Ray Dalio: The principles that made me a billionaire

You wanna be successful? Here's the mantra for investing.

I got my pen.

The most fundamental question is, how do I have the upside without having the downside? That approach was the basis of Bridgewater going from having to borrow four thousand dollars from my dad to the largest hedge fund, the most successful hedge fund in the world. I created personality tests. I gave it to Elon Musk, I gave it to Bill Gates, I gave it to Reed Hastings. Maybe I should probably not tell stories, but, um-

No, no, no, that's what we do here.

You don't have to make it to the top to be happy.

Well, what's the top? There's no correlation between the level of happiness in your life and the amount of money that you make, so you have to have a purpose. What do you wanna do with the money that is so important? You better answer that question.

[singing] I feel like I could rule the world. I know I could be what I want to. Uh, I put my all in it like no days off. On the road less traveled never looking back.

You were, in some regard, a little bit of a late bloomer in terms of, like, traditional metrics of success.

Oh, yeah.

I think you were thirty-four or thirty-five. You had, like, two kids, I think. You had just laid off the five employees that you had had, and you're like, "Look, Dad, I've lost it all." Can you, like, close your eyes and, like, remember that conversation?

So I started Bridgewater in nineteen seventy-five, and in nineteen eighty-one and 'eighty-two, interest rates were not the, uh, emerging countries had a lot of debt, and I calculated that those countries were not gonna be able to pay their debts and, and they were gonna have big debt crisis. And that was a very controversial point of view. And then Mexico defaulted in August of nineteen eighty-two. So I was asked to testify to Congress about what this is all about and, and how, what might happen to the economy. I thought it, the economy was gonna be a disaster. I couldn't have been more wrong, okay? So I lost money from me, I lost money from my clients, and I had to lay off everybody. I was so broke, I had to borrow four thousand dollars from my dad. So then my choice was, am I going to, you know, put on a suit and tie, go in, commute, and work for somebody in that capacity? And I knew that I wasn't very good at working for people. Now, that was painful. That changed everything in my life. That created the bottom at Bridgewater, and then it just kept going up because of what I learned. I learned two things. First of all, I l- I learned humility to balance my audacity, okay? [laughs] I didn't have much humility. I'd say, "I'm right, I'm gonna be right," and all that. And then I learned how to d-diversify my bets and substantially reduce my risk without reducing my returns because I didn't wanna have reduce the upside. I, I knew that I w- had to reduce the downside. And so, um, I really learned and taught myself really my mantra. Okay, here's the mantra for investing. You wanna be successful? Th-this will, um, this is the, uh, holy grail of investing. Find fifteen good uncorrelated return streams.

Wh- how did you come up with fifteen?

Well, I just looked at the math of it, okay? So in other words, what are the