The Dao of Capital
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Reviews / Votes
"At last, a real book by a real risk-taking practitioner. You cannot afford not to read this!" --Nassim Nicholas Taleb, Author of The Black Swan "Investors of all kinds will find immeasurable value in this convincing and thoroughly researched book where Mark champions the roundabout." --Paul Tudor Jones II, Founder, Tudor Investment Corporation "A timely, original, right-economic principles and history-based approach to investing. Drawing on impressive philosophical building blocks, The Dao of Capital illuminates the wellsprings of capital creation, innovation and economic progress. Dazzling!" --Steve Forbes, Chairman and Editor-in-Chief, Forbes Media "This is a magnificent, scintillating book that I will read over and over again. Every page is eye-opening, with numerous areas for testing and profits in every chapter. Here's an unqualified, total, heartfelt recommendation, which coming from me is a rarity, and possibly unique." --Victor Niederhoffer, Author of The Education of a Speculator "The Dao of Capital is an impressive work. Spitznagel's approach is refreshing--scholarly without being tedious. What a broad look at economic history it provides!" --Byron Wien, Vice Chairman, Blackstone Advisory Partners LP "Wall Street gamblers who believe the Fed has their back need to read this book. Mark Spitznagel provides a brilliant demonstration that the gang of money printers currently resident in the Eccles Building have not repealed the laws of sound money nor have they rescinded the historical lessons on which they are based." --David Stockman, Former U.S. Congressman, Budget Director under Ronald Reagan, and Author of The Great Deformation "Mark Spitznagel assembles the best insights in human nature and economics to bring order out of the chaos of our world. Economists, investors and lay persons alike will find abundant treasures in The Dao of Capital, one remarkably useful and exciting book!" --Lawrence Reed, President, Foundation for Economic Education and President Emeritus, Mackinac Center for Public Policy "Spitznagel's excellent book is a powerful presentation of how monetary policy deceives entrepreneurs and investors into making poor investing decisions. I highly recommend The Dao of Capital as a guide to avoiding these deceptions and thus to better investment results." --Marc Faber, Publisher of The Gloom, Boom & Doom Report "Spitznagel's sound analytical foundations combined with shrewd strategic thinking provide the reader with a broad philosophy for long run success in wealth creation--where understanding the process that puts you in a position to win is more important than simply stating the goal of winning. I greatly recommend this book." --Peter Boettke, Professor of Economics and Philosophy, George Mason University "Mark Spitznagel has done a remarkable job summarizing, synthesizing, and extending the great Austrian tradition, and weaving it into a wonderful set of practical lessons. What's more, he is a great writer and storyteller in the tradition of Bastiat, Hazlitt, and Rothbard, bringing subtle and sometimes complex ideas to life with memorable examples and sparkling prose. Highly recommended!" --Peter Klein, Professor of Applied Economics, University of Missouri and Carl Menger Fellow, Ludwig von Mises Institute "A highly successful investor, Mark brings Austrian economics from the ivory tower to the investment portfolio." --Ron Paul, Former U.S. Congressman (from the Foreword)More details
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Content
Foreword xvii
Introduction xxiii
Chapter One: THE DAOIST SAGE
Klipp's Paradox 1
The Old Master 3
The Soft and Weak Vanquish the Hard and Strong 6
Into the Pit 9
The Privileges of a Trader 12
Robinson Crusoe in the Bond Pit 15
Fishing in "McElligot's Pool" 18
Enter the Austrians: A von Karajan Moment 18
A State of Rest 21Guiding into Emptiness . . . 23
Moving On 26
The Wisdom of the Sages 29
Chapter Two: THE FOREST IN THE PINECONE
The Roundabout and the Logic of Growth 33
The Forest and the Tree 36
The Slow Seedling 39
Wildfire and Resource Reallocation 41
The Conifer Effect 43
A Logic of Growth 49
Chapter Three: SHI
The Intertemporal Strategy 51
The Dao of Sun Wu 56
Shi and the Crossbow 58
Li-The Direct Path 59
Shi and Li at the Weiqi Board 60
A Common Thread, from East to West 64
An Attack of Misunderstanding 68
On War-An Indirect Strategy 70
Shi, Ziel, Mittel, und Zweck 74
Chapter Four: THE SEEN AND THE FORESEEN
The Roots of the Austrian Tradition 75
That Which Must Be Foreseen 78
At the Viennese Crossroads Between East and West 85
The Teleology of Baer's Butterfly 88
Menger Establishes the Austrian School 89
Tutor to the Prince 93
Methodenstreit 97
Österreichische Schule 101
Chapter Five: UMWEG
The Roundabout Path of the Unternehmer 103
Postulating the "Positive" 105
Produktionsumweg 108
Böhm-Bawerk, the Bourgeois Marx 113
Faustmann's Forest Economy 116
Rings of Capital 122
Henry Ford: The Roundabout Unternehmer 125
The Roundabout of Life 134
Chapter Six: TIME PREFERENCE
Overcoming That Humanness About Us 139
"Radical" Böhm-Bawerk and the Psychology of Time Preference 145
The Curious Case of Phineas Gage 149
The Shi and Li Brain 151
The Subjectivity of Time 153
The Trade-Off of an Addict 158
No Zeal for Ziel on Wall Street 161
Adapting to the Intertemporal 164
Chapter Seven: "THE MARKET IS A PROCESS" 167
The Man Who Predicted the Great Depression 169
Fleeing the Nazis 173
Human Action 175
Unternehmer in the Land of the Nibelungen 179
Genuine Change Is Afoot in Nibelungenland-
Market-Induced Drop in Interest Rates 187
Distortion Comes to Nibelungenland-The
Central Bank Lowers Rates 190
Time Inconsistency and the Term Structure 194
The Day of Reckoning Comes to Nibelungenland 198
The Austrian View 199
The Market Process Prevails 201
Chapter Eight: HOMEOSTASIS
Seeking Balance in the Midst of Distortion 203
The Teleology of the Market 205
The Yellowstone Effect 207
Lessons from the Distorted Forest 209
Market Cybernetics 213
How Things "Go Right" 216
Spontaneous Order 217
Distortion 219
The Sand Pile Effect 220
Distortion's Message: "Do Nothing" 222
The Shi of Capital 223
Chapter Nine: AUSTRIAN INVESTING I: THE EAGLE AND THE SWAN
Exploiting Distortion with Misesian Tools 227
Homeostasis en force 229
Witness to the Distortion 231
An Initial Misesian Investment Strategy 236
The Eagle and the Swan 240
Case Study: Prototypical Tail Hedging 244
The Ziel and the Zweck: Central Bank Hedging 248
The Roundabout Investor 251
Chapter Ten: AUSTRIAN INVESTING II: SIEGFRIED
Exploiting the Böhm-Bawerkian Roundabout 253
Siegfried, the Dragon Slayer 255
Case Study: Buying the Siegfrieds 263
Value Investing: Austrian Investing's Estranged Heir 269
A Zweck Finally Attained 275
Epilogue: THE SISU OF THE BOREAL FOREST 277
The World Learns Sisu from the Victorious Finns 278
Sisu-Of Character and Character-Building 284
Notes 293
Acknowledgments 309
About the Author 311
Index 313
