The Zurich Axioms: The rules of risk and reward used by generations of Swiss bankers

by Gunther Max

A given gain will be the same whether it comes from Sears or any other investment. No matter where ...

With a whole wide, wonderful world of possible ventures to choose from, what is the point of getting obsessed with the single...

Why persevere with Sears at a time when other investments, coolly considered, ...

The reasons for persevering are emotional and not ...

Then there is the wish to have one’s judgment vindicated, which we looked at under another Axiom. “I’ll be proved right in the end.”

If you have trouble getting over an urge to persevere in a losing venture, maybe a talk with a friend, spouse, or bartender will help. Or it might clear your head to go to a good movie or concert and forget your troubles for a few hours. A four-mile walk does wonders for me. Each of us finds his or her own route to salvation.

Never try to save a bad investment by averaging down

You’ve lost money on Hoo Boy and want to gain it back. But as we asked before in connection with Sears, why does the gain have to come from Hoo Boy? It’ll be the same good, spendable cash no matter where it comes from.

Value the freedom to choose investments on their merits alone. Don’t give that freedom away by getting obsessed with one soured venture.

react to events as they unfold in the present. When you see opportunities, go for them. When you see danger, jump out of the way.

The only long-range plan you need, as far as money is concerned, is an intention to get rich.

From my viewpoint, the [long-term] investors are the big gamblers. They make a bet, stay with it, and if it goes wrong, they can lose it all. The intelligent speculator will . . . by acting promptly, hold his losses to a minimum.”