📖Ray Dalio
Seek Uncorrelated Alpha
Diversify alpha sources for better risk-adjusted returns.
The key to great returns is finding alpha — returns above the market — from multiple uncorrelated sources. Each source of alpha should be independent.
🏠 Everyday Analogy
📖 Core Interpretation
Ray Dalio advocates a repeatable process: define criteria, execute consistently, and review decisions against evidence. Process quality drives outcome consistency.
💎 Key Insight：Multiple independent alpha sources reduce overall portfolio risk.
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❓ Why It Matters
Without process, there is no reliable feedback loop. Structured execution and review improve decision quality over time.
🎯 How to Practice
Run a decision loop of research, thesis, execution, and post-mortem; document assumptions and update playbooks with evidence, not hindsight bias.
⚠️ Common Pitfalls
Having opinions without execution criteria
Reviewing outcomes but not decisions
Abandoning rules during volatility spikes
📚 Case Studies
1
Ray Dalio and Bridgewater Before the Global Financial Crisis (2008)
In the mid‑2000s, Dalio’s team rigorously examined credit data, debt growth, and lending standards. Their models and firsthand conversations showed an unsustainable debt bubble, even as consensus believed housing was safe. Bridgewater embraced this uncomfortable reality instead of following the optimistic narrative.
✨ Outcome：Bridgewater positioned defensively and profited during the 2008 crisis. Lesson: facing unwelcome facts early, and updating beliefs from evidence, is the foundation for resilient investment decisions.
2
Warren Buffett Buys, Then Exits Dempster Mill (1961)
Buffett bought Dempster Mill Manufacturing as a classic cigar-butt value play, convinced his analysis was right despite operational problems. Partner Charlie Munger and new manager Harry Bottle challenged Buffett’s assumptions, forcing him to confront his blind spot about weak businesses and stagnant management.
✨ Outcome：Buffett liquidated assets, sold Dempster, and later shifted from pure ‘cheap’ stocks to high-quality businesses. Lesson: being open-minded to partners’ critiques and contrary evidence helped him see reality more clearly and evolve his entire investment philosophy.
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