for example um you might say I think I should do this decision well you'd be done if the doctors tell you to do the other decision even though you don't understand it if those people who were independent thinkers are willing to argue with each other and they triangulate and they think you should do something you probably should do it but if they're at odds you would get to hear the disagreements why is it it's the quickest way to get an education yeah so you raise your probabilities of being right so I learned that that's one of the smartest things I could do is find the smartest people who disagreed with me and triangulate and so when we came to the financial crisis in 2008 it was because we had this view that was very different from the rest of the world about the financial crisis yes but to have that independent thinking and to do that triangulation so it's humility in other words the humility the fear of being wrong I have a saying if if you don't worry you need to worry and if you worry you don't need to worry right you don't need to if you if you don't worry you're probably gonna get into trouble yes and if you worry you'll probably do the things that are necessary that's exactly and so that change in mindset and being able to draw the best out of everybody so I can make the best decisions not being attached what I think yes that's why I say I think it's one of the greatest tragedies of mankind one of the greatest tragedies of mankind because it's so easily can be rectified if people can separate their attachments for what they have in their head and put them out and stress test them probably properly they will raise their probabilities of being right this is the mrs. Keith has been key for me I think you know for those people watching there's so many business owners out there small and medium big big businesses if you're watching and I always talk about the fact that owners tend to put themself in position where they try to make 12 decisions and always say get 12 your best people make one decision because the crowd decision is always gonna be better but why don't people do that why do we have this push that we all think that we have to be the source we have to have the answer and we have to be you know never fail when it's just not realistic what do you think that is in the human psyche well how have you uh how do you balance absolutely structure I've studied why this is I passed neuroscientist I guess psychologists why it is and they say that there's two reasons for it partially it's neuroscience and partially its environment and habit and it could be broken so the neuroscience part of it is that deep-seated in our brains is a part of the brain called the amygdala which is the fight-or-flight part of the brain rather and there's a little bit of an instinct that if there's disagreement that that is conflict and it produces an emotional reaction there's a tendency to do that the other part of it is the world rewards being right in other words you start with the smart kid who gets the A's on his test and so on and then they and then they don't get go through their failure you know that the best learning comes from failure right but if people become embarrassed about not knowing we're in a society that operates that way yeah and if you can actually teach how great failure can be as a learning things it's so terrific so it's a combination of habit and instincts but I've learned that in 18 months people can be totally different it the we call it the getting to the other side they go through this of course experience of everybody speaking frankly with each other and figuring out in an idea meritocratic way what's true including what your weaknesses are do you want to know your mrs. is it good when you go through that and people want to so that they know how to compensate for those weaknesses then they can move beyond that and so what we found in a period of 18 months of doing that exercise most people can get to the other side then they don't want to operate the old way right because first of all they don't want people not to be straight with them yeah you know like if do you want me do you want to know what I really have so you ask people they do their intellectual part of them does their emotional part needs to have a little bit of adjusting to that yeah and so we go through that process and then in that and it changes everything because great collective decision-making with the smartest people are willing to disagree is going to make you most likely to be right yeah you're learning right now the most fundamental important distinction that has guided this man's life after got so much failure to have so much success in every business person any human being that wants to make better decisions needs to apply this I hope you'll take it in it's kinda like when people succeed they party when they fail they ponder and there's no there's no transformation not partying there's some joy but I think of pondering really can make the shift I think I think in order to be successful you have to do five things I mean there's a sequence okay first you have to have your goals I'm you talking about audacious goal well I think have audacious goals why right I agree but less you want to have the greatest life you can possibly have in the greatest impact you can have and your goals affect you whatever they are if they're small goals you're affected in a small way if they're really driven you rise to the occasion right goals next problems on your way to your goals you're going to encounter your problems your failures yes right but you know tolerate them don't think you got it doesn't tolerate them yes right number three is then diagnose them to get at their root causes and often those root causes are things that people are doing wrong maybe you're doing wrong maybe it's a weakness of you notice the patterns get at the root causes yes once you know the root causes to your problems then you go to find out a diagnose I know so you've diagnosed it to its root cause find out the design of what you're gonna do about that yes let's say you have a weakness you might not maybe it's developed the strength or maybe it is to work somebody who's with somebody who's strong where you're weak so you don't always have to be able to overcome every weakness sometimes it's finding the right part it's usually the most practical thing right because everybody's brain works in different ways in other words to see to something one way you're probably gonna be blind in another way so to know how to work with people who are strong where you're weak yeah it's very powerful so number three design what you're