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The Zurich Axioms: The rules of risk and reward used by generations of Swiss bankers Paperback – June 3, 2005
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""If you have got the price of this book, stake it."" -- Investors Chronicle ""Investors Chronicle""
About the Author
Max Gunther was born in England and emigrated to the US when he was 11. He attended schools in New Jersey and received his B.A. from Princeton University in 1949. He served in the U.S. Army in 1950-51 and was a staff member of Business Week from 1951 to 1955. He then served as a contributing editor of Time for two years. His articles were published in several magazines and he wrote several books, including The Luck Factor, How to Get Lucky, The Very, Very Rich and How They Got That Way, Instant Millionaires and Wall Street and Witchcraft.
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Top customer reviews
Chaos is not dangerous until it begins to look orderly. History may or may not repeat. Unless you actually see a cause operating, beware of being fooled by correlation. Gambler's Fallacy: there are no hot streaks or lucky days.Go and see. Do not accept what someone tells you for what you have directly observed. Past success is no guarantee of future performance.
Your intuition can be trusted if it can be explained. First determine if you have a rich enough experience base to have formed a viable hunch. Don't confuse a hunch with a hope: put more trust in hunches about negative outcomes.
No such thing as a sure thing. All swans are white until you have seen a black one. It's a mistake to sell your offering as a sure thing and a bigger mistake to buy into a "sure thing."
Very little can be used in trading or speculation. When, what, why, how, where should a speculative bet be made?( Jesse Livermore’s book “How To Trade In Stocks” is dismissed as “perfect nonsense”. At least Livermore attempted to be more specific than listing “axioms”. )
After the reader is convinced about unpredictability of the market (with ever present danger of losing all investment money) he is left with no counterpoint. This is the biggest weakness of the book. While it is an entertaining read, if someone is looking for truly useful advice, I would recommend "The Coffeehouse Investor" or "Millionaire Teacher". If one aims to be more than an "investor", I suggest "The Perfect Speculator". But if one is an “axiom” believer, I recommend the excellent “Simple Rules” by Sull and Eisenhardt.
Max Gunther writes about the 12 major and 16 minor axioms handed down to him by his father, a swiss banker/speculator. I believe if you follow these axioms you can be very successful, or at least not lose everything you have worked hard to gain.
The first axiom is on risk. Max tells some good stories about people that risked, alongside those that played it safe. You can probably guess who did well in the long run. The minor axioms for risk talk about always play for meaningful stakes and resisting the allure of diversification. Meaningful stakes is a problem for many traders/investors. They take trades that are low risk and low reward, when there are plenty of slightly higher risk and much higher reward trades available on a daily basis. And lets not even get into the subject of diversification, that kills many accounts. Most truly successful people take the opposite aproach to diversification, they put all their eggs in one basket, and then keep a very close eye on that basket.
The second axiom is greed, one of my personal favorites. Max talks about always taking your profit too early! I really like his take on profits. I have had way too many times where I was making great money on trades and then sat on my hands waiting for it to go higher. Thats usually when the bottom falls out and you end up with less than half the profit you would have had if you got out "too soon". The minor axiom for greed is to know what your target profit level is in advance, then to get out once that number is hit. Great advice.
The other axioms are on;
-Hope - When the ship starts to sink, don't pray, jump.
-Forecasts - Human behavior cannot be predicted, distrust anyone who claims to know the future.
-Patterns - Chaos is not dangerous until it begins to look orderly.
-Mobility - Avoid putting down roots, they impede motion.
-Intuition - A hunch can be trusted if it can be explained.
-Religon and the occult - It is unlikely that Gods plan for the universe includes making you rich. (plus God must really love poor people, afterall he made so many of them)
-Optimism and pessimism - Optimism means expecting the best, but confidence means knowing how to handle the worst.
-Consensus - Disregard the majority opinion, it is probably wrong.
-Stubbornness - If it doesn't pay off the first time, forget about it.
-Planning - Long-range plans engender the dangerous belief that the future is under control. It is important never to take your long-range plans, or others plans seriously.
This book is packed with value. It will not lead you to investments or speculations, but it does lay down some of the all-important groundwork so you can go into money making opportunities with the correct mental outlook. This book has earned a place on my very short list of important books.