Question
Ray Dalio used several key principles to prevent financial mistakes. One of the main principles was learning from history. He studied past currency devaluations from the beginning of time to the present to understand patterns and lessons. He believed that most events have already happened multiple times in the past and will surely happen again. This principle helped him to anticipate and prepare for potential financial scenarios. Another principle was acknowledging and learning from his mistakes. After nearly going bankrupt due to a wrong prediction, he took it as a learning opportunity and set out to identify the principles he needed to put in place to prevent such a mistake from happening again.
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Once, following an international currency devaluation, Dalio expected the stock market to plummet, and he took what he thought was an appropriate position. Instead, the stock market jumped significantly, causing him to nearly go bankrupt. To prevent such a mistake happening again, he set out to identify the principles he needed to put in place and studied past currency devaluations from the beginning of time to the present to see what lessons he could learn. He learned that what had just taken place had happened before many times in the past. Dalio calls these moments in history "another one of those" moments, meaning that most everything has happened many times before and will surely happen again. Perhaps the last time an event occurred was before our lifetime, despite it being the first time we have experienced it. Most events we experience have already happened multiple times in the past. As a consequence, if our human psychology has not changed in the last thousand years, then by s...
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