gonna do and number it number four and number five is to push through the results right right so you say I've got a design okay now god damn do that design determination of flexibility to find the way and that's it this is what I call this looping go for your goals identify and not tolerate your problems get to the root cause of them then design a path to fix those gems up and then go beyond it to push through and you just keep life is just basically keep doing that over and over again and if you do that you'll you'll make the advances that is why failure failure as a teacher you know if you have success you did it right so there's nothing to learn probably right if you if you have failure there's something to learn right make the most of your failures what what I learned I like I developed an instinctual reaction that's different from failure it used for what the instinct is now to view failure as a puzzle that will give me gems the puzzle the puzzle right the puzzle is what would I do differently in the future so not to have that result and that's where the principles come from that's what you write that down yeah so you can guide those decisions in the future and really make app after every event I've done rayon forty years my team will tie this is no exaggeration have not after every event after every break every event which is usually pretty late at night I think you know I do a debrief of everything that worked so I can catch it and why the principle behind it and then I do a debrief of what didn't work or it could have been better and what should we do to change it and prove it I don't know for 40 years to give you an idea so there's a reason why my events get better and better because it's nothing but principles and then my team reviews it before the next event we review what works that we can do it again even better and then we see what didn't and figure out what the solution is and it's just it never the the learning never stops right well this is why we something you and I want to pass along to value of mistakes yes and they sting so they stick remember them right like I think of my life and I remember back and I remember all my fares I don't remember my successes and so I would like to me I would think it was a life of failure I'll remind you and it's beautiful but you can't worry about getting your knees skin you know what have been some of your weaknesses and and you know maybe share with me I know in 1993 you read about in the book we've talked about it you received a memo you built this culture where everybody's transparent where there's this total radical honesty and truth not meanness just honesty but not everybody was ready for that and they were interpreting in a certain way so tell me about that memo and how it changed you but also tell me what what has been one of your weaknesses and how have you either made inner strength or how have you surrounded yourself with better people to overcome it okay so let me take the 93 first and my weaknesses so 1993 I then had about 70 people work for me yeah and how many 1800 1,500 1,500 1,500 oh yeah and so and I get a review I want to be reviewed by other people and I get a review by some of the closest and they said you did these things great but you're demoralizing people you're they're feeling you know bad about all of these things there's no more lies yes and I said to myself I didn't want to demoralize them or in it together I didn't know what that they didn't tell me but fortunately came through this way and I was put into a dilemma how do I handle this do I be straightforward with the people and because I want them to be straightforward and be straightforward but it was difficult and it was a problem and that was a very important time yes because it the way that I dealt with it was to think how are we going to with each other so I sat down with them individually and I said do you want me to be straight though do you want to know what I really think do you want me to listen to what you really think should we be this way together and that began a process really of writing down principles of dealing with different things though putting them in writing yes and then saying can we agree that this is how we're going to be with each other yes this unfairness and truth that's right yes but it's but a lot of people could say that's discomfort most of the world doesn't do this right why is it when they write about you do you every honors you obviously but you always once in a while get those pieces like they talk about your group like it's a cult it's like it not a cult is the silliest thing I've ever heard it's an unbelievable standards like a group of Navy SEALs because the standard is so high missing about your culture I know what does it be missing III think that some people you know get bruised by this right by that straightforwardness is there a percentage of the population that just can't handle it in terms of their psychological that's right it's about well we find in about the first eighteen months two years about a third of the population doesn't make it yeah right it's not for them and it's totally fine yes okay but what happens it basically is a battle that they have between their to use we call it okay there are two use for your brain okay there's the upper level you that is logical rational and say what I like to know what's true what I like to know my weakness is what I like those little projects okay keep on the prefrontal cortex and then the other parts of our brain the subliminal amygdala and so on that doesn't like that and so usually they go through this process they think the process is fair everything we do extraordinary things to make it fair but they are really having a battle of their to use yes so that's what's going on to a large extent yes and so it because it's a difficult environment it's like you say it's like an intellectual Navy SEALs right if you get to the other side and you get through it and you have these relationships these relationships are very important then it's powerful I I want to describe it maybe in one long sentence okay it is an idea meritocracy in which the goals are to have meaningful work and meaningful relationships and they're equally important by the way and they reinforce each other so an idea meritocracy to have meaningful work and meaningful relationships through radical truthfulness and radical transparency radical truthfulness means we lay on the table what we really think and we deal with it yeah and radical transparency means gives the ability of the people to see everything because you can't have spin if you I can see everything if you can see