Part 2: My Most Fundamental Life Principles
Time is like a river that will take you forward into encounters with reality that will require you to make decisions. You can’t stop the movement down this river, and you can’t avoid the encounters. You can only approach these encounters in the best way possible.
That is what this part is all about.
Where I’m Coming From
Since we are all products of our genes and our environments and approach the world with biases, I think it is relevant for me to tell you a bit of my background so that you can know where I’m coming from.
I grew up in a middle-class neighborhood on Long Island, the only son of a jazz musician and a stay-at-home mom. I was a very ordinary kid, and a less-than ordinary student. I liked playing with my friends— for example, touch football in the street—and I didn’t like the school part of school, partly because I had, and still have, a bad rote memory and partly because I couldn’t get excited about forcing myself to remember what others wanted me to remember without understanding what all this work was going to get me. In order to be motivated, I needed to work for what I wanted, not for what other people wanted me to do. And in order to be successful, I needed to figure out for myself how to get what I wanted, not remember the facts I was being told to remember.
我在长岛的一个中产阶级社区长大，父亲是位爵士音乐家，母亲足不出户，是位家庭主妇。我呢，曾是个很普通的小孩，但在学校里又是个不那么普通的学生。那时我老和一帮朋友们厮混，在街上踢踢足球什么的。并不是很喜欢学校上课的方式，可能是因为我一直不擅长死记硬背教科书上的内容，当然我现在依旧如此，还可能是因为如果别人要我在完全没搞清楚是怎么一回事的情况下就囫囵吞枣，死记硬背，我可真是一点都提不起兴趣。做事要想有干劲，得干 些我自己想做的事情，而非他人逼迫我为之。想要做成一件事，我得弄清楚获得成功的过程， 而非强记那些没用的知识点。
Rote memory is memory for things that don’t have an intrinsic logic for being what they are, like a random series of numbers, words in a foreign language and people’ s names (all of which I have trouble with). On the other hand, I have a great memory for things that make sense in a context. For example, I can tell you what happened in every year in the economy and markets since the mid-1960s and how many things work.
死记硬背式的记忆是机械记忆，没有实质内容之间的内在逻辑，比如一串随机数字，外语单 词，人名（这个我感到最头疼了）。可另一方面，我对语境中有意义的内容记得很清楚，例如我能告诉你自 60 年代中期以来每年在经济和市场方面发生过什么大事，哪些事起到了作用。
One thing I wanted was spending money. So I had a newspaper route, I mowed lawns, I shoveled the snow off driveways, I washed dishes in a restaurant, and, starting when I was 12 years old, I caddied.
我想做的事是花钱，于是我就去赚钱，所以那时我送过报纸、除过草坪、铲过公路上的积雪、在餐馆刷过盘 子。12 岁那年，我开始做高尔夫球童。
It was the 1960s. At the time the stock market was booming and everyone was talking about it, especially the people I caddied for. So I started to invest. The first stock I bought was a company called Northeast Airlines, and the only reason I bought it was that it was the only company I had heard of that was trading for less than $5 per share, so I could buy more shares, which I figured was a good thing. It went up a lot. It was about to go broke but another company acquired it, so it tripled. I made money because I was lucky, though I didn’t see it that way then. I figured that this game was easy. After all, with thousands of companies listed in the newspaper, how difficult could it be to find at least one that would go up? By comparison to my other jobs, this way of making money seemed much more fun, a lot easier, and much more lucrative. Of course, it didn’t take me long to lose money in the markets and learn about how difficult it is to be right and the costs of being wrong.
大概是在 60 年代吧，股市行情欣欣向荣，家家户户都在聊炒股，而我做球童时的那些雇主们更 是热衷炒股，耳濡目染，我开始了第一笔投资。当时我买的第一支股票叫东北航空公司，选择的原因也只是因为在每股 5 块钱以内的公司里，我就只听说过这家公司。不过也好，至少我能多买几股，行情还是很棒的，因为这家公司刚要破产就被另一家公司收购了，市值瞬间涨到了从前的三倍，我靠这点运气也算小赚一笔，当然那时我还不清楚这些事情背后的具体原因。看起来这游戏不难玩，报纸上登的每天那么多公司都在上市，找家会涨的公司有什么难的？再说了，和我做过的那些工作比起来，这种赚钱方式既有趣又容易，还能赚更多钱，何乐不为？不过没多久我就开始亏钱了，原来选对股票并非易事，选错了代价也挺不菲的。
So what I really wanted to do now was beat the market. I just had to figure out how to do it.
