The Zurich Axioms
By John Sage property developer
What rules and principles do you follow in your investing strategies? In the last series, we covered the ten rules of the game to help you become the best investor you can. Now, I want to shift focus away from these rules and provide you with some axioms I’ve learned over the years.
What is an Axiom?
So, what is an axiom? An axiom is a statement of belief that everyone knows to be true. Like this link points out, a common axiom would be that supply equals demand. Hundreds of years ago, people would have thought of that as an opinion, but since it’s been proven over and over, we know it as an axiom.
The Zurich Axioms
This leads me to the primary topic of this and future blogs — the Zurich Axioms. Here’s the backstory on them:
Back in the mid-1980’s, a guy named Max Gunther published the book The Zurich Axioms that spilled the beans on the Swiss financial world.
For those that aren’t old enough to remember investing before this, everyone was focused on the income they were earning. We all wanted to make as much money as possible, and the actual investment came first and foremost before any other part of the decision.
The Swiss did things differently. Essentially, they were crushing it in the investment game and were beating everyone. As a super wealthy country, everyone wanted to know how they did.
That’s where Gunther came in.
What the Swiss investment firms were doing differently was that they focused on risk and understood risk to its very core. They cared more about the risk an investment posed, not the potential earnings since the lower the risk, the better their chances of investment success.
If you ask the Swiss at the time how they did it, they would say “by making smart investing decisions.” But we all know that wasn’t the case. In reality, this risk-centric approach was just in their investing DNA. They took this approach for granted and didn’t treat it as a new way to approach investing, but rather the only way to do it.
Why the Zurich Axioms Matter
There are many things that you can (and will) learn from the Zurich Axioms. Essentially, there are two primary perspectives from which to view the axioms.
For one, they show that there isn’t one right way to approach investing. Sometimes the most counterintuitive ideas can be the most successful. At the time, the Zurich Axioms were out of the ordinary, but now we know that even the wildest investing principles can work.
Second, The Zurich Axioms show that there are no rules in the investing world. You are the person that creates the rules, but there isn’t a concrete list of rules that you must follow to a tee. You’re free to experiment and try new strategies to see if they work.
Ready to learn more about the Zurich Axioms? Well, you’re in luck. Follow me (John Sage property developer) on social media and subscribe to this blog so you’re first to read the following posts in this series.