everything you can be part of the idea of meritocracy of course if you hear somebody tell you what's happening and everybody's giving you the different stories you can't be so being radically truthful and radically transparent just to clarify people doesn't mean the hair looks ugly it's not looking fat it's gonna happen if not that kind of thing it's about the truth of what we're trying to get to and understanding where markets are going out of the businesses functioning how calling it tight right how we should be with each other yes whether we're strong or weak in different ways okay that kind of thing yes so that that that radical truthfulness and radical transparency is key essentially would you be where you are today without no no that's what I want everyone to get nowhere near yeah right yeah cuz you go you know I think you've got to do three things first you have to put your honest thoughts on the table for everybody to look at everybody and you look at them and they're different then you have to know the art of thoughtful disagreement in other words maybe I'm right maybe I'm wrong how do you work through to get a better answer than you would have individually yes okay yes thoughtful disagreement to like it to respect the other person and not to know but it's gonna lead to something greater for everyone of course higher okay higher and then and then third is if the difference different disagreements remain you have to have protocols for getting past that in our case we have what we call believability weighted decision-making in other words we have not an autocracy and not a democracy but but idea meritocracy in which there's ways we're not the best track record in those and everybody and and who thinks is the best decision making in very different in that category God exactly and so if you have an idea meritocracy where the best ideas went out it's going to be so much better than if you're stuck with the ideas in your head right yeah without a doubt it's nice and personal development yes it's how can you grow if you can't be honest how can you sell gotta be truthful the truth sets us free and the relationships you know the thing that has been best for me on now I'm at a stage in my life where I look back yes and I reflect yes and I'm and I think wow it's been great in so many ways but the best were the relationships it wasn't the money okay yeah I mean that was great sure all these other things you know I track record we did good things to clients all that great but it was still the relationships and those honest relationships yes are deeper and better yes it's tough love it's it's the benefit of tough love tough love is the best love was given from the heart still that's the see it's coming from a place of truly caring toasters exactly because well you do it all the time right you help people be it's caring and when people know that it's caring together with the truth the tough truths yes and you can go through it together that's powerful it is tell me what's what's been one of the weaknesses you got to deal with early on and how did you deal with the did you find a way to grow through it did you find people around you had better skills that's what would it be well early on I have a terrible rope memory like I I mean I can't remember anything that doesn't have a reason for being what it is so I mean like I was a bad student your class at Harvard no no Harvard Business School I loved Harvard Business School thought it was it was lovely well it was a different kind of education because it wasn't a memory I have enough into it memory let's call it for most of my early years I hated school god I didn't I you know I have a bad memory you know I tend to details are a mess for me you know anybody who's around me I need to work with people who are meticulous you know and and and detail-oriented you know we owe so much you so yeah I mean so you know and then I wouldn't say that certainly my audaciousness will had an arrogance to it but that before I got the kicked out of it in order you know enough times to learn here's big multiple times you're sitting right where you learn right fear you know those who are the things yes and but then I can start to learn you know it doesn't matter weaknesses don't matter really yeah it was a metaphor when we first met you share with me your philosophy of like looking life as the jungle and how that kind of shifted the way you've even built your company tell me a little bit about the jungle matter yeah so in 1982 when I crashed and I had to think okay would I go get a job and work and that or would I continue on with the audacious goals yes I realized it seemed to me like it was being on one side of a jungle and I could stay on the safe side of the jungle and but not have a terrific life right and in order to have a terrific life I had to go through this dangerous jungle yes and in order to have a great life and I think okay what would I do now for me I I need to go after the great life I mean I just need to get settled so and I think well how would I go into that dangerous jungle with all of these different things and what I realized is that if I go into it with people who also are with me on it who see differently who can see what I can't see and we each can bring our own that we together can go through that dangerous jungle to get the other side to have a great life yes so that's what it's like and what interest people that agreed with these people that this is all of your geometry yes see differently yes it's not just somebody disagrees with it though it's somebody's qualified to disagree with you sometime one of your principles is you know wind and not sandy they want to shut up yeah when do you rigs to keep your opinion to yourself I've explained that if you really recruit best of the best but you're not looking for everybody's gonna add a boy you looking for you people have a radically different point of view and out of that you're pulling this maybe explain that what's it called the dot what do you call the odds elected collectively explain to people how that functionally happens because people can criticize you in the gum you have a twenty four-year-old whose know no background and say rare that you're doing a crap job on this and someone else let's say you're doing a great job how do you measure and decide who to listen to how do you make that meritocracy work okay I want to say that for anybody who wants to see it there's a TED talk I'm gonna I'm gonna put it out running minutes and you'll see how the dot collector works right but what it is is as the meetings are going on people are very easily it the dotting they