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Author Topic: Does learning Austrian economics make you a better investor?  (Read 4254 times)

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Pvincent87

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Austrian Economics is the science of human action. Learn more about it at mises.org if you are unfamiliar with it.

I believe understanding Austrian Economics in today's environment helps you allocate money Immensely. According to the Austrian theory of the trade cycle, hyper-inflation stend to increase the prices of items with inelastic demand exponentially more than other items. So what does this mean for you? It means you need to invest in oil, natural gas, uranium, agriculture commodities and monetary commodities like silver and gold RIGHT NOW...you'll probably make a killing is you do your homework and stay conservative while the average American loses his purchasing power to the inevitable runaway inflation which will destroy the U.S. Dollar.

That's really the tip of the iceberg, but you should start looking at investing options NOW and understanding Austrian economics will help you do that. If I can do it, trust me, ANYONE CAN lol

What do ya think?
« Last Edit: May 27, 2009, 08:02:59 PM by Pvincent87 »
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fatcat

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Re: Does learning Austrian economics make you a better investor?
« Reply #1 on: May 27, 2009, 01:26:10 PM »

I don't think by default learning about Austrian Economics can improve the skills needed to make good investments.

Economists of other schools can still analyze the market in ways to make apt judgments for investments.

However, I think a better understanding of the money supply and currency valuation that comes with Austrian economics can be useful.

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Pvincent87

  • Guest
Re: Does learning Austrian economics make you a better investor?
« Reply #2 on: May 27, 2009, 05:03:43 PM »

Quote
I don't think by default learning about Austrian Economics can improve the skills needed to make good investments.

I disagree! Austrian trade cycle theory as clearly outlined by Mises demonstrates that artificial credit and monetary expansion by the central bank necessarily results in a deflationary bust (if on the gold standard) or a hyper-inflationary bust if tied to a fiat currency. Most people do not realize this and this gives investors schooled in Austrian economics an advantage in selecting asset classes for long term holdings.

For example, when the market bottomed last October (I think?) I bought, among other things, a mining company. I would not have purchased this company if I did not understand Austrian trade cycle theory and the Austrian take on the evolution of money. Keynsians and Monetarists and average investors do not understand these important points and thus do not fully understand that gold lends itself well to monetary use. It was only because of my understanding of Austrian economics that I purchased this gold company because I know where the long term price of gold denominated in U.S. dollars will head and that is simply up.

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Economists of other schools can still analyze the market in ways to make apt judgments for investments.

Yes, but how have the monetarists and Keynsians fared recently? All of them I know about missed the housing collapse and most of them will miss the currency collapse as well. Only Austrian methodology is particularly well-suited to accurately predicting long term trends like this emerging from the bust of an extraordinary large federal reserve induced monetary and credit expansion.

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However, I think a better understanding of the money supply and currency valuation that comes with Austrian economics can be useful.

Well doesn't this profoundly help my long term investment strategy? It is because of my understanding of austrian economics that I can confidently predict a super-bull market in commodities. Keynsians and monetarists do not fully understand the root cause of inflation, and this misunderstanding may well bankrupt them when the U.S. dollar collapses amidst a holocaust of inflation.
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Pvincent87

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Re: Does learning Austrian economics make you a better investor?
« Reply #3 on: May 27, 2009, 05:06:42 PM »

Heck, I predicted the housing collapse, stock market correction, and the run up in oil without even knowing what an index fund was. I had no knowledge of financial markets but I had read my share of austrian economics literature.

That's gotta be worth something.
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Bill Brasky

  • Guest
Re: Does learning Austrian economics make you a better investor?
« Reply #4 on: May 27, 2009, 07:00:24 PM »

Thats hedging, which is not the precise definition of investing. 

Also, you've said in three out of fifteen posts that you:

A) Do not own stocks
B) Own (stock in) a mining company
C) Manage your parents portfolio

I'm not gonna comment on the incongruity of that. 

