Ray Dalio built Bridgewater Associates out of his small New York City apartment in 1975. Bridgewater is now considered one of the most successful investing firms in the world, and Times and Forbes have deemed him one of the world’s wealthiest, most influential people alive. In this book, Dalio distills decades of knowledge and experience into guiding principles for getting all that we can out of life. According to Dalio, it all begins with fundamental truths that equip us to achieve our personal and professional goals.

Principles are the essential foundations for a life full of meaning and growth. They drive our actions and define what we hope to achieve. With principles, we have the tools to make sense of our experiences and act accordingly. Without them, we would approach each situation as if it were the first of its kind, resulting in paralysis or anxiety.

People tend to be successful when they can operate comfortably in the unknown. Learn to embrace the fact that there are many things you do not know. More important than what you know is how you handle uncertainty. As you create principles, it is essential that they are authentic to who you are. Figure out what you want, what is true, and what you should do in light of those wants and truths.

Phoniness is the worst. It betrays trust with others and shows a lack of self-respect. As you develop your principles, write them down. You can then return to them later for reorientation and refinement. Principles will become clearer and life more fulfilling through the process of setting audacious goals, failing, learning from those failures, improving, and then going after even more audacious goals.

There is nothing more unfortunate than an impractical idealism that daydreams without any clue as to how those ideas interface (or don’t) with reality. The untethered idealist will end up with problems instead of progress. It is better to operate as a hyper-realist: one who has fierce dreams, but takes concrete, determined strides toward their realization. Some like to savor life; others want to make an impact. Both are fine goals, and they don’t have to be mutually exclusive. What is important to remember is that truth must be part of the pursuit of either end.  

But what is truth? Truth refers to an accurate grasp of reality. Some people fight the truth because it can be bitter stuff and they can’t cope with it, but truth isn’t going anywhere. It is better to accept reality and confront difficult truths than to cry about them. What is more, even the harsher truths can become more palatable if you commit to radical open-mindedness and transparency. This carries risks because it means exposing yourself to the possibility of being wrong and being critiqued. However, it becomes easier the more you do it, and it expedites the process of learning and growing because you expose yourself to more opportunities for feedback.

This is a daunting prospect for some because it means letting go of the fear of other people’s opinions. But you will be glad when you do, because meaningful work and meaningful relationships are the fruit of open-mindedness and transparency.

Nature gives us some key clues about how reality operates. Nature’s enormity alone has a chastening effect on human hubris, showing us that we are a small part of a larger, complex whole. Perhaps we would be wise to consider taking our cues from nature before presuming a monopoly on truth and how the universe operates.

Take evolution, for instance, probably the strongest force in the nature. The one constant in life is flux and change. We evolve or we die. We learn to adapt and improve ourselves. It is true for species, for individuals, organizations, and businesses. It doesn’t matter is we fail, so long as we learn from our failure. To learn from our mistakes and evolve is a great achievement and a source of immense satisfaction.

Principles from nature are ours to harness and harvest. As a practical application, consider how understanding evolution in nature can help us fast track our personal evolution by getting better at things and solving problems. (As an aside, this is far more satisfying than simply acquiring new things. The law of diminishing returns is another term derived from the natural order.) By pressing into new frontiers, we will inevitably encounter pain, but we will also begin to grow. Accept the pain. Learn from it. Adapt and let it make you stronger.

If you’re experiencing pain in your life, this does not necessarily mean you’ve made a mistake. In fact, it could mean that you’re doing something right, discovering new problems to which you can find solutions. Confront the pain along the way. Another part of this is taking ownership of your decisions and accepting the things that are beyond your control to change. Knowing the difference is critical. You will be far happier if you take responsibility for what you can change and refrain from blaming others or circumstances for your unhappiness and failures. Psychologists refer to people with this ability as possessing an “internal locus of control.” Such people are not rattled by externals, but maintain an inner sense of stability by acting on what they can control: their own thoughts, attitudes, and actions.

