Ray Dalio Principles Behind MT20

Marcus explains how Ray Dalio’s principles influence the MT20 portfolio and why avoiding interference is one of the most important rules in funds management.

If you don’t know who Ray Dalio is, look him up. He’s written books called Principles, and principles are the way you do things in business or in your personal life. He’s written one about both. One of his businesses, obviously, has been running one of the biggest and most successful hedge funds in the world, which has put him into the top 100 richest people in the world.

Ray Dalio operates off principles. And we have adopted this approach with Marcus Today and how we run our MT20 portfolio, which is a fund that our members invest in. It’s got about $70 million in it at the moment. We hope it hits $100 million by the end of the year.

Why Principles Matter

So we operate on principles. What principles allow you to do – and you can do this in any business or in your personal life – is answer the question: how do I handle a situation? So how do we handle funds management? And if you put down your principles… Ray Dalio had to write everything down. It just wasn’t intuitive.

He wrote down his principles and, in so doing, communicated them with his team. The whole team would discuss the principles. One of the principles is humility – being open to other people’s opinions and the input of your team. So the team massages these principles over time. When they work out to be wrong, they make them better.

Everything becomes clear to everybody: what they do and how they do things as they move through whatever process it is. It could be life. It could be their business. They redevelop, improve and polish their principles. We’re up to 22 principles for funds management.

Avoiding Interference

“Jemima, give me a number between 1 and 22.”

“Eighteen.”

Eighteen: avoid interference.

Avoid interference. In other words, we don’t want anyone interfering with us and our principles. Everybody has an opinion. If I were to say, “We invest by doing X”, and I put that up on social media, everyone would have a goddamn opinion about X, and some people would abuse you for doing it. It’s unpleasant, but more importantly, it’s unhelpful.

Avoid interference means: don’t be affected by what other people think about what you’re doing.

Why Other People’s Opinions Don’t Help

So if we’re driving the wrong way up a one-way street – or even if we consider it the right way – one of our things is we cash out to 100% sometimes. You have to be able to sell. And, of course, no other fund manager does that. They aren’t allowed to. Their mandates will say their maximum cash level is 10% or 15% or something.

So they couldn’t even do what we do. We are driving the wrong way up the funds management street by cashing out to 100%. And everyone will have an opinion.

I put an article up on Livewire about cashing out, and you should have read the comments. Go and read them – 95 comments, and everybody had their own opinion. Some supportive, a lot not supportive. But we won’t let that interfere with what we’re doing.

Stick to the Plan

It doesn’t matter which way you’re driving. Bugs are going to hit the windscreen whatever direction you’re going – especially if you’re driving the wrong way up the one-way street. But you’re going to have bugs hit the windscreen.

Stick to your plan. Stick to your process.

If you know it works, it works.

And just avoid interference.