The Zurich Axioms – A Book Review

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The Zurich Axioms has an interesting preamble. Switzerland. A country that’s landlocked by mountains. It has no agricultural, mineral or any other natural resource of any kind. Yet is one of the richest countries in the world, with a GDP per capita of $42,783! (India’s is at $2,000). How? A large part of the answer lies in the Investment Banking services that the Swiss have specialised in.

Max Gunther summarises the various risk and investment principles used by his father and generations of bankers to create their millions. A quick recap of the few Axioms that I currently remember in my own words:

– Invest a meaningful portion. Do not diversify your investment

– Don’t wait for the peak of any Market (Stock, Real-Estate, etc.). As long as you are higher than your buy price, sell.

– When the ship is sinking, don’t pray, Jump! When the stock market is falling, don’t pray and hope that it’ll climb up again. Sell and get out. When to sell? When the market price falls to 15% of the highest price you’ve held it at.

– Don’t listen to Economists, Stock Market gurus or any other experts. Economy runs on people emotions. No one can predict that.

– Be wary of what the majority is doing. They are not always right. When the world is buying and they are screaming “gimme”, stand in a corner and reply back, “gladly”.

– Don’t stick to an investment plan and don’t be a long term investor. Be always quick and nimble on your feet. If long-term investing is beneficial go long-term. If long term prospects are looking bad, jump ship.

I’d like to add a cautionary note here that, Many of them axioms go against conventional wisdom (for eg. general investment advise is to diversify your risk, however, the Zurich Axioms state that to get high returns one must concentrate his risk). Nonetheless even though some axioms may sound bold, the risk is neutralised by other axioms that state that one should sell fast and always cut short your losses. No matter what it says, the book should NOT be used a sole guide when it comes to investing. But it’s got some really good principles and when used in conjunction with the advise of stalwarts like those of Warren Buffet, Benjamin Graham and Peter Lynch, (advise such as, when buying a company, buy it as if you would hold it for life), I believe one can come out a safe and prosperous investor in any market.

A mere 130 pages, this book is a helpful read and a guide in times of stress and confusion to anyone who’s into any sort of investment or business.

You can get the book from Amazon here.

My rating: 4-stars.png

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