It all begins with your goals. This will determine the direction you take. As you pursue your goals, you will run into problems along the way. When confronted with problems, you have the opportunity to diagnose them, design a new path forward, and enact the newly designed plans. These five steps form the basis for a feedback loop of personal growth. Let’s look at each step in turn.

Goals

What do you value enough to go after? Your goals must be clear. You can achieve just about anything you want to, but you cannot have it all. Choose what’s most important and put your hand to the plow. It is important to distinguish between goals and desires. Goals should be so central to who you are that you have to go after them. Desire can—and ideally will—eventually align with goals, but there are plenty of times when it conflicts with goals. In these instances, don’t let desire win out over what you know you need to do. It is okay to be audacious with your goals. There is rarely a straightforward path, but there is a best path, and it will become clearer as you start taking steps forward.

Problems

It is important to remember that setbacks are inevitable in this process. Avoidance is tempting because the problems stem from tough realities; however, it is best to deal with them squarely. To deny or shy away from problems is to miss out on opportunities for learning and growth. Figure out what your particular problem is and deal with it decisively—don’t tolerate its existence. Just keep in mind that time is limited, so spend it identifying the main problems, as solving them will have the biggest positive impact on your goals.

Diagnosis

When grappling with problems, we tend to be reactionary. To deal with them decisively involves truly understanding their nature. Don’t jump to the how until you are sure you understand the what. 

Design

In a similar vein, design comes before doing. People are so eager to execute that they fail to review past steps and snags or to draft a revised plan of action in light of those past experiences. Your plans should resemble a movie script, tentatively anticipating actions and lines of the characters involved in the project you are attempting to realize. This provides a guide and a template against which to compare the plan’s actual unfurling.

Doing

People who attempt to execute ideas without designing solid plans won’t make it, but neither will the planners who don’t execute at all. It requires discipline and courage to stick to the script as best you can. Prioritized to-do lists and good metrics to measure progress are both underrated and essential to helping you achieve the results you envision.

It is imperative to perform every step in the prescribed order, one at a time. Don’t look for solutions until you know what the problem is. Don’t troubleshoot problems that haven’t happened yet. If the steps are not discrete or in order, you will not be able to discern problems readily or solve them effectively.

Good decision-making is critical, but your ego and personal blind spots can cloud your judgment. Both are embedded in the brain’s inner-workings; so if you have a brain, then you have definitely seen the consequences of both in your life.

The ego barrier has to do with the defenses we put up so we don’t have to acknowledge our shortcomings and missteps. Your basic needs of love, significance, and survival—and the fear of losing any of those—originate in the amygdala. Even if your conscious brain may tell you that the constructive criticism you’re receiving is good and helpful, you might feel a visceral anger and get defensive. Your higher, conscious self is often at war with the more primal, emotional subconscious. Critique can feel like attack, leading us to react in anger if we are not careful. Never let the urge to be right drown out the need to pursue truth in a situation. The need to be right and justify oneself springs from egoism.

Blind spots are another impediment to clear decision-making. No one sees everything perfectly clearly. Some people catch the details that big-picture people miss. On the other hand, big-picture people are better at keeping overarching goals in mind. Both have their place. The slew of personality tests all reveal that there are strengths and weaknesses with every personality, both things we see clearly and things we often overlook.

Failing to acknowledge these barriers is a recipe for close-mindedness and gridlock. No one wins. These barriers are tragic flaws that affect countless smart, industrious individuals. Closed-mindedness is not, however, insurmountable.

Are you close-minded? If you are, are you willing to admit it and face that uncomfortable truth? Consider this an opportunity for honest self-examination. What follows are some telltale signs of close-mindedness.

Close-minded people become resentful when their ideas receive pushback. They tend to make lots of assertions without asking questions, and are far more concerned with being understood than understanding the viewpoint of others. Oftentimes they lack the humility to admit that they are wrong or the capacity to hold two disparate ideas at the same.

