Principles and Directives

I learned a lot from Ray Dalio’s Principles, which he describes as “ways of successfully dealing with reality to get what you want out of life”. I also valued Derek Sivers’ directives for how to get what you want. Both Ray and Derek make good arguments for everybody sharing their own principles and directives. I liked their reasoning so I’ve started sharing some principles and directives that resonate with me here. This is a living document that I will update with new things that I find useful.


Principles arrived at through my own struggles:

  • Listen intently to people and ask them questions, because you never know where this will lead.

    • If nothing else, people really appreciate it when you listen to them properly.

  • If I have high conviction on investing in an area/theme, I’d be better to spread bets across players within the theme, rather than betting on only one player per theme.

    • Past mistakes have taught me this across three such situations, investing in: 1. Lithium miners; 2. Semiconductor producers and 3. Water treatment in China. For each of these I correctly identified areas/themes ripe for huge growth, and I had high conviction, and I invested at a time when there was still plenty of growth ahead. I tried to pick a single stock within each of these to invest in. This worked out ok, but I would have made more money with less volatility if I had spread my bets across a few players in each theme instead of trying to pick just one per theme.

  • Don’t sweat the small stuff

    • I have a tendency to worry too much about some things, even though history shows that most of these things did not matter in hindsight. So I would have been better-off by not worrying too much.

  • Before making a new purchase ask:

    1. Do I really need this?
    2. Will this improve my life, or burden it, over the long term?
    3. Is it better to rent/hire this, or get this 2nd hand?
    • helps to avoid useless consumption.

  • Know your strengths and use them often. Know your weaknesses and partner with others who have complementary strengths.

    • …and be humble/realistic about what your weaknesses are.

Principles from Ray Dalio that resonated with me:

  • Remember that in terms of wellbeing, the marginal benefits of being very wealthy (over and above comfortably having the basics - saftey, good relationships, good food, a comfortable bed, good sex) decrease the more wealth you get.

    • Ray Dalio has experienced having nothing to having an extreme amount of material success, and he observed this in his own life and wrote about it in his book Principles. It stood out to me as being important to remember, regardless of your level of material success.

  • Find out what your gifts are, then use them in a way that helps others, and also helps yourself, so that you stay motivated to keep going.

    • Important to have your own incentives in place to keep you going.

  • Money is a tool that can help you achieve your goals. Having money is not a goal in and of itself.

    • First define what I want, then work backwards from there to figure out how to get it. Money is not actually what I want, it is just a tools to make getting what I want easier.

  • When you make a mistake or struggle a lot, remember to reflect on and learn from the experience.

    • Ray Dalio’s equation: Pain + Reflection = Progress

  • Understand Reality -> decide what your dreams are -> go after you dreams until you have them. Repeat.

    • Doing this will likely see you going after and achieving increasingly more ambitious dreams

  • Don’t get hung up on your views of how things should be to the point that you miss out on understanding how they really are.

    • To get good results we need to be analytical and not too emotional.

  • If you come up with things that people value, you almost can’t help but to be rewarded.

    • Don’t think too much about the reward, think about what’s needed/valued and build that.

  • Perfection doesn’t exist but it is a goal of the never ending process of evolution.

    • Once you reach a goal, you set new goals.

  • When you’re faced with a situation in which there are two things you want or need which are seemingly incompatible, go slow to figure out how you can have the most of both

    • e.g. I want both low risk and high return from my investments. Is there a way to get this?

  • When faced with a seemingly binary decision (either option A or option B) always look for an option C.

    • e.g. either communism or capitalism (of the current U.S. type) is a false dichotomy.

Principles from others:

  • Don’t apply labels to yourself. The more labels you apply to yourself, the stupider you become…and the more prone you are to groupthink.

    • I heard this from Tim Ferris, who got it from computer scientist Paul Graham, I think.

  • Always ask ‘is the way I spend my time in line with the life I say I want to live?’

    • I got this from John Montgomery (Bridgeway Capital) during a podcast with Barry Ritholtz

  • Save aggressively, invest wisely and be generous with the results of that.

    • I got this from John Montgomery (as above)

  • Have big life goals and pursue them relentlessly within the framework of a balanced lifestyle

    • I got this from John Montgomery (as above)

  • Start with the end in mind. Understand what your mission is from the start.

    • Got this from Stephen R. Covey.

  • Remember, it’s usually best to take a long-term view

    • I got this one from talking to Amy. Also, Bill Gates says something like ‘most people overestimate how much should be achievable in 1 year and underestimate how much is achievable in 10 years’.

  • Think in bets to help make decisions … especially when you need to make a decision without having all the information you need

    • Got this from Annie Duke

  • Work harder on yourself than you do on your job

    • This leads to a better life, and compounds to give greater job performance and career improvement over time anyway. Got this idea from Tony Robbins.