The Zurich Axioms by Max Gunther is one of the worst books ever written. There are a dozen axioms about cutting losses and cutting profits. But either there’s momentum or there isn’t, and it has to be tested. He doesn’t know anything about modern portfolio theory and says that you should double down in such things as commodities when you think they’re good, or stocks, but doesn’t tell you how this affects the risk or return. And the problem is when things look good, they’re usually bad, and vice versa. Nothing is tested. Everything is secrets from his father, and he tells you always to take your profit too soon. But an equally anecdotal person, Peter Lynch, has just the opposite view that you should hold every investment till it becomes a 10 bagger. For stocks, especially meme-driven companies such as retailers, that have the ability to replicate, my tests tend to show that Lynch is right. Like most books, since nothing is tested or documented it’s impossible to tease out the good from the bad. So when he tells you such things as disregard the majority opinion, you don’t know when you should do it, if at all. He tells you not to plan, but that’s the only thing an investor should do, as his life cycle, and choices among consumption and saving, is the main thing he should take seriously as he plans how much of his wealth he should have in liquid and risky investments as his needs for current and future satisfactions changes. The book is replete with anecdotes that are available for every point, and he summarized things like the wisdom of Getty, and the difficulties of General Motors, with the focus of a dilettante who has never actually invested or traded. A totally worthless book.

GM Nigel Davies replies:

The book has many flaws, and I got the impression the author is a playboy who had a wealthy and clever father. But I did find a number of things that were useful, namely the insights, probably second-hand, about different psychological states in trading and investing. It’s very dangerous to underestimate the importance of psychology within this or any game, not least because most people’s brains turn to jelly under fire. I posted before about police in shoot-outs being unable to count things like the number of bullets they have fired, and I have no evidence that traders perform better under fire in the markets. Even if they don’t fall apart completely, their thinking can show bias in favor of the hoped-for outcome. Thus, countists can be biased in that they will hone in on patterns that show the positive whilst ignoring the negative, failing to falsify their hypotheses by selectively hypothesizing.

I found the first axiom, “Worry is not a sickness but a sign of health; if you are not worried, you are not risking enough,” useful because of its contradiction of the deeply-held cultural belief that life should somehow be about relaxation. It’s a good point that people will be more worried when they don’t have a clue what they’re doing. But even if they do, and have “everything quantified,” there’s always risk. If anyone was long in May and June and not worried, he either had some screws loose or became punch-drunk.

Many of the other axioms are similarly useful; for example, the one on mobility recalled Lasker. But the examples used to illustrate them and attempts at application are just rubbish because of the total lack of methodology and the author’s apparent inexperience with trading and investing. It seems Gunther is a natural at psychology and got some second-hand wisdom from his father, but neither of these qualifies him to write an investment book. But there are worse trading books. And if any countists believe they are immune from the psychological weaknesses described, they are in serious danger.

Larry Williams adds:

I thought “Axioms” was a very good read from which I took away some good lessons. It is not a book that will give you a key or formula to the treasures but I think there is some wisdom there, or at least it was there for me.





Speak your mind

16 Comments so far

  1. Jake Kenfield on May 11, 2008 7:58 am

    It’s a great book!

  2. Jono Chatterton on June 10, 2008 10:51 pm

    Hi there,

    In response to Viktor’s comments above, I would have to totally disagree with most of what he says. I think the Zurich Axioms is a fantastic book on speculation. Viktor completely misses the point of the the book. It isn’t about the specifics of portfolio management and isn’t going to tell you when exactly you should buy and when you should sell, nor does it give you any sure fire methodologies to invest by, but it covers the fundamentals of speculation. I think there is no better book on this topic and is definitely work a read! For one to understand investment he/she needs to understand speculation and I would say there is no better book that outlines what speculation is and how to go about speculating than the Zurich Axioms

    The principles outlined in the book I have invested by and I have done very well out of them!

    Each to their own, but anyone who shuns the contents of this book is missing some very useful advice on investment and the art of speculation. I would have to recommend this book to anyone and everyone who invests or is looking to invest in the stock market!

    Good luck!

  3. Serghei Caisin on September 13, 2009 5:18 pm

    I don’t have any experience in investing and have never traded on the market. I’m 18 and i’m just starting my way in the beautiful world of stock market, that’s why my words has no theoretic or practical basis.
    But in my opinion “Zurich Axioms” is a good book for the guys that are on their start-up. It’s not describing any theory, formula or rule. Psychology is the point of this book, as the market is composed by traders, market for it-self doesn’t exist, millions of traders are the market, and that’s why psychology is so important in understanding how does it work. I think this book can go on the same line with Napoleon Hill’s “Think and grow rich” or “The law of success”.
    I got some new theoretical knowledge (like what is marginal credit, stop loss and call and put options, among some other terms), and i learned new things the book was focused on-the psychological side of the market.
    I’m happy that the time i spent reading the axioms was a rightly spent time, and i recomend this book to everyone else who are interested in learning short-term investment and speculation.

