Ray Dalio Reveals How His Costliest Blunder Turned Into His Best Investing Lesson | Global News Avenue

Ray Dalio is a hedge fund manager who founded Bridgewater Associates, one of the world’s largest hedge funds.

Dalio is a billionaire known for his investing acumen. While growing into the middle class, he began his investing journey with money he earned as a caddy at a local golf course. He encountered and learned from many setbacks, including a major setback in 1982 that helped him learn the lessons he needed for future success.

Ray Dalio’s Big Mistake

Ray Dalio says the biggest mistake of his career occurred in 1982, when he founded Bridgewater Associates. That year, he predicted that the economy would enter a depression and positioned the company’s investments based on this premonition.

Ultimately, he was wrong, and the economy continued to grow until 1990, when it entered a recession. This caused huge losses to his company and personally. He recalled having to borrow $4,000 from his father to pay bills and lay off many employees.

what did he learn

Dalio said his failures, including the 1982 mistake, were crucial to his learning and helped him grow as an investor. The 1982 mistake helped him reframe his thinking from blind confidence and thinking “I’m right” to a more questioning “how do I know I’m right?” which helped him look at himself more effectively beliefs and premonitions.

He also learned that it would be a great benefit to be surrounded by people who thought differently than he did. By bringing other smart people into the room to oppose him and stress-test his theories, Dalio can look at a situation from multiple sides and be more likely to come to the right conclusion.

Dalios said his failures were largely part of his learning how to build a strong portfolio. He advocates finding fifteen good, uncorrelated return streams, claiming that this allows him to beat the market while significantly reducing risk.

bottom line

Learning from other people’s mistakes is one of the best ways to learn because it prevents you from making those costly mistakes yourself. One of the most important lessons Dario learned from his previous failures was to have an open mind.

It’s important to have confidence in yourself, but don’t be afraid to consider other people’s perspectives. By looking at things from multiple sides, you can gain a clearer understanding of a situation. Rather than ostracizing those who think differently or have different perspectives than you, bring them on board and collaborate so you can become stronger together.