called onyx yes so they're seeing they're conveying what they're seeing and how each person is behaving about different things and you might be speaking in they might say what some people might think that's the most arrogant thing or the stupidest thing or you're not being considerate to that person or there's like one of 50 different things you can hit you can go dot dot dot R a bomb that you know bad good book and we all do it together right so that creates all of a sudden the visualization of how everybody's seeing everything so that comes up on a screen and you're seeing in colors how people are seeing each other and and and the colors Wow so what happens from that which is unbelievable is that you ask yourself how do I know that I'm seeing it the right way this young lady might be saying this is stupid and there's more the people saying this is genius and you're seeing all that in real time in real time Wow so because when you're seeing it in real time you're forced to say how do I know that I'm not the wrong one or why am i seeing it that way that it's different from that and so what happens is the computer is analyzing simultaneously who is seeing what way and it causes people to go above themselves right in other words really promotes perspective yeah because you're just one of those in that line and in this grid and now you go above yourself and you're saying this is how everybody's seen then it raises the you know together how do we know what's best okay just cuz it's in your head doesn't mean it's best so how do we know what's best and now that's about to we and the the ability of the team to make the decision as opposed to me think I have the answer completely right so the ability of those computers then programmed in a way where it knows about all of those what they're good at what they're bad at and so on puts it in place and and actually communicates individually well with each person so what your iPad is coming back and saying Tony be aware of this this and the other thing as you're making that decision and so it's supplements the decision-making and it communicates to you personally knowing what you're like knowing what the other people you're interacting like and it drives us to the higher level then we say to ourselves what are the criteria for determining the best decision given that so it's a column for the album grapes the principles right and then the team creates the principles and then you write the algorithms okay and that algorithm which is just the same as a principle but just in computer license is going to trigger you at the right time right it comes and it communicates with you and it says okay now how do we make a believability weighted decision based on this strengths and weaknesses so that if let's say for believable people at one level out vote one who it might even have a higher believability in another what is our way of doing that yeah and because everybody believes that that's an idea meritocratic way most everybody believe that yes because we can do that collectively that's why we create an idea meritocracy I don't want it to sound complicated we it's just because it's evolved in these ways over time the important thing for anybody out there they may not have the algorithm okay they won't have a lot of things although I would like to put this out for everybody to have but what I think the important thing is just the understanding just the wanting of idea meritocratic decision making yeah just the writing down of what are the principles when we get into that situation how will we deal with that situation and we agree on those principles yes and then you build on that anybody can do that yeah it's all about making the right decision ultimately that's all about that's all it really is all this is that we have right decision and you make decisions more than anybody else to your category and not her twice I just want people know you know wealthy people take their money and put it in a hedge fund a large hedge fund might be twenty billion dollars your 160 billion dollars you're twice you're bigger than your two biggest competitors combined so he's actually showing you how they make these decisions what are you doing - not while your team excuse me I'm saying the power of the crowd - if because if you're stuck with all you've got in your head that's very little yeah in relationship to all this out there and that's what makes you a business owner anyway as opposed to an operator is when you can be in a position where the team is making those decisions not just you otherwise well and on your back but even if you're just the one one guy you have the one business have you advice you still have all those people around you exactly right it's all about skewing the probability of being right right it's awesome tell me what in 2008 you saw what was coming you try to warn people very few people listened to you what did you see that no one else saw that you know what you know what's going on so you could do well even during that time and protect well we went through the calc it's really pretty simple at individual and levels we went down how much is that going to have to be paid back in debt what are the calculations who lends the money and we could see that we were going to have a you know a debt crisis but but I want to make it I did a 30 minute video on how the action people works and and I'd say if they look at that almost everything I know that's worthwhile in economics is in that 30 minute video and so you can understand how do you see a bubble how do you what are they like bubbles and busts and and so on where are we today in our economics that's my question will be today our economics well and that's as as you know there's productivity is what productivity when we learn we do things better and we advance our living standards by learning and that at a certain pace yes and that's the line and then around that line there were two big cycles there's a short-term debt cycle which we call a business cycle right you go from a recession to an overheating the economy and so on over five-date years usually yeah something and a little stretch we are in putting aside away we're at that part of the cycle where inflate in in the beginning of the late part of the cycle where um no longer do we have the slack but we're not having tightness so we're in the that part of the cycle which is the Goldilocks part of the cycle when things are not too hot and not too cold yes and so as a result we don't have too much inflation we don't have too much growth everything is kind of tepid that's the part of the cycle we're at so as a result the Federal Reserve