InvestIdeas

I'm re-reading "The Zurich Axioms" by Max Gunther.

Axiom 1: Risk

If you are not worried, you are not risking enough.

Jesse Livermore: I dont think I'd enjoy life half as much, if I always knew how rich I was going to be tomorrow.

Minor Axiom 1: Always play for meaningful stakes

Minor Axiom II: Resist the allure of diversification
- no more than 4 speculations at the same time

Axiom 2: Greed

Always take your profit too soon.

By reducing your greed, you improve your chances of getting rich.

Dont fear regret.

Since you cant see the peak, assume that it's close than far.


Minor Axiom III: Decide in advance what gain you want and when you get it, get out


Dont hope for winning streaks to go on and on. Dont stretch your luck. Expect winning streaks to be short.

Axiom 3: Hope

When the ships starts to sink, don't pray. Jump.

3 obstacles to implementation of this Axion:-
1) Fear of regret
2) The need to abandon part of investment
3) The difficulty of admitting wrong


Minor Axiom IV: Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.

Axiom 4: Forecasts

Human behaviour cant be predicted. Distrust anyone who claims to know the future, however dimly.

Get out of the habit of listening to forecasts.

Economists, Politicians, Clairvoyants know the following rule: If you cant forecast right, forecast often

The successful speculator bases no moves on what supposedly will happen but reacts instead to what has happen.

Axiom 5: Patterns

Chaos is not dangerous until it begins to look orderly

Most advisers have some some kind of orderly illusion to sell, for that is what sells


Minor Axiom V: Beware the Historian's Trap
- based on the unwarranted belief that history repeats itself

Minor Axiom VI: Beware the Chartist's Illusion

Minor Axiom VII: Beware the Correlation and Causality Delusions
- Even the most rational minds try to perceive links of cause and effect, where none exist.
- The human is is an order seeking organ. It's uncomfortable with chaos.

Minor Axiom VIII: Beware of the Gambler's Fallacy
- this is when you think "you are hot", "you are on a role", "this is your lucky day", "it's sunny today" etc..


Do not see order where order does not exist

Axiom 6: Mobility

Avoid putting down roots. They impede motion.


Minor Axiom IX: Dont become trapped in a souring venture because of sentiments like loyalty and nostalgia

Minor Axion X: Never hesitate to abandon a venture if something more attractive comes into view


Preserve your mobility. Stay foot-loose and be ready to jump away from trouble or to seize opportunities.

Axiom 7: Intuition

A hunch can be trusted only if it can be explained

Three approaches to intuition:-
1) Scorn
2) Indiscriminate Trust
3) Discriminate Use


A good hunch is something that you know but you dont know, how you know it.

When you have a hunch, ask whether a big enough library of data, could exist in your mind, to have generated that hunch. Ask whether you are genuinely knowledgable about that topic.

If you have no such library of data, disregard the hunch.

No matter how good a hunch feels, dont let it lull you into a state of over-confidence.


Minor Axiom XI: Never confuse a hunch with hope

When you want something very much, you can all too easily talk yourself, into believing that it will happen.

Be highly skeptical anytime you have a hunch that something you want to happen, will happen.

winston wrote:I'm re-reading "The Zurich Axioms" by Max Gunther.

Axiom 1: Risk

If you are not worried, you are not risking enough.

Jesse Livermore: I dont think I'd enjoy life half as much, if I always knew how rich I was going to be tomorrow.

If you are not challenged on how to make the leap, you are staying within your comfort zone.

eg. This place cost $X, it is too 'expensive'. And that is an opinion.

Minor Axiom 1: Always play for meaningful stakes

A reminder on risk-reward.

Minor Axiom II: Resist the allure of diversification
- no more than 4 speculations at the same time

Be focused.

Axiom 8: Religion and Occult

It lulls you into a dangerously unworried state.


Minor Axiom XII: If astrology works, all astrologers would be rich

Minor Axiom XIII: A superstition need not be exorcised. it can be enjoyed provided it is kept in it's place.


Money and the supernatural are an explosive mixture and can blow up in your face. Keep the two worlds apart.

In handling your money, assume that you are on your own.

Axiom 9: Optimism and Pessimism

Optimism means expecting the best but confidence means knowing how you will handle the worst.

Never make a move if you are merely optimistic.

If a situation looks bad, it is.

When you are feeling optimistic, try to judge whether that feeling is really justified by facts.

Be aware of any venture without an exit. Ask yourself how you would be save if things go wrong.