— From 25iq.com
I want an idea meritocracy. I want independent thinkers who are going to disagree. The most important thing I want is meaningful work and meaningful relationships and the way to get that is through radical transparency.”
“Meaningful work is being on a mission that you’re excited about and that you can get your head into. And in meaningful relationships you can be totally transparent with each other, letting each other know what your weaknesses are.”
Dalio’s approach is quite similar to Charlie Munger’s approach: “I never allow myself to have an opinion on anything that I don’t know the other side’s argument better than they do. Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side.”
Dalio and Munger share other approaches to decision-making. For example, Munger, who describes his process as follows: “I use a kind of two-track analysis. First, what are the factors that really govern the interests involved, rationally considered? The first track is rationality-the way you’d work out a bridge problem: by evaluating the real interests, the real probabilities and so forth. Second, [I work to eliminate] influences where the brain at a subconscious level is automatically doing these things-which by and large are useful, but which often malfunctions.” Munger and Buffett also have a third step in their decision-making process that is similar to Dalio: expose their ideas to the best minds they can find. In Buffett’s case that mind is almost always Charlie Munger. Buffett calls Munger the “Abominable No Man.” Buffett exposing an investing hypothesis to Munger is like tempering steel if an investing hypothesis doesn’t break after being exposed to Munger it is more likelky to be sound.
To review what I have said in this post so far, the decision making process that Dalio, Buffett and Munger use is:
(1) make the most rational decisions you can;
(2) look for psychological bias that may have interfered with making a rational decision; and
(3) expose your hypothesis to very smart people who have a thoughtful contrary view and deeply understand their position.
On this last point Daniel Kahneman believes: “To better avoid errors, you should talk to people who disagree with you and you should talk to people who are not in the same emotional situation you are.”