  4. james black on November 18, 2009 12:12 pm

    the zurich axioms is a great book especially when it tells us not to listen to economists or such other people who claim to have prediction powers. each investor should make their own decision and not have too any investments lest they get confused. and about modern portfolio theory, there are just too many assumptions which make it practically flawed thus making gunther’s analysis more valuable and practical

  5. Mark Morgan on December 13, 2009 2:49 pm

    Here’s a start. I picked up the book for $1.50 in a used bookstore. Later I tried to find another copy on the Net and found it was going for $33.00 in used condition. So I did O.K. on the book itself! But seriously, I found it a good and useful tool. I have lost money by “holding on for the 10-bagger,” but I recently read the Axioms again (probably 6th or 7th time) and decided to take my profit on gold, as Gunther says, “early.” I thought myself it might be very early, but it proved not to be and I did well. Gold retreated almost immediately. Some stocks I have held on to, waiting for the top, have reached the top one day and fallen straight down the next day. Gunther wins over Lynch on that one. I like the book and I don’t think it deserves the harsh criticism meted out by Victor. Maybe he should read it again. It’s rare that I don’t get something useful out of a book - “Why We Want You to Be Rich” by Trump and Kiyosaki is an exception, unfortunately - but I got a lot of mileage out of the Axioms. I’m a fan.

  6. Sunu on June 18, 2010 12:47 pm

    The Zurich Axioms is a very good book for any small time gambler who wishes to make a quick buck. I read the book when i was doing my first year in economics (2007). Up to now i pay my own fees through gambling. I have nothing to lose by taking my profits early. The book concentizes one to be a risk indifferent person when at break-even, and to be a risk preferer once you have tucked the profits safely into the coffers. I have to say if you are an investor, be financial literate and stay away from that book. For investment try “Rich Dad Poor Dad” by Kiosaki and put Gunther on the shelf. The day you decide to go to Vegas Get Gunther before you get you passport.

  7. Kevin Lewis on July 19, 2010 10:22 am

    I bought this book because of a Larry Williams interview that I read. Larry stated that this is the best book he has ever read. That’s a very good endorsement from one of the best traders ever.

    At the top it is written that it is one of the worse trading books ever…then at the bottom it is stated that there are worse trading books out there.

    This really gives me hope that I can be a successful trader with two people with such different views, but both being successful. Thanks

  8. Goldfinch on February 19, 2011 2:40 am

    Victor, I’m at a loss to remember when I last read such drivel. The chapter on contrarianism alone is worth the price of the book. Attitudes like yours are the reason the majority never amount to anything. This is the best book on speculation ever written whether you trade forex or play the horses.

  9. Luke Paedrus on May 16, 2011 11:54 pm

    This is one of the worst critics ever written.

  10. Manish Shah on October 25, 2011 10:38 pm

    I should say, I agree with all other posters, this is the worst critics ever written. This is the only book I remembered I love it. everything Spot on..

  11. Anonymous on November 4, 2011 9:16 am

    There is truth to be found in this book, but mainly general stuff that has already been written about in older books. Bottom line, I found the book a comfortable read, and while I did not find anything new in Zurich Axioms, it does contain a lot of useful general wisdom in one book, and is therefore a good book to have around. I also like the fact it’s only 123 pages and does not take up a lot of space on my bookshelf.


  12. Adam on May 13, 2012 9:26 am

    I totally disagree with this review. This book is a must for anyone making any sort of investment. I have been managing clients money for 25 years and found this book to be as clear a statement of how to invest. There are no secrets to investing. To be successful at it, you have to realize it is hard. What makes this book so good is that if offers a common sense approach…and no magic formulas.

  13. Larry Klepper on May 20, 2012 9:57 pm

    For Victor Niederhoffer:

    I have been investing my own money in the stock market since I was 13 when I received 10 shares of Bell Canada as a Bar Mitzvah present. I am well known in Canada and in the US not only as a high net worth investor but as someone who mutual and hedge funds much larger then Victor ever managed call on a regular basis to discuss investment ideas. I mention this only to let Victor know who I am.

    I can say that the only two books I have ever read that gave me some insight and knowledge about the stock market are “The Zurich Axioms” even though I do not agree with several opinions in the book and the other book is “Reminiscences of a Stock Operator” by Edwin Lefevre. I should mention here that I was born in 1941 and there have been many books written since and before I was born.

    As for Victor’s comments about the Gunther book and the way he expressed himself it is a perfect example of why Victor blew up two of the funds that he managed and controlled.

    The only thing that I know that Victor has ever been very good at was squash and I personally saw him beaten in a squash tournament at McGill University by Sharif Khan who was ranked number one in the world at that time. I only mention this to let Victor know I am for real and I challenge Victor not to a squash game but to a pleasant conversation where I can discuss some aspects of investing that he appears to have missed.

    I hope that after our conversation Victor will become more a more humble and knowledgable investor. I am listed in the Montreal telephone directory.

    Larry Klepper

  14. The Zurich Axioms by Max Gunther on November 17, 2012 2:42 am

    […] This is one of those books that challenges societal beliefs. Victor Niederhoffer made his displeasure obvious in his review of the book. He labelled it “one of the worst books ever written” and “[a] totally worthless book”. Interestingly, the Amazon ratings were not that bad after all. Anyway, I decided to give it read. […]

  15. The Zurich Axioms by Max Gunther on November 20, 2012 7:10 am

    […] This is one of those books that challenges societal beliefs. Victor Niederhoffer made his displeasure obvious in his review of the book. He labelled it “one of the worst books ever written” and “[a] totally worthless book”. Interestingly, the Amazon ratings were not that bad after all. Anyway, I decided to give it read. […]

  16. Hemant Muthiyan on April 11, 2013 3:42 am

    I disagree with any one who says the book is not worth it! In fact, it goes well with modern times.

    I simply love the way he describes ‘investment’! I have ALWAYS been caught on the wrong side under the name of investment and long term and not only had to give up good gains, but infact sell at losses later. I agree when he says, “All investment is SPECULATION”.

    One thing is for sure, if one can master even most of the axioms, he will not loose big money and chances of making decent money will be good.

    It is every trader’s BIBLE!


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