Zurich Axioms - Principles for Trade and investing

Worry and its worth

1. While taking chances in trading / investing its obvious that we are worried about what happens with our money .

2. Worry is adventure and results after it can be satisfying.

3. If we fear to become worry full , we are actually fearing to be rich.

 What real difference will it make if you get a bit poorer while trying to be richer? - max Gunther

Meaningful stakes

1. Only bet what you can afford to lose is a formula that almost assures poor results.

2. Bet heavily if odds in Favour and you understand what you are doing.

3.  If amount is so small that losing it won't bring any significant difference, then its likely to bring no significant gains either.

Diversification

1. The fact that diversification reduces risk also reduces by same degree any hope of you getting rich.

2. It is safe from everything including danger of getting wealthy

3. It breaks axiom of meaningful stakes.

4. Gains and losses cancel each other.

5. The more speculation you get into more study you require. Hold only what you can handle.

Target Your Profits

1. Act of self-control makes one better speculator than 99% others.

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

3. Losing control of own desires is self-destruction.

4. " Don't Push Your luck "

5. Don't fear regret if profits go more than your target and you exited on target because this habit guards you from bigger regret of not exiting.

When Ship starts to sink, don't pray. Jump.

It is about saving yourself when we go wrong

1. Knowing how to get out from a bad speculation is rarest gift.

2. Getting stuck in a losing venture is worst money pain

3. Don't wait until ship is half submerged , 10-20% must be a high time.

4. Be on ship only if you have tangible evidence of improvement on way.

5. Taking small losses to protect from big ones is wise step.

6. Fear of regret, Fear of acceptance of mistake, fear of losing some money can be obstacles to overcome.

Accept Small Losses

1. We should welcome small losses since they protect us from large losses 

2. If a venture doesn't work walk away don't get trapped

3. Habit of such acceptance makes us tough.

4. Hope and prayers are nice, but they are not useful tools of speculation. 

No one knows Future

1. Don't trust people and their forecast too much as markets work on human behavior which is unpredictable.

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

3. Design speculative program based on quick reactions to events that you actually see developing in the present

Chaos is not Dangerous until it becomes orderly

1. The minute you think you see an orderly design in affairs of men and women including their financial affairs you are in peril.

2. The truth is world of money is world of pattern less disorder.

3. Patterns are not sound base for one's plan They are alluring and always fooling smart people.

4. There are no formulas and patterns to make money while speculating because it's related to human behavior. 

5. It seems fictional but luck plays a good role in speculation.

Historians Trap

1. People who follow patterns and formulas are of assumption that history will repeat itself.

2. Makings many complex models and charts all backed by assumption is terrible risk.

3. Because if this would happen every one will be rich as every one now knows what will happen next. 

4. History to repeat itself requires same situation at all ends to give same result , which happening is very rare.

5. Believe on reliable source and not assumptions from history.

Gambler's Fallacy

1. Speculation is about chances and so it involves times when chances are continuously in your Favour or against. 

2. We are enjoying a winning streak in any speculation we are actually experiencing a good streak of favorable chances.

3. No one knows when such chances ends. 

4. So one must not fall in this fallacy and Believe that they are too smart and bet heavily overconfidently.

5. Bet heavily when odds are in your Favour because of some reliable base and not just lucky streak.

Trapping Roots

1. Do not become trapped in a souring venture because of sentiments like loyalty and nostalgia.

2. Never hesitate to abandon a venture a venture if something more attractive comes into view

3. Preserve your mobility

4. This doesn't mean you have to bounce from one speculation to another like a ping pong ball. All your moves should be made only after careful assessment of the odds for and against.

Hunches

1. Hunch is a piece of feeling - stuff ; a mental event that feels something like knowledgeable but doesn't feel perfectly trustworthy.

2. The challenge is to decide which hunches are trustworthy and which are not.

3. Never confuse a hunch with the hope. Be highly sceptical anytime.

4. Trust hunch only if you can explain it ; that is only if you can identify with 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 then disregard the hunch.

Superstitions and Religious beliefs

It says essentially that 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 the God has the slightest interest in your bank account and there is no evidence that any occult belief or practice has ever been able to produce consistently good financial results for its devotees the most anybody has ever been able to show is an occasional isolated bulls I hate to expect help from God or from a psychic power is not just useless but also dangerous .

Optimism Vs Confidence

1. The 9th axiom warns that optimism can be speculators enemy. it feels good and is dangerous for that very reason. it produces a general clouding of the judgement it can lead you into ventures with no exists.

2. The axiom says you should never make a move if you are merely optimistic 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 have got something better than optimism that is confidence.

Buy when everyone is selling and sell when everyone is buying.

The Tenth Axiom teaches that a 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 for yourself before putting your money at risk. The greatest pressures on you, and the most frequently felt, will be those that push you into betting with the majority. Such march-with-the-crowd speculations, the Axiom warns, can be costly, for it is in their nature that they tend to make you buy when prices are high and sell when they are low.

If it Doesn't pay of first time; forget it.

1. Don't get into trap of averaging a bad venture. Average by buying more at falling price when the ongoing trouble in investment is short lived or overreacted and business is intact.

2. By averaging a sour venture, we break axiom of jumping from ship before it sinks.

3. We have to find reasons behind sharp fall in our investment value and if such fall is of permanent nature or long term than get out of it.

4. Enjoy our freedom and buy investments on their merits and don't get stuck if the venture turns out to be sore.

Freedom

The Twelfth and final Axiom warns about the futility and the dangers of planning for a future one cannot see. 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. The Twelfth Axiom says 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. 

Long term Investments

1. Long term investors are biggest gamblers so the biggest risk takers.

2. Many people who have approach of invest and forget and to hold for 10-15 or more years are rooting them to that investment and assuming that every change in future will be in similar trend.

3. Better way is to review your investments every 2-3 months and ask yourself is it worth continuing or there is better opportunity available.

4. lazy long-term investments look cheerful because they help to avoid painful decision makings.