Book Review: Principles for Dealing with the Changing World Order by Ray Dalio

Ray Dalio is one of the most influential voices in the world of finance and economics.

In his 2021 book, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail, Dalio explores the long-term cycles that impact the rise and fall of global powers and how individuals can prepare financially.

This review breaks down the book’s main takeaways, Dalio’s perspective, criticisms from readers, and whether it’s worth adding to your personal finance reading list.

Who is Ray Dalio?

Ray Dalio is the billionaire founder of Bridgewater Associates, one of the world’s largest and most successful hedge funds. He’s also the author of the bestseller Principles: Life and Work, where he outlined the philosophies that helped him build Bridgewater from the ground up.

In Principles, Dalio takes a macroeconomic lens to global history, analyzing patterns of debt, inflation, wealth gaps, and political conflict over the past 500 years. His goal is to help readers recognize the signs of economic turning points and adjust their financial strategies accordingly.

Lessons from the Book

The biggest value of Principles comes from its long-term, historical perspective. Here are a few core lessons:

Understand Long-Term Debt Cycles

Dalio explains that major economic shifts often follow predictable cycles driven by debt accumulation, inflation, and social unrest. By recognizing where we are in the cycle, you can make smarter decisions with your investments, such as holding assets that protect against inflation like treasury bills or low-cost S&P 500 index funds.

Diversification Is Critical

One of Dalio’s long-held beliefs is the importance of diversification, something every financial advisor recommends. He reiterates this point here, noting that uncertainty and volatility are inevitable. A diversified portfolio, including stocks, bonds, and even cash in a high-yield savings account, helps reduce your risk.

Pay Attention to Global Trends

Principles warns that the U.S. may be nearing the end of its current cycle as the dominant global power. While he doesn’t make predictions, he encourages readers to watch geopolitical shifts closely. For individuals, this means being financially nimble (having an emergency fund, avoiding excessive credit card debt, and investing with a long-term strategy).

History Repeats… Be Prepared

Whether it’s inflation, rising interest rates, or economic inequality, Principles shows how these factors have repeatedly led to downturns and recoveries. Rather than reacting emotionally to news headlines, readers should keep their budgets in check and continue contributing to long-term investments like an S&P 500 nest egg.

Should You Read It?

If you’re serious about understanding the forces shaping the global economy (and how they affect your personal finances) this book is a worthy investment. It’s not light reading, but for those interested in macroeconomic trends and long-term financial planning, Principles offers powerful insights.

That said, if you’re early in your financial journey, you might find more value in straightforward books about budgeting, investing basics, or how to get out of credit card debt. Principles is more strategic than tactical.

Final Thoughts

Dalio’s Principles for Dealing with the Changing World Order is an ambitious, thought-provoking book that challenges readers to think beyond the next stock tip. It’s not a personal finance guide in the traditional sense, but it can help sharpen your perspective on risk, resilience, and the importance of preparing for change.