The pursuit of this goal taught me:
1) It is not easy for me to be confident that my opinions are right. In the markets, you can do a huge amount of work and still be wrong.
2) Bad opinions can be very costly. Most people come up with opinions and there’s no cost to them. Not so in the market. This is why I have learned to be cautious. No matter how hard I work, I really can’t be sure.
2）糟糕的意见代价昂贵。很多人给出的观点和看法都是零成本，但在股市里可就不一样了， 这就是为什么我已经学会了谨慎。因为再怎么努力，我都无法 100%肯定市场走向。
3) The consensus is often wrong, so I have to be an independent thinker. To make any money, you have to be right when they’re wrong.
So … 因此……
3.1) I worked for what I wanted, not for what others wanted me to do. For that reason, I never felt that I had to do anything. All the work I ever did was just what I needed to do to get what I wanted. Since I always had the prerogative to strive for what I wanted, I never felt forced to do anything.
3.2) I came up with the best independent opinions I could muster to get what I wanted. For example, when I wanted to make money in the markets, I knew that I had to learn about companies to assess the attractiveness of their stocks. At the time, Fortune magazine had a little tear- out coupon that you could mail in to get the annual reports of any companies on the Fortune 500, for free. So I ordered all the annual reports and worked my way through the most interesting ones and formed opinions about which companies were exciting.
3.2）我把我能想到的最好的、独立的观点汇聚到一起，用以实现我的目标。例如，我想在股市里赚钱，我就得了解公司，从而评估该公司股票的吸引力。那时，《财富》杂志每期都附赠优惠券，可以撕下来邮寄给杂志，免费获取世界 500 强各企业的年度报告。我订了所有企业的年度报告，找出我认为最有趣的公司，形成自己的观点，选出自认为最有吸引力的公司。
The way I learn is to immerse myself in something, which prompts questions, which I answer, prompting more questions, until I reach a conclusion.
3.3) I stress-tested my opinions by having the smartest people I could find challenge them so I could find out where I was wrong. I never cared much about others’ conclusions—only for the reasoning that led to these conclusions. That reasoning had to make sense to me. Through this process, I improved my chances of being right, and I learned a lot from a lot of great people.
This included my retail stockbroker, the people I was caddying for, even my local barber, who was equally engrossed in the stock market. (It wasn’t as precocious as it sounds. At the time, instead of talking about the Yankees, everyone was talking about stocks. That was the world I grew up in.)
3.4) I remained wary about being overconfident, and I figured out how to effectively deal with my not knowing. I dealt with my not knowing by either continuing to gather information until I reached the point that I could be confident or by eliminating my exposure to the risks of not knowing.
Sometimes when I know that I don’t know which way the coin is going to flip, I try to position myself so that it won’t have an impact on me either way. In other words, I don’t make an inadvertent bet. I try to limit my bets to the limited number of things I am confident in.
3.5) I wrestled with my realities, reflected on the consequences of my decisions, and learned and improved from this process.
By doing these things, I learned how important and how liberating it is to think for myself.
In a nutshell, this is the whole approach that I believe will work best for you— the best summary of what I want the people who are working with me to do in order to accomplish great things. I want you to work for yourself, to come up with independent opinions, to stress-test them, to be wary about being overconfident, and to reflect on the consequences of your decisions and constantly improve.
After I graduated from high school, I went to a local college that I barely got in to. I loved it, unlike high school, because I could learn about things that interested me; I studied because I enjoyed it, not because I had to.
At that time the Beatles had made a trip to India to learn how to meditate, which triggered my interest, so I learned how to meditate. It helped me think more clearly and creatively, so I’m sure that enhanced my enjoyment of, and success at, learning. Unlike in high school, in college I did very well.
By the way, I still meditate and I still find it helpful.
