I have some background on Austrian economics and I am currently very interested in applying principles of Austrian economics for investing. Could anyone recommend me some readings on Austrian economics for Investing/Investors?
I came across a book by Mark Skousen: “Austrian Economics for Investors: Ludwig von Mises Goes to Wall Street“. It is out of print. Any ideas on where or how I could find it?
Thank You!
From The Ultimate Beginner meta-thread:
Practical Applications of Austrian Economics (investing)
I think the biggest thing that is missing from most "investment" advice is just the understanding that the government is a mafia and that - to whatever extent possible - the major corporate players are all in bed with the government. The government - and its ecosystem of lobbyists - is naught but a gang of thugs writ large. The sooner the would-be investor gets this through his skull, the better for his own sake. The idea of government as an exogenous variable for the sake of market analysis is a fairy-tale... like the fairy-tale of "investing in the whole market."
Tax breaks and incentives are lures. The stupid, naive investor runs out and "takes advantage" of the tax breaks. The wary investor either steers clear or tries to move in and out of the tax-subsidized asset quickly enough to avoid whatever long-run shenanigans are coming down the pipe. But the truly wise investor asks who lobbied to get this tax break put in place, estimates how successful it is likely to be, and then tries to get a piece of the action, that is, join in the fleecing of the first class of investor mentioned in this paragraph: the stupid and naive.
Investing is sold to the masses as a way to get involved in business without taking the risks involved in starting one's own business. This is entirely backwards. Starting and running your own business is a much less risky proposition than investing. In the former case, you actually hold the gears and levers of success in your own hands. If the venture fails, it is the result of your own incompetence or mismanagement. But if you invest, you're taking your cash and placing it someone else's hands. That person - you are hoping - is more competent and adept than you would be in managing your own business but, when you think about it, there's less reason why this should be the case. After all, it's not his money on the line, it's yours. This is particularly the case for unsecured creditors (almost all stocks are unsecured credits). If the company goes bankrupt, you - as an unsecured creditor - will almost certainly lose your entire principal. In any case, the presumption that there are lots of people out there who are more competent to run a business than you are is generally false.
The point is that if you don't feel comfortable starting and running your own business because "it's too risky" then what the hell are you thinking to invest in the stock market?? The vast majority of people invested in the stock market today simply shouldn't be.
As I point out in one of the threads JJ has linked to, the actually valuable work of a stock investor in an unhampered market is dissemination and arbitrage of insider information. That's the whole point of a stock market. Yet trading on "insider information" is illegal. What a joke. But if you're ready to peel the wool from your eyes, look at the "desert of the real world" for what it really is and you have built a large enough capital base from which to operate, you can indeed become fabulously wealthy with nothing more than cunning and knowing (emphasis on knowing) what to buy and sell and when.
Clayton -
It may interest you to know that I've recently started a blog on day-trading and technical analysis from an Austrian perspective (austrotrader.freecapitalists.org). It seems most Austrian investing information is aimed at long-term investing, so I feel I have a unique niche here. ABCT is good at telling us how the story ends, but what I try to do is read along as the story unfolds.
I time the market, which is something foreign to Austrians. I understand Austrian economics tells us we can't time the market, but I'm timing the market in a different sense. I don't create a projection of all the moves I think the market will take but rather I react to time & sales data. Since time & sales is just how much of a stock was bought and sold at a given time and at what price, it is the most direct observation of human action in the stock market. So what I'm literally doing is technical analysis grounded firmly in human action.
My blog is new, and I'm new to blogging, so you'll have to forgive some of the warts for now, but to show how serious I am and how reliable the information is, I've put up $5000 total of my own money into two brokerage accounts for trading. These trades are all third-party verified. I think it will show that you don't need to start with a lot of money to grow, and I think the amount will appeal to young people just discovering Austrian economics but who don't have a lot of money to invest.
Since I'm still trying to figure out who my audience is, this is great for you, because I'll be very receptive to your feedback and will try to blog in a way that will more directly answer your specific questions. You can help move me along, and I can save you a lot of time and effort in your quest for knowledge. It's win-win. So I hope you check it out: austrotrader.freecapitalists.org, and you can email me directly at austrotrader-at-gmail or contact me on facebook (under the name Austro Trader).
Investing in One Lesson - Mark Skousen