 Even the preface “I could be wrong . . . ” is often a veneer to mask close-mindedness. This preface is invariably followed by an assertion rather than a question. It is best to respond to such statements with a question instead of a counter-argument. 

This is what we are trying to avoid, but what are we going for? The answer is that we need to work toward a radical open-mindedness. It is the humble acknowledgement of the two barriers and the belief that you may not be viewing your choices from the ideal vantage point.

The radically open-minded value achievement over simply appearing competent, so they take in and process information before worrying about how they’ll perform. The open-minded have the ability to suspend judgment of a differing opinion long enough to truly understand it, and are willing to abandon the solution they came up with if presented with a better one. They are aware that they don’t know everything and focus on navigating the the open seas of the unknown instead of feeling bound to their small pool of knowledge. As a result, they welcome respectful arguments from thoughtful objectors.

These are the traits of a mindset that is as admirable as it is rare. Open-mindedness, however, can be cultivated. Viewing points of pain as opportunities for reflection, becoming acquainted with blind spots, meditating, and giving greater weight to evidence and logic than to your personal feelings are all ways to develop patterns of open-mindedness.

There is not a “best way” to make decisions; however, there are some absolute truths that help us choose effectively.

The most significant threat to clear decision-making is destructive emotions. Failure to learn before making decisions is also extremely problematic. Perspective is key to dealing with these potential pitfalls. If we think of our experiences as little “dots” that we accrue over the course of the day, we end up with many of these dots before the day’s end. Some people become anxious when they cannot categorize or prioritize the experiences they have. They end up overwhelmed by the sheer volume of raw data.

A big-picture perspective is critical, because it allows you to stratify experiences and lump them into levels of varying importance and urgency. To help you make sense of your experiences, make sure you are asking questions of other people, and that you are asking the right people. The opinions of the uninformed usually do more harm than good. Refuse to submit to the tyranny of the present. Personalities and situations loom larger in the moment than they actually are. Hindsight shows this to be case over and over again. Returning to the dots, bear in mind both the importance of weighing experiences and that a dot is just a dot. Avoid becoming inordinately transfixed with single dots; they can only teach you so much. The larger patterns of dots are more crucial to identify. They provide a higher perspective and they prevent every single experience from becoming a saga.

If harmful emotions are an impediment to making good decisions, then logic, evidence, and common sense will help you. They will allow you to make sense of your situation at all its levels and clarify what you need to do. Take action based on evidence—not feelings. Any idiot can complicate matters, but it takes insight and practice to simplify things.

The ability to keep things in perspective and prioritize accordingly is essential. It is easy to amass facts and principles, but these will leave us paralyzed if we do not learn to differentiate between reality’s various levels (e.g., there is a vast difference between “I want to change the world” and “I need to cook dinner for my family”). Track your conversations and you will observe how fluidly we move between these various levels of reality. As you cultivate these skills, it is best to be an imperfectionist. Perfectionists have a hard time keeping the main thing the main thing and are often the first to get lost in the weeds.

An idea meritocracy is a system of reaching the best decision through robust discussion among intelligent, freethinking, credible individuals with a shared goal. When Bridgewater Associates was still a fledgling company, the approach to decision-making typically involved informal heated arguments that would eventually lead to a decision that was better than what anyone could have thought up on his own. This process became more explicit and systematic as Bridgewater grew and the range of issues and opinions widened. The company needed a system to fairly evaluate the differing voices, so that everyone had to chance to state their opinion and play a role in reaching the best possible decision.

For the idea meritocracy to work, there must be a staunch commitment to truth and transparency. What is more, decisions must be believability-weighted. This means that it is not enough that everyone says his piece: depending on the decision at hand, certain people will be able to speak to the issue with varying degrees of insight and authority. The believability of each person involved must also be taken into account. This triangulation with people who can meaningfully speak to an issue sharpens us and helps us fine-tune what is at stake and what needs to be done.