which pushed a lot of money into the system will stop pushing those money into the system as a result of pushing interest rates down they're gonna stop pushing those interest rates down and now we're in that transition period okay that's the short-term debt cycle and it's probably not going to produce much volatility it's going to create that kind of and almost everything is sort of like at equilibrium their short term interest rates where they are and so on in addition though in the long term debt cycle we are late in the long term debt cycle now you've got to watch this video because you'll understand this more thoroughly if on YouTube what's the title again of how the economic machine works right the please continue I want to make sure they know to look yeah over the period of time we have accumulated lots of debts and then some obligations that are not necessarily called hard debts prevention obligations a lot of pension either card Medicaid and then medical aid and you know health care and the demographics are changing and all of those obligations cannot be met and there like a lot of debt and they're there they're squeezing us they're gonna squeeze us okay so that we're in that middle part of the cycle with that squeezing gradually coming we don't have a bubble that so we don't have to worry about that we're gonna ride you're another 2008 here's a question on you know here's what a more you we're gonna have we're gonna have squeeze a slow squeeze and the biggest thing to understand is that we don't have one economy think of it as having two economies okay think of it to make it this way there's the let's call at the bottom 60% and the top 40% yes okay because don't we make a mistake of thinking about the economy or the average economy and you don't realize how different those are and that's the biggest issue of our time so very much like the late 30s same things by the way happened in nineteen all the 30s up to 1937 today this year is very similar to 1937 and what was it back then they had a debt crisis 29 to 32 that was the same as our 2008 debt crisis both cases interest rates hit zero in both cases the central bank's printed a lot of money bought a lot of financial assets pushed the economy and the market higher and up to 1937 up until now and then there was a giant wealth gap so today the top one-tenth of one percent of the populations wealth is equal to the bottom 90% combined in mine one tenth of one percent equals bottom 90% you have to go back to 1935 to 1940 and also as a result of that you have populism you have populism because one segment the economy's not working for okay and and and there's an odds and we saw it reflected in our election and we're seeing populism around the world take place yes very similar and in 1937 when we were at the exact same point in the cycle and the Federal Reserve decided to tighten monetary policy and as a result we had a 50% fall in the stock market we had a lot of problems we don't have to enact that there are lessons to be learned from that period of time I think the federate start a lot of soft landing so we don't want to you can't have an economic downturn right even though this is times are supposedly great for the average the stock prices at new eyes we have a situation in where the unemployment rate is low if you look at the circumstances of that bottom 60% the economy has not worked they haven't had growth right their death rates are rising at only places in the world they're rising because opiates and because of the suicides the employment the that middle part of the economy is had a hollowing out is having a hollowing out so if you just said what does that economy let's carve it out and look at that economy and that's the economy that we have that is a miserable economy okay that's a miserable economy so with the fact that we have these two economies think of it as two economies operating the economics of the bottom 60% versus the upper 40 which how are you dividing it up what's the economic barrier there well number I guess who what are you saying an income stream is that for a person who's in that bottom 60% of 40% of your chunk again it's 50 some odd thousand or yeah okay god but if you if you you can't have that conflict yeah so if we look at averages we're in a in a bind right so the central bank so these are the economic issues I think the most important is how we deal with conflict okay conflict of the haves and have-nots conflict of the left and the right conflict in social things we do that you invite conflict but you you teach people how to do it intelligently respectfully and you figuring how to resolve it how do we do that it's a society when you get people that go into Congress now and it used to be they fight like crazy 20 years ago and then they go have a beer together now if they speak to each other they're making you active this is that what do we buy you to ship this so I think the most important thing the President of the United States and other people we should think what are the principles that bind us together as a society right what are our overarching principles those that bind us together greater than those that divide us what are they can we have thoughtful disagreement and have protocols for getting past disagreements for the country as a whole this is a time we're gonna be tested okay because if you look at the statistics on polarity in any measure of polarity we're having greater polarity almost to the point where the sides want to kill each other they don't want to find the compromise our system was based on a system of compromises in other words when they were at odds will gonna come to compromise now we have a dangerous situation in terms of that so I would say you know go to principled level thinking do the three things that I'm sort of describing you know put the honest thoughts on there have no the art of thoughtful disagreement and have protocols for getting past that disagreement and being comfortable with getting past it and then rowing in the same direction because we did that together this is a you know be principled yeah the principle sometimes people forget it what it needs to be principled I don't think most people have really are clear in their principles I mean if there's anything that I hope will come out of this conversation in reading your book is that people sit down and figure out what's the most important time the values and then what are the principles they're gonna guide their decision-making because otherwise it's all about whatever you feel in the moment whoever pisses you off or whatever you're fearful about and then you're a reaction and you know