Arana Library is having its Book Sale. I picked up a delightful little book for 50 cents. A wonderful investment.
Max Gunter: The Zurich Axioms: this book could make you rich! 164 pages
Mr Gunter claims to be the son of a man who headed up the Swiss Bank Corporation and he says the axioms are a summary of what the Swiss use to keep wealthy as a nation of almost no natural resources.
They would make our community a lot richer if the gamblers in our midst turned away from putting their money into poker machines on horses on poker on lotteries and scratch-its and followed the Zurich Axioms.
The book is an excellent read full of great stories to make the axioms come to life. But here in summary they are:
1. Put your money at risk. Don’t be afraid of getting hurt a little. The degree of risk you will usually be dealing with is not hair-raisingly high. By being willing to face it you give yourself the only realistic chance you have of getting rich. The price you pay for this glorious chance is a state of worry. But this worry is the hot and tart sauce of life. Once you get used to it you enjoy it.
2. Sell too soon. Don’t wait for booms to reach their peaks. Don’t hope for winning streaks to go on and on. Don’t stretch your luck. Expect winning streaks to be short. When you reach a previously decided-upon ending position cash out and walk away. Do this even when everything looks rosy even when you’re optimistic even when everybody around you is saying the boom will keep roaring along. When you’ve sold don’t torment yourself if the winning set continues without you. In all likelihood it won’t continue long. If it does console yourself by tinking of all the times when selling too soon preserved gains you would otherwise have lost.
3. Don’t wait around when trouble shows itself. It tells you to get away promptly. Don’t hope don’t pray. Hope and prayer are nice but they are not useful as tools of a speculative operation. Three obstacles to carrying out this axiom are: fear of regret unwillingness to abandon part of the investmnet and difficulty of admitting a mistake. Somehow or other you have to get over them. Learning to take losses is an essential speculative technique.
4. Don’t build your speculative program on a basis of forecasts because it won’t work. Disregard all prognostications. In the world of money which is a world shaped by human behaviour nobody has the foggiest notion of what will happen in the future. Nobody. The successful speculator bases no moves on what supposedly will happen but reacts instead to what does happen. Design your speculative program on the basis of quick reactions to events that you can actually see developing in the present. Never never lose sight of the possiblity that you have made a bad bet. If a speculation turns sour despite what all the prophets have promised get out.
5. Do not see order where order does not exist. Instead study the speculative medium in which you are interested – the poker table the art world whatever it is – and when you see something that looks good take your best shot. But don’t be hypnotized by an illusion of order. There is an overwhelmingly large role of chance in the venture. It is unlikely that your studying has created a sure thing or even a nearly sure thing. You are still dealing with chaos. As long as you remain keenly alert to that fact you can keep yourself from getting hurt. Your internal dialogue should be: “Okay I’ve done my homework as well as I know how. I think this bet can pay off for me. But since I cannot see or control all the random events that will affect what happens to my money I know that the chance of my being wrong is large. Therefore I will stay light on my feet ready to jump this way or that when whatever is going to happen happens.”
6. Preserve your mobility. It warns against sentiments like loyalty and hangups like the wish to wait around for a payoff. It says you must stay footloose ready to jumpy away from trouble or seize opportunities quickly. All your speculations should be made only after careful assessment of the odds for and against and no move should be made for trivial reasons. But when a venture is clearly turning sour or when something clearly more promising comes into view then you must sever those roots and go. Don’t let those roots grow too thick to cut.
7. A hunch can be trusted if it can be explained. It is a mistake either to laugh at hunches categorically or to trust them indiscriminately. Though intuition is not infallible it can be a useful speculative tool if handled with care and skepticism. There is nothing magical or otherworldly about intuition. It is simply a manifestation of a perfectly ordinary mental experience: that of knowing something without knowing how one knows it. If you are hit by a strong hunch telling you to make a certain move with your money the axiom urges you to put it to a test. Trust it only if you can explain it – that is only if you can identify within your mind a stored body of information out of which that hunch might reasonably be supposed to have arisen. If you have no such library of data disregard the hunch. A hunch can be easily confused with a hope. Be especially wary of any intuitive flash that seems to promise some outcome you want badly. Be more inclined to ones that promise outcomes you don’t want!
8. It is unlikely that God’s plan for the universe includes making you rich. Money and the supernatural are an explosive mixture that can blow up in your face. Keep the two worlds apart. There is no evidence that God has the slightest interest in your bank account; nor is there any evidence that any occult belief or practice has ever been able to produce consistently good financial results for its devotees. To expect help from God or from occult or psychic powers in your speculations is not just useless but also dangerous. It can lull you into an unworried state which is not a good state for a speculator to be in. In handling your money assume you are entirely on your own. Lean on nothing but your own good wits.
9. Optimism means expecting the best but confidence means knowing how you will handle the worst. Never make a move if you are merely optimistic. Optimism can be a speculator’s enemy. It feels good and is dangerous for that very reason. It produces a general clouding of judgment. It can lead you into ventures with no exits. And even when there is an exit optimism can persuade you not to use it. Before committing your money to a venture ask how you will save yourself if things go wrong. Once you have that clearly worked out you’ve got something better than optimism. You’ve got confidence.
10. Disregard the majority consensus. The majority though not always and automatically wrong is more likely to be wrong than right. Guard against betting unthinkingly either with the majority or against but particularly the former. Figure everything out before you put your money at risk. Never follow speculative fads. Often the best time to buy something is when nobody else wants it. March-with-the-crowd speculations can be very costly for it is in their nature that they tend to make you buy when prices are high and sell when they are low. Be keenly aware of their existence and insidious power.
11. Perseverance is a good idea for spiders and kings but not always for speculators. Certainly you can persevere in your general effort to learn improve and grow rich. But don’t fall into the trap of persevering in an attempt to squeeze a gain out of any single speculative entity. Don’t chase an investment in a spirit of stubbornness. Reject any thought that a given investment “owes” you something. And don’t buy the alluring but fallacious idea that you can improve a bad situation by averaging down. Value the freedom to choose investments on their merits alone. Don’t give that freedom away by getting obsessed with one soured venture.
12. Do not get rooted in long-range plans or long-term investments. Instead react to events as they unfold in the present. Put your money into ventures as they present themselves and withdraw it from hazards as they loom up. Value the freedom of movement that will allow you to do this. Don’t ever sign that freedom away. There is only one long-range financial plan you need and that is the intention to get rich. The how is not knowable or plannable. All you need to know is that you will do it somehow.