The Power of Being Imprecise

Ray Dalio started his investment company Bridgewater Associates at 26 and built it into one of the wealthiest private companies in the following 42 years. Time identified him as one of the 100 most influential people in the world, while Forbes ranked him among the 100 wealthiest. CIO magazine called him "the Steve Jobs of investing." His latest book, Principles, describes in detail how he learned his business acumen from his mistakes and from his unwavering belief in accountability, transparency, humility, truth, long-term view and fact-driven decision making.

Reading Principles, I was particularly heartened by the similarities between some of Dalio's ideas and mine. One of them is the importance of being imprecise. What Dalio is talking about here is the power of estimation and approximation. Here is what he writes: "Understand the concept of “by-and-large” and use approximation. Because our educational system in hung up on precision, the art of being good at approximation is insufficiently valued. Multiply 38 by 12. Most people do it the slow and hard way. But approximate by 40 times 10 = 400 ... “By-and-large” is the level at which you need to understand most things to make effective decisions. Whenever a big-picture “by-and-large” statement is made and someone replies, “Not always,” my instinctual reaction is that we are probably about to dive into the weeds - i.e., into a discussion of the exception rather than the rule, and in the process we will lose sight of the rule ... I often repeat: “When you ask someone whether something is true, and they tell you it’s not totally true, it’s most likely by-and-large true.”

A significant part of my training comprises teaching my clients how to estimate, approximate and make order-of-magnitude calculations of real-world problems, using only pen and paper. A question frequently comes up: "Is it still relevant to learn math when technology can do it for us?" The answer is an unequivocal "Yes." If we rely completely on our technology to do all our calculations and make our gadgets smarter than us, our intelligence as a society, as well as our global standing, will dangerously decline.

​Give my training a try - customized for your unique needs - and you will never look back when it comes to dealing with numbers, uncertainty and probability.