Above all, Dalio believes that cause and effect relationships exist almost everywhere, and that if you can figure them out, there’s money to be made. When investing in commodities like soybeans and corn, for example, Dalio would forecast demand by looking at how many cattle, chickens and hogs were being fed and how much grain they consumed, one of the “causes” in the cause and effect dyad. To estimate supply, he’d look at how much soybean and corn acreage was being planted and how rainfall affected their yields – another “cause”. Dalio would then reconcile these two causes to arrive at the “effect” – how grain prices were likely to move in the future – and use that to profitably trade soybeans and corn.

Another key…