leaders anticipate losers react right you know it's like the capacity to do this so if we look around right now one of the biggest concerns that I have is you look around and you see the changes of technology they can make our economy explode you've got nanotechnology you got CRISPR you've got you've got tools that are coming along that are gonna change the way we function that's gonna change our health our vitality everything but at the same time you're gonna disrupt so many jobs so you know 200 years ago 85 percent of population was a farmer you know but we had almost a century and a half to ship to where we are today and now we have 4% farmers and we feed the world today then you look at uber drivers taxi drivers truck drivers there's five million of them just the United States alone we're gonna see you know eat Florida's voting right now this year that next year my wife can turn her car on potentially if they agree to it and next year she'll have this self-driving car what happens when all those who's gonna hire a truck driver when I can buy a truck that works 24 hours a day the truck traffic only worth eight my insurance is better I get to depreciate it what happens when five million people from just one disruption or four million people that we know be disrupted by farming some new technologies are coming up that's 9 million it's more than we saw disrupted in the world economic challenges so what do we do so right now we've heard other people talk about universal income opportunities I like they do in the Middle East where keep everybody so they're not upset they get a stipend a couple thousand dollars a month what what needs to be done in this area because there doesn't seem to be anyone going to these individuals that are clearly going to be disrupted and saying here's what you're gonna do and then some people say we'll just pay them and I say people need meaning more than money maybe a sense of purpose they need otherwise they write up they get angry all kinds of things what's your view of how we deal with this technological shift that's going to disrupt so much of the labor that we have in our world today well I think you I think you've said it so well I'm gonna repeat very quickly some of the points that you made and then I'm gonna answer your question because ok the invention of technology you know is different than in the past because it the technologies can surpass all the uniqueness of most people and as a result the what's happening is that those who are making those algorithms you have to replace people to make companies more efficient yes are having that effect of creating that polarity and something like 40% of the jobs over the next 20 years and will be lost something like that it's happening faster every why of course I mean like us our traders are gone they're being replaced by the quants and it's it's it's a beautiful and terrible thing at the same time yes it's a because that computer that's how we make decisions we athlete all of them algorithms put in there and it's so fantastic better than individual decision making so we enjoy all the benefits of that and at the same time it creates this wealth gap that creates this more as you say opportunity gap is even more important than wealth gap because people need to be made useful so we're in the home tooling that's gonna have and we're mmm we're at the green in my opinion there are many many many things that can be done in many things I mean for example you need to teach than the next generation algorithms how to write algorithms because it's like reading and writing yes if you're going to be ignorant you can change education so effectively you can create in many different cases microfinance I love microfinance how did you know because it works and it works for people down there there are so many things that can be done in order to deal with the question that's not the issue there are many things clever people in doing it but you actually have to have cohesiveness it has to be a national mission yes to do two things simultaneously that how do you improve the economic education and and so on of that bottom sixty percent and how do you do it in a way that it pays for itself in other words don't have a program that you're going to just throw a lot of money and you don't know that you're going to waste but do it as microfinance that works or other things work and I see lots of those that has to I think be a national initiative in order to do that because it can be powerful you can do it yes but it's going to require transfers of wealth that some elements of transfers are well and so when I look at it it wouldn't take so much of a change in the wealth or the taxation in from one group to another to redistribute it because it's so skewed in that way but we have to approach this collectively yeah okay because if it's angry if one group is angry at the other group and and beat that beat it out of them then we're going to have people running away we're going you know people are leaving one state to go to another state and all of this how we do this collectively has to do with more how we are with each other yes then are there solutions there are solutions and we went to the moon right we're going to Mars now yeah we can do amazing things but I do believe an initiative in which the goal is to deal with that issue particularly the bottom 60% their opportunity their income and to do that it in ways that are self funding in other words if you borrow it it pays it back because of the productivity that's the how's DeBarge money for a television Center buying money for a college education that maybe doesn't provide a job well a lot of programs here's a point of the problem a lot of programs are put into place by policy makers who really in a sense may not have a clue and they think I'm going to do this program and they don't pay off the one thing about business that I also bring to philanthropy that I see is can it pay for itself if you can get there if not all good things can pay for themselves ok so there's there's room for giving people money because I can but there's an enormous ability to have it pay for this week I'm going to go to honor Muhammad Yunus who was the founder of microfinance ok yes and and he basically is a very clever man and he finds any of the ways where there's a business activity a goal that he wants to achieve that it pays for itself so there are lots of ways education education can be so much better and so much cheaper in terms of technologies and certain things so it's these things that if we bring to bear we need to deal with that but it's more fundamentally can we all be in