Ever wondered as to why Switzerland is so phenomenally rich? Well, apart from being the destination of the world’s unaccounted money, the country’s banking system, its regulations and ways are one huge reason. It is also a fact that the Swiss are perhaps the most astute and articulate risk takers, the high-rollers of the high world of high finance. Their way, was codified in a path-breaking work by Max Gunther in his 1985 best seller, The Zurich Axioms, which was in fact the rules set down by a group of bankers which included the author’s father. An excellent read, not to mention the fact that they are widely used by financial wizards and laymen alike to gain from the markets, the book in one of my perennial favourities. Here are the Axioms as originally set out.
The first major Axiom.
ON RISK
Worry is not a sickness but a sign of health. If you are not worried, you are not risking enough.
Minor Axiom I
Always play for meaningful stakes.
Minor Axiom II
Resist the allure of diversification.
The Second Major Axiom
ON GREED
Always take your profit too soon.
Minor Axiom III
Decide in advance what gain you want from a venture, and when you get it, get out.
The Third Major Axiom
ON HOPE
When the ship starts to sink, don’t pray, Jump.
Minor Axiom IV
Accept small lossess cheerfully as a fact of life. Expect to experience several while awaiting a large gain.
The Fourth Major Axiom
ON FORECAST
Human behavior cannot be predicted. Distrust anyone who claims to know the future, however dimly.
The Fifth Major Axiom
ON PATTERNS
Chaos in not dangerous until it begins to look orderly.
Minor Axiom V
Beware the historian’s Trap.
Minor Axiom VII
Beware the Gambler’s Fallacy.
The Sixth Manor Axiom
ON MOBILITY
Avoid putting down roots. They impede motion.
Minor Axiom IX
Do not become trapped in a souring venture because of sentiments like loyalty and nostalgia.
Minor Axiom X
Never hesitate to abandon a venture if something more attractive comes can be explained.
Minor Axiom XI
Never confuse a hunch with a hope.
The Eighth Major Axiom
ON RELIGION AND THE OCCULT
It is unlikely that God’s plan for the universe includes making you rich.
Minor Axiom XII
If astrology worked, all astrologers would be rich.
Minor Axiom XIII
A superstition need not be exorcised. It can be enjoyed, provided it is kept in its place.
The Ninth Major Axiom
ON OPTIMISM AND PESSIMISM
Optimism means expecting the best, but confidence means knowing how to handle the worst. Never make a move if you are merely optimistic.
The Tenth Major Axiom
ON CONSENSUS
Disregard the majority opinion as it is probably wrong.
Minor Axiom XIV
Never follow speculative fads. Often, the best time to buy something is when nobody else wants it.
The Eleventh Major Axiom
ON STUBBORNNESS
If it dosen’t pay off the first time, forget it.
Minor Axiom XV
Never try to save a bad investment by “averaging down.”
The Twelfth Major Axiom
ON PLANNING
Long-range plans engender the dangerous belief that the future is under control. It is important never to take your own or other people’s long-range plans seriously.
Minor Axiom XVI
Shun long-term investments