While mental models help us comprehend, principles guide our behavior. Fundamentally, they act as the core operating system behind our decision making.
As Ray Dalio writes in Principles:
Every day, each of us is faced with a blizzard of situations we must respond to. Without principles we would be forced to react to all the things life throws at us individually, as if we were experiencing each of them for the first time. If instead we classify these situations into types and have good principles for dealing with them, we will make better decisions more quickly and have better lives as a result. Having a good set of principles is like having a good collection of recipes for success. All successful people operate by principles that help them be successful, though what they choose to be successful at varies enormously, so their principles vary.
The Oxford English Dictionary defines a principle as a fundamental truth. And therefore, principles are generally a delicate subject, because each of us has our own set of them, either evolved through experience or adopted from heroes. It’s simply not enough to be a person of principle without giving much thought to the ones adopted. It’s imperative to deduce the right ones.
We can’t know our moral compass or the road to the end goal without setting the right principles. Everyone has them in some form, but people rarely write them down, reflect on them, change them, and share them.
The following is our list of guiding principles to operate by in business/investing, life, and learning that help us to ultimately make rational decisions.
Our principles act as the second level in our Decision Levels framework that we use at Junto Investments to make sense of observations and make important decisions. The last level of the framework is through the use of checklists.
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