the same room working on the same goal that's like going to the moon and the way you do that in your organization is there certain principles for example simple one as I understand it is if someone has two minutes that are interrupted during those two minutes which you can't watch on a television discussion between both sides but also you have to repeat fundamentally what they just said so they know they're heard and so that you actually have to listen so that there's the bridge because what happens today is people just stomp all of each other they don't hear anything you know they don't perceive anything and what we seem to be forgetting is but you'll be like a couple years ago with the battles happening over guns we all want our children protected this idea that you are evil because you have a different view about how to get that done than me is where the challenge really happens let's shift because we're gonna run out of time here what would be you've given us so much advice and the book is filled with again the book is principles by Ray Dalio of life and business um please go pick it up today it'll change your life it'll tell you the history of all the most successfully things in the world one 100 most wealthy men but most importantly most influential men and the man has added so much value to tens of millions around the world what would be your best a desk for business owners out there you've kind of done it but we're going to summarize what it'd be two or three of the most important principles that you share with the business owner and help them to succeed you know one of them is you talk about snarling weapon who you know picking the right people but what would be something you could give them right now as a trigger saying if you really want to grow here are two or three areas that I would put your focus and to expand or generate I tell people you got to run two businesses the business you're in and the business you're becoming right because you have to anticipate what will be your advice well again I same thing somebody discovered well have your audacious goals okay okay and prepare go go learn from your mistakes yes realize that you're not in it alone don't be trapped in your own head know how to get the best resources and know how to learn from that thoughtful disagreement yes and you will get there you will evolve there is always a best path you just don't know it yes right you don't know it yet yet yes okay get around bright people the right good ones of you you can find it don't and and when when you fall and you get banged up reflect yes reflect calm yourself down reflect there's a lesson there right it's it's the same things make them your puzzles yeah right they'll give you gems yes the gems are the principles of what you'll do better next time yes yeah where is meditation play to want to make sure we touch then cuz you've been a long-term meditator with TM tell us about how that's played a role in the success of your career in your life well I think it's what been one of the most powerful things that helped me the most because it is I've been doing it for I don't know forty four years or something yes and it has given me an equanimity you know before we did this we just had a brief meditation together it gives as you know it gives you both an equanimity that so that you can it seems like being a ninja everything kind of slows up and they come at you and you can deal with it with that equanimity and it gives you a creativity because it opens the connection between your subconscious brain and your conscious brain that's what the magic is and that's where the magic is because in your subconscious brain is all those creativity you know it doesn't come from working it in your conscious brain you know where the best ideas come from you have take a hot shower and they pop into your sleep so wanting an answer and wake up with the answer right so subliminally it's there but it's it's trapped there and when you open up the way through meditation because it literally as you know it you're not conscious and you're not unconscious you're in your subconscious because by repeating that mantra that word essentially that sound what happens is it gets you away from all the noise that your brain is constantly going through and you focus in first on the sound and then the sound disappears and then there's nothing and where you are is in that subconscious state and so as a result that exercise a very simple exercise there's nothing religious about it there's nothing anything it's just a good exercise that exercise giving the equanimity and the creativity is just invaluable would you be the same level success if you had meditating all these I don't believe I'd be close yeah I think it helped really provide that perspective mmmm yes I recommend it I say really it's probably the best gift I can give anyone they can take it around with them anywhere they go the rest of their lives right right it's bringing joy for nothing yeah it brings you joy for nothing and you know there are moments where you say I need to go meditator what if you didn't have the meditation then it just brings you out differently so it's I recommend it investing just for a moment we're eight and a half years into this bull market you've given us an idea where we think we are and that you told us what some of the challenges are when there is a crutch and there's a correction every year people don't realize on average since you know since 1900 we have a correction a number of last year in January is the worst January in history but he's freaking out they all came to you at CNBC and said you're in Davos and what do we do and you know you talk to him about home down don't overreact tell me how you came up I want to go through it now at the time it's it's in my books to be able to read the chapters but this whole finding out how you can not know where the markets are gonna go and yet still win this idea of the all-weather that you came up with and you adapted it for me to share you're unbelievably generous with my readers and with anybody picked it up you know we call it you know the All Seasons it's not quite the same but it's been right 85 percent of the time you had made money in the last 75 years and and when you lose the most whatever losses 4% on that formula how did you come up with it what made you pursue that and what would you say to people that are panicking in the markets in a crash any moment and they've been sitting on the sidelines missing one of the greatest bull markets in history I'm going to give the brief answer and then which is that diversification properly properly balancing means