Ray Dalio

The Systems Builder

You do not want to be right about a company; you want a process that is right on average. You think in machines, balance exposures, and write down principles so the decision does not depend on your mood that day.

Position on the six dimensions

Where this method has an edge

• Your results do not depend on one call
• You can survive regimes you did not forecast
• Your process improves over time because it is written

Where it can hurt you

• Systematic diversification caps your upside
• A model is only as good as its assumptions
• You can be right about the machine and wrong about the timing

One rule from this method

Write the rule you already follow in practice. You will find you have a system — it just has never been checked for consistency.

The other nine