Ray Dalio is one of the richest men you've probably never heard of. But before he got rich, he went flat broke because of how right he thought he was.
In the early 1980s, Dalio was on the warpath, warning everyone and their financially unstable uncle that the stock market was about to crash and burn like it was 1929 all over again. Instead, starting in 1982, stocks went on an eight-year bull run and returned one of their best performances in history.
Dalio went completely broke betting against the market. And, more importantly, he had to avoid a lot of Manhattan cocktail parties for a while.
But after wiping the egg off his face, he realized it wasn't necessarily his bad hypotheses or incorrect economic analyses that made him lose every penny he had. Because, in the end, it turned out he was right. The economy did crash… eight years after he said it would.
No, it was his unrelenting belief in himself that he was right that made him go broke and look like a complete idiot.
Dalio vowed to never let his ego overrun his decision making like this ever again. Today, he constantly analyzes even his most basic assumptions about the world and tries to poke holes in his own theories. He demands his employees—even his interns—give him brutally honest feedback about his views to try to prove him wrong.
He realized that he'd rather be challenged and proven wrong about his beliefs than cling to them in a desperate attempt to show the world he was "right."
He's now been an investor for over 50 years and has amassed a fortune in the tens of billions of dollars. Dalio's company, Bridgewater Associates, is one of the world's largest hedge funds and has consistently beat the market in good times and bad for decades now.
Anyone can survive a bad idea, a stupid mistake, or dumb risk or twelve as long as you don't cling to the need to be right about your beliefs.
The fact is, you, me, and everyone on the planet are almost certainly wrong about…well, pretty much everything. And we can never be 100% sure we're right about anything.
We can only learn from our observations and hopefully be a little less wrong.