And of course I continued to trade markets. Around this time I became interested in trading commodities futures, though virtually nobody traded them back then. I was attracted to trading them just because they had low margin requirements so I figured I could make more money by being right (which I planned to be).
By the time I graduated college, in 1971, I had been admitted to Harvard Business School, where I would go in the fall. That summer between college and HBS I clerked on the floor of the New York Stock Exchange. This was the summer of the breakdown of the global monetary system (i.e., the Bretton Woods system). It was one of the most dramatic economic events ever and I was at the epicenter of it, so it thrilled me. It was a currency crisis that drove all market behaviors, so I delved into understanding the currency markets. The currency markets would be important to me for the rest of my life.
That fall I went to Harvard Business School, which I was excited about because I felt that I had climbed to the top and would be with the best of the best. Despite these high expectations, the place was even better than I expected because the case study method allowed open-ended figuring things out and debating with others to get at the best answers, rather than memorizing facts. I loved the work-hard, play-hard environment.
In the summer between my two years at HBS, I pursued my interest in trading commodities futures by convincing the Director of Commodities for Merrill Lynch to give me a job as his assistant. At the time, commodities trading was still an obscure thing to do.
In the fall I went back to HBS, and in that academic year, 1972-73, trading commodities futures became a hot thing to do. That is because the monetary system’ s breakdown that occurred in 1971 led to an inflationary surge that sent commodity prices higher. As a result of this, the first oil shock occurred in 1973. As inflation started to surge, the Federal Reserve tightened monetary policy to fight it, so stocks went down in the worst bear market since the Great Depression. So, commodities futures trading was hot and stock market investing was not. Naturally, brokerage houses that didn’t have commodities trading departments wanted them, and there was a shortage of people who knew anything about it. Virtually nobody in the commodities futures business had the type of Harvard Business School background that I had. So I was hired as Director of Commodities at a moderate-size brokerage and given an old salt who had lots of commodities brokerage experience to help me set up a commodities division. The bad stock market environment ended up taking this brokerage house down before we could get the commodities futures trading going. I went to a bigger, more successful brokerage, where I was in charge of its institutional/hedging business. But I didn’t fit into the organization well, so I was fired essentially for insubordination.
秋天我回哈佛商学院上学，就在 1972 年到 1973 年的这个学年里，商品期货市场火了起来。因 为 1971 年货币体系的瓦解导致了通货膨胀狂潮，物价飞涨。1973 年，第一次石油危机爆发 了。通货膨胀加剧，美联储收紧了货币政策，股票市场面临大萧条时期以来最糟糕的熊市。在此背景之下，商品期货交易变得炙手可热，股票市场投资无人问津。证券经济公司也想搞商品期货交易，但公司没人懂这些。事实上，从事商品期货交易的，很少有我这种具备哈佛商学院 背景的。我很轻松地应聘上了一家中型经纪公司，担任商品主管，公司里一位在商品经纪领域经验丰富的老手帮助我成立了商品分部。但我们还没来得及维持商品期货交易，股票市场环境就拖垮了这家经纪公司。后来我去了家规模和影响力大点的经纪行，负责机构事务与对冲基 金业务，我没能很好地融入到这个公司里，最终因不服从领导被开除了。
So in 1975, after a quick two-year stint on Wall Street after school, I started Bridgewater. Soon after, I got married and began my family.
Through this time and till now I followed the same basic approach I used as a 12 year-old caddie trying to beat the market, i.e., by
- working for what I wanted, not for what others wanted me to do;
- coming up with the best independent opinions I could muster to move toward my goals;
- stress – testing my opinions by having the smartest people I could find challenge them so I could find out where I was wrong;
- being wary about overconfidence, and good at not knowing;
- wrestling with reality, experiencing the results of my decisions, reflecting on what I did to produce them so that I could improve.
就在上述的这段时期里，从我是个 12 岁的球童开始到现在，我击败市场一直都使用的是同一套方法：
- 我把我能想到的最好的、独立的 观点汇聚到一起，用以实现我的目标；
- 对观点进行压力测试，把我认识最聪明的人找来帮 我挑毛病，找出我观点中错误的地方。