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Started reading
October 16, 2025
But rather than recognition, his goal was the pursuit of economic truth.
The core of the Austrian School is the unpredictability of human action and the enormous influence individual choice wields in how economics works. It recognizes the subjectivity of value, the role of the entrepreneur, and the pursuit of capital creation to advance society itself.
From Menger, we move in Chapter 5 to the man who put the Austrian School on the map: Böhm-Bawerk, who gives us insights on the relationship between saving, investment, and capital accumulation, thus providing today’s investor with a theoretic understanding of the market process.
“hyperbolic discounting.” This feature of the world plays a crucial role in my understanding of asset prices, but here Böhm-Bawerk was a man ahead of his time, writing on these topics more than a century ago.
“The bright path seems dim/Going forward seems like retreat/ The easy way seems hard/The highest Virtue seems empty . . . Great talents ripen late.”
“the primordial fact that human beings have goals and purposes and act to attain them. And this fact is known not tentatively and hesitantly, but absolutely and apodictically.”3
And so I say the same to you: If there were a book that could teach you how to make money, you would be at the end of a long line down the street from any bookstore (what few still exist).
The intention of this book is to teach you how to think and provide you the discipline of the roundabout.
(Moreover, saying that one is acting long term is very often a rationalization used to justify something that is currently not working out as planned.)
To the Laozi, the best path to anything lay through its opposite: One gains by losing and loses by gaining; victory comes not from waging the one decisive battle, but from the roundabout approach
of waiting and preparing now in order to gain a greater advantage later. The
this sense, the Laozi can simply be seen as a manual on gaining advantage through indirection, or turning the force of an opponent against him, through “excess leading to its opposite.”
Impatience and intolerance for many such small losses, as well as urgency for immediate profits, Klipp believed, dealt a death blow to traders, an easy and common one.
Going for the immediate gain feels so right, while taking the immediate loss feels so wrong.
Exploiting others’ immediacy was the logic of the roundabout approach, the fundamental edge—the ultimate edge of trading and investing.
Days sometimes passed with little to show for time spent standing and yelling in the pit; then I would hook a meal for a week.
Klipp had an intuitive understanding that the market tended to experience infrequent, large moves—what we call “fat tails,” for mass in the extremes of the frequency distribution of market returns—and that replicating such a basket, in its simplest and most elegant form, was a good way to play it.
It is most fitting to gain the greatest insight about markets from those who fled antimarket regimes, in his case in Latvia.
And from there I discovered a book by Henry Hazlitt titled Economics in One Lesson—and if I am able to get my children to read only one economics text in their lifetime, God forbid, it would be Hazlitt’s.
The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy.”33 I could not put Hazlitt’s book down (and it would even replace my dog-eared Treasury Bond Basis).
“For the moment, let the others decimate themselves in the Viennese battle of all against all—my time is sure to come and I await it, calm and confident”—and
Acting was to relieve our insatiable “impatience and the pains caused by waiting.” And overcoming this natural urge was the necessary key to productivity—roundabout production—“the harvesting of the physically
Understanding this process of liquidity is basically about understanding that any market exchange must be perceived as mutually beneficial to both parties.
The real black swan problem of stock market busts is not about a remote event that is considered unforeseeable; it is rather about a foreseeable event that is considered remote—which I have spent the bulk of my career exploiting (and which explains the use of this moniker in some of my current partnerships).
but a purposeful force, the Misesian market process at the very heart of the progression of civilization.
“Anyone can see the pinecones in the tree. None can see the trees, none can foresee the forest in the pinecone.”
Klipp’s great disdain for focusing only on the immediate, the tangible, the seen.
teaches us that it is far better to avoid direct, head-on competition for scarce resources and, instead, to pursue the roundabout path toward an intermediate step that leads to its eventual position of advantage.
a wearing-out without replacement—that makes the forest prone to fire.
These incremental blazes also help prevent the major-routs that prove deadly to the forest and are of benefit to no one. Thus, what might appear to be a destructive force is in actuality constructive, balancing the temporal structure of total growth in the forest.
on the contrary, capitalism wants stability—but also the free competitive transferral of resources (through failures, bankruptcies, and the opportunity for profits) to where they are most suited to the needs of consumers.
(Paradoxically, water is one of the softest and yet strongest forces in nature.)
(An asset need not be physical or material; it can be a state, as in an advantageous readiness.)
