World economics and macro finance can seem like a complex web of interdependancies, especially when combined with the roller coast that is the financial markets.

As someone who has a background in Finance and Investing, one of my favourite ever videos to summarize growth, interest rates, inflation and the economic cycles is ‘How the Economic Machine Works’ by ex-Hedge Fund Manager and Best Selling Author – Ray Dalio. It’s only 30min long but a great resource for students, non-finance people and seasoned economists/investors. I highly recommend it.

Ray Dalio gave up his role as CEO for Bridgewater Associates in 2011. Bridgewater is the longest running hedge fund in the world with approximately £120bn in AUM. Dalio is one of my investment gurus as he has the ability to break things down and simplify concepts. It’s one of the cornerstones of the success of Bridgewater – which has a reputation for being a challenging but innovative environment. Their results speak for themselves.

Dalio said that the ‘How the Economic Machine Works’ model has guided Bridgewater for over 30 years.

Here it is!

Personally, I like to use this model for;

  • Understanding where we currently are in the economic cycle;
  • What are the macro economic features of our position in the cycle, i.e. high inflation, low growth?
  • Assessing where I should position my investment portfolio in terms of macro assets, i.e equities, cash, gold, etc – in preparation for the next cycle.

Enjoy!

What is the Ego?

Your Ego is a part of you, but at the same time it can be separate to you. It is usually on auto-pilot and ticking away as part of your sub-conscious. The sub-conscious is part of your mind that isn’t in current focal awareness. For example, when you’re driving a car, those gear changes and tiny movements of the steering wheel while you’re thinking about something else….that’s your sub-conscious driving the car.

The ego is never satisfied. It’s always seeking more. It is defined as a person’s sense of self-esteem or self-importance. More material items, more money, better possessions and experiences. As a result, the ego borders on greed especially with its glass half-full attitude. In fact, any negative experiences you go through in life are a contradiction to the ego’s beliefs. For example, if you hurt yourself that’s your ego saying ‘i shouldn’t be in pain’, if you lose money that’s your ego saying ‘i shouldn’t be suffering losses’. When your business suffers your ego says ‘this was not supposed to happen’ – and it becomes easy to revert to your default setting. This is how your ego holds you back from achieving your best.

Ego driven?

The majority of humans have their ego running their life and are essentially passengers. It may well be that in some areas of our life we are the passenger, and in other areas we are the drivers. The key is to be the driver in all areas of our life – but you have to look within yourself to achieve change . However, once people decide that change is needed, they don’t follow through. Why? Because the ego is lazy, and it knows that we can survive life in a default setting so why bother changing?

If our goal was to lose weight – you may intend to achieve change by exercising regularly. But no transformation is easy, so at any sign of hardship the ego will question the transformation and urge you to give it up. It uses avoidance tactics and makes excuses! Similarly for mediating. You will set aside 10 minutes every morning upon waking to meditate. However, you find yourself hitting the snooze button on day 1, day 2…and so on. Why? Because your ego is seeking the easy option.

Follow through

Your desire needs to be stronger than your ego and this takes discipline. Essentially, you need to ask yourself “am i serious and committed to this change?”. Your word needs to be absolute as you don’t want your ego to hold you back.

When you don’t follow through on a practice, you are telling your ego that you’re not committed and are feeding more power to the ego. This applies to pretty much any aspect of your life that you feel isn’t amazing, i.e. relationships, money, health etc.

The key to committing to real change is to remain disciplined and focused on the task/activity/project at hand. In addition, being vulnerable is so important for growth, as it means you are opening yourself up for new insights, constructive feedback, tools and knowledge that you may have not have previously welcomed into your life.

Click below a really useful guide for ways to overcome your ego and ensuring its not holding you back;

As I go through my own journey creating an online business and honing my digital marketing skills, I am aware of my ego taking control and making me procrastinate and lose focus. Luckily the online community I have joined are amazing in making sure I stay on track and am clear on my goals and vision. In fact, there are accountability mentors that ensure you stay on track – ensuring you’re ego doesn’t take over.

If you are interested in learning the same marketing, technical and mindset skills, click here and start your journey to taking control and freedom.

Best