that you could take equally good things and you can reduce the risk and because really it was I just want to clarify you said that the holy grail of investing you found early on change your career and it was how you could reduce your risk but not really reduce your returns how do I do that by knowing how to balance okay when you can take equally good things yes they're equally good so your expectation of return is equal right but because they're uncorrelated because they move differently they balance each other right and I would love to get into it but you know I'll just repeat what you did is provide a great service it's in your book yes so anybody who reads that book has taken the time and you've put it in a language that everybody can understand in a way that we won't have the time to go through now so it was great for me and great for you and great for those people that we could communicate how they could achieve that balance it's so important because you have to understand that in order to beat somebody it's the market is a zero-sum and adding values that's right yeah again and so the consensus is reflected in the price and so you have to be better than that I put hundreds of millions of dollars each year in trying to play that game well and others do and it's a difficult game it's more difficult to compete in the markets and be successful than to compete in the so be humble about that it's difficult but to achieve that balance so that you understand how you can get that good return without losing a lot of money is that is something you've communicated it well so I would rather than be able to cover it again recommend that they look at your book that but your all your personal most of my money is in that isn't that that's really amazing and people you can go on you can go pick up a book or go to library whatever and get the answer because you're you you walked us through it we did it in two chapters of the book and it's mind-boggling I mean if you do go to Vegas let me write 85% the time and make close to 10% on average and when you're wrong the most you've ever lost is 4% how often would you invest balls every game right yeah the risk of ruin yes is so diminished yes you know it depends exactly how you construct that in terms of what your risk in return is so it's explained there but you the risk of ruin like you know any one investment there will come a time in your lifetime that it's gonna be down 50 to 75 percent yeah and when it's down 50 or 75 percent it's down 50 percent that means you have to make a hundred percent in order to get back on you so you can't afford those positive later in life you right I'm right all right yeah so this is really the way to protect themselves so many people get great returns but then they also slash at the bottom and but these are good returns yeah these are great returns but you're you're limiting the downside massively what we're out of time now so on the last piece is there anything we've covered we have you have me all to share what's the core message you want people to leave with whether they're an entrepreneur and investor or just somebody wants to improve their life what would you say that corpse well most of you know most importantly have their print principles that deal with reality yes well embrace reality and deal with it and have those core principles and get them wherever they can as you know what I want to do is I want to get your principles I've listened to a lot but if everybody took the time to write down their principles yes and to think about each other's principles for how to deal with specific things not this big high-level principles but in other words the specific okay I have somebody who is cheating in my company what do I do or I have the banker who is doing this thing what do I do where are some of the best team I mean recipe right here well that's why I've been through those experiences and I wrote down my residents they can consider my recipes they can consider anybody else's recipes at the end of the day they must believe them what is good for them and they must have principles because as you say if you're not if you don't have principles everything looks the same like you're in a blizzard when you start to think of something and you say oh it's another one of those like you think of a certain type of species it's that species and here is how I deal with that species and that way of dealing with it works that is an effective way of operating so I would like to encourage people to have their own principles that they understand and believe in wherever they get them I spend my whole life basically pulling principles not of people I wrote money master the game and I came to your I met you was saying I gotta find the best people the world it can't be my ideas have their own ideas on the psychological emotional side I don't want the best investors in the world let's figure out what the principles that are guiding them and let's teach them to the average Americans so that's really what Donna you've been so generous ray I consider you a dear friend now I love you personally and I hope people here not only get to see this unbelievable you know historic figure here but I want them to feel the man and your true passion and caring for people and the commitment that you have to leave a legacy where people can continue to grow and expand beyond the time that you're here this book is part of that legacy you're gonna write another one I understand is that true on an economic and investment principle yes and then I'll be done yes because everything that I have to say can be in here and I don't gives you leverage it's it's in there I don't have anything to add I just I hope my grandkids will read it when they get older I'm sure they will and Tony what I want to say that that's we share the same type of values the same type of principles and that's why I you know like you know back at you man thank you thank you very much thank you so much god bless you so pick it up principal's life and work by Ray Dalio this week also check out on YouTube the machine how do you say that look the phrase now the economic machine works and then his TED talk as well and I'll put those out over the next few days as well pass it on everybody go grab this book as quick as you can it's a great read it'll give you a history it'll give you principles it'll change your life last thing to everybody we'll see you soon

Channel: Anric Blatt

Views: 306,762

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Keywords: Ray Dalio, Tony Robbins, Anric Blatt

Id: UzehRUSUd30

Length: 66min 44sec (4004 seconds)

Published: Thu Jun 21 2018