The Zurich Axioms are based on the axioms that Swiss bankers have used to increase and preserve wealth over generations. I decided to look at the axioms through the lens of antifragility and coaching principles.
It’s all very well reading the axioms and think – yes, they make sense – but what about putting them into practice? Of course, axioms are like rules of thumbs to be used to guide decision making in complex and unpredictable environments where the outcome is unclear. However, in my opinion, to actually apply this wisdom, we also need to confront our own fears and emotions before being able to apply these axioms.
I considered re-organising the insights to make them more readily applicable (at least for myself).
Key questions
From the outset we need to consider some key questions that we need to ask ourselves before wishing to speculate or invest.
- Why you are speculating or investing?
- What success looks like for you?
- Clarity about what it means to be acquisitive and improving one’s situation
Accepting reality
According to the author there are certain truths or realities that we need accept.
- Understanding that luck is the biggest factor in any success.
- Understanding that forecasts are wrong, plans are useless, unexpected things will happen and the future cannot be predicted.
- Understanding that there is downside involved in any risk and that this will hurt you.
Overcoming emotions
At this point, it is worth noting that in the face of these realities, the decisions we make will be heavily influenced by our emotions and fears.
A lot of this appears to be overcoming the emotions. Trying, as much as possible, to make any investing strategy as unemotional as possible, since it is emotions that often trip us up.
- Overcoming the fear of being hurt (it is inevitable)
- Overcoming constant worry about investment / decisions (‘better to worry, than do nothing at all’)
- Overcoming greed (or the fear of not having enough)
- Overcoming the fear of regret of not having made a decision
- Overcoming the attachment to ideas / investments
- Overcoming the need for control and predictability
- Overcoming the need for consensus when making a decision (or fear of of being different)
Delusions
Humans are prone to biases and delusions and again many of these delusions will prompt us to make decisions which are completely irrational. What’s more, looking back at previous ‘successful’ decisions can give us the impression that we knew what we were doing when in reality it was more about chance.
- “Luck is on your side” (the universe is not smiling just on you)
- “There are experts who know what they are talking about” (if anything, they’re more wrong than they right)
- “You can be certain about this decision” (almost nothing is certain)
- “There is helpful information that you can trust”
- “You have spotted trends and patterns” (particularly dangerous thinking!)
Zurich Axioms
I’ve boiled them down and modified them a little bit since some of the axioms were covered by the questions or delusions above. My hope is that after clarifying the key questions, overcoming the emotions and being aware of our own delusions that we can use the following axioms in order to help us make decisions in a
- Take risks!
- Make any hits quick, positive, and then move on
- Sell too soon and make it a ‘win’
- Keep looking for opportunities
- Have an exit strategy (know how to get out of anything you get into)
- Use intuition if you know why / can explain it
- Be confident by taking care of the downside
- Stay flexible and don’t outmanouver yourself
- Be a contrarian going in, be consensus when you get out
Seen from the lens of antifragility, these principles tally quite nicely, essentially that unexpected things will happen that no-one can predict. That you will get hits if you want to take risks, and that you should take risks, and the best way to do so is to reduce the downside, make the hits positive and stay flexible.