Max Heinrich studied the principles of the Swiss Bankers for making money. He then published a great little book called "The Zurick Axioms".
In summary form, the axioms are:
On 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 - if an amount is so small that its loss won't make any significant difference, then it isn't likely to bring any significant gains either.
* Resist the allure of diversification.
On Greed
* Always take your profit too soon.
* Decide in advance what gain you want from a venture, and when you get it, get out.
On Hope
* When the ship starts sinking, don't pray. Jump.
* Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.
On Forecasts
* Human behaviour cannot be predicted. Distrust anyone who claims to know the future, however dimly.
On Patterns
* Chaos is not dangerous until it starts to look orderly.
* Beware the historian's trap - it is based on the age-old but entirely unwarranted belief that the orderly repetition of history allows for accurate forecasting in certain situations.
* Beware the chartist's illusion - it is characteristic of human minds to perceive links of cause and effect where none exist.
* Beware the gambler's fallacy - there's no such thing as "Today's my lucky day" or "I'm hot tonight".
On 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.
On Intuition
* A hunch can be trusted if it can be explained.
* Never confuse a hunch with a hope.
On the Occult
* 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.
On Optimism & Pessimism
* Optimism means expecting the best, but confidence mean knowing how you will handle the worst. Never make a move if you are merely optimistic.
On Consensus
* Disregard the majority opinion. It is probably wrong.
* Never follow speculative fads. Often, the best time to buy something is when nobody else wants it.
On Stubbornness
* If it doesn't pay off the first time, forget it.
* Never try to save a bad investment by "averaging down".
On Planning
* Long-range plans engender the dangerous belief that the future is under control. It is important never to take your own long-range plans or other people's seriously.
jfi
dub
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