Contemporary Digest

The Zurich Axioms is a book written by Max Gunther. In the context of speculation, it maps out the risks of chaos and the risks of human behaviors and tendencies, and it provides a framework for managing these risks to capitalize on positive luck.

Here are the major and minor axioms.

1. Risk
   • Worry is not a sickness but a sign of health. If you are not worried, you are not risking enough.
   • Always play for meaningful stakes.
   • Resist the allure of diversification.
2. Greed
   • Always take your profit too soon.
   • Decide in advance what gain you want from a venture, and when you get it, get out.
3. Hope
   • When the ship starts to sink, don’t pray. Jump.
   • Accept small losses cheerfully as a fact of life.
4. Forecasts
   • Human behavior cannot be predicted.
5. Patterns
   • Chaos is not dangerous until it begins to look orderly.
   • Beware the Historian’s Trap.
   • Beware the Chartist’s Illusion.
   • Beware the Correlation and Causality Delusions.
   • Beware the Gambler’s Fallacy.
6. Mobility
   • Avoid putting down roots. They impede motion.
   • Do not become trapped in a souring venture because of sentiments like loyalty and nostalgia.
   • Never hesitate to abandon a venture if something more attractive comes into view.
7. Intuition
   • A hunch can be trusted if it can be explained.
   • Never confuse a hunch with a hope.
8. Religion and the Occult
   • It is unlikely that God’s plan for the universe includes making you rich.
   • If astrology worked, all astrologers would be rich.
   • A superstition need not be exorcised. It can be enjoyed, provided it is kept in its place.
9. 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.
10. Consensus
    • Disregard the majority opinion as it is probably wrong.
    • Never follow speculative fads. Often, the best time to buy something is when nobody else wants it.
11. Stubbornness
    • If it doesn’t pay off the first time, forget it.
    • Never try to save a bad investment by “averaging down.”
12. 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.
    • Shun long-term investments.

When I read these, the first thing I think of is Nassim Nicholas Taleb. Although these axioms were written about speculation, most are applicable to much broader aspects of life.