These decision-making systems were much better than the forecasting systems I’d been using before, mostly because they incorporated our ongoing reactions to developments, allowing us to deal with a wider range of possibilities. They could also include timing rules. In a January 1987 piece called “Making Money vs. Making Forecasts,” I explained that:
Truth be known, forecasts aren’t worth very much, and most people who make them don’t make money in the markets. . . .
This is because nothing is certain and when one overlays the probabilities of all of the various things that affect the future in order to make a forecast, one gets a wide array of possibilities with varying probabilities, not one highly probable outcome. . . .
We believe that market movements reflect economic movements. Economic movements are reflected in economic statistics. By studying the relationships between economic statistics and market movements, we’ve developed precise rules for identifying important shifts in the economic/market environment and in turn our positions. In other words, rather than forecasting changes in the economic environment and shifting positions in anticipation of them, we pick up these changes as they’re occurring and move our money around to keep in those markets which perform best in that environment.
Over the last three decades of building these systems we have incorporated many more types of rules that direct every aspect of our trading. Now, as real-time data is released, our computers parse information from over 100 million datasets and give detailed instructions to other computers in ways that make logical sense to me. If I didn’t have these systems, I’d probably be broke or dead from the stress of trying so hard. We certainly wouldn’t have done as well in the markets as we have.
As you will see later, I am now developing similar systems to help us make management decisions. I believe one of the most valuable things you can do to improve your decision making is to think through your principles for making decisions, write them out in both words and computer algorithms, back-test them if possible, and use them on a real-time basis to run in parallel with your brain’s decision making.
Ray Dalio. Principles: Life and Work (Kindle 位置 762-769). Simon & Schuster. Kindle 版本.