Now, returning to the OP, I don't think it really matters which economic theory you subscribe to.  Or at least, it doesn't matter for me.  The market does not follow a strategy.  The market is reactionary. 

Lastly, the bottom was not in October.  And your prediction of going below the established bottom in this cycle is wrong. 
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Pvincent87

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Re: Does learning Austrian economics make you a better investor?
« Reply #5 on: May 27, 2009, 07:36:06 PM »

Quote
Also, you've said in three out of fifteen posts that you:

A) Do not own stocks
B) Own (stock in) a mining company
C) Manage your parents portfolio

A: I sold my shares about two weeks ago. My shares...not my parents shares.
B. I sold the shares. I plan to buy more because I expect another correction.
C. Yes, my parents own stocks. Their stocks are their property and I do not somehow construe their property as my own.

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Pvincent87

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Re: Does learning Austrian economics make you a better investor?
« Reply #6 on: May 27, 2009, 07:38:20 PM »

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Thats hedging, which is not the precise definition of investing. 

Buying shares of a mining company is hedging? That's simply not true!

I consider my physical silver to be a hedge against hyperinflation, but it is inaccurate to categorize all precious metal investments particularly highly speculative mining stocks as hedging.
« Last Edit: May 27, 2009, 07:44:21 PM by Pvincent87 »
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Pvincent87

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Re: Does learning Austrian economics make you a better investor?
« Reply #7 on: May 27, 2009, 07:43:49 PM »

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Lastly, the bottom was not in October.
Indeed, I was wrong! I meant the low in the HUI index, not the DJI.
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Pvincent87

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Re: Does learning Austrian economics make you a better investor?
« Reply #8 on: May 27, 2009, 07:46:15 PM »

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And your prediction of going below the established bottom in this cycle is wrong. 
Could be!  I guess we'll see.
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Bill Brasky

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Re: Does learning Austrian economics make you a better investor?
« Reply #9 on: May 27, 2009, 08:13:37 PM »

Quote
Also, you've said in three out of fifteen posts that you:

A) Do not own stocks
B) Own (stock in) a mining company
C) Manage your parents portfolio

A: I sold my shares about two weeks ago. My shares...not my parents shares.
B. I sold the shares. I plan to buy more because I expect another correction.
C. Yes, my parents own stocks. Their stocks are their property and I do not somehow construe their property as my own.



Anybodys investments you manage, you should manage as if they were your own. 


Quote
Thats hedging, which is not the precise definition of investing. 

Buying shares of a mining company is hedging? That's simply not true!

I consider my physical silver to be a hedge against hyperinflation, but it is inaccurate to categorize all precious metal investments particularly highly speculative mining stocks as hedging.

As you're describing it in your Austrian mumbo-jumbo, devaluation of the dollar will result in your money or wealth remaining at least static in value due to their projection/production, as the bottom drops out of the dollar.  That is the definition of the hedge.  You are betting on inflation.  This hasn't taken into consideration the actual profitability of the company if the economic environment would be linear.   

Your investment model is incomplete without consideration of normal inflation.  The miner could lose profit, the company is not infallible. 

Its funny to me that everyone talks about long term bubbles, yet refuses to consider gold to be a potential bubble.  As fear ramps up goldbugs, they cause their own bubble.  Thats the funny thing about charts and tops.  You never know when today is the top, until today is the past and you're caught in a bull trap. 

I just can't get excited about a stock that sells for 9.50 that might be 10.50 next summer.  Thats all gold is, move the decimal.  Thats how percentages work.  I have better things to do with a thousand bucks, like turning it into ten thousand bucks.  A ten percent move is bullshit. 
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Bill Brasky

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Re: Does learning Austrian economics make you a better investor?
« Reply #10 on: May 27, 2009, 08:19:21 PM »

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Lastly, the bottom was not in October.
I meant the low in the HUI index, not the DJI.


LOL, ok.  Everybody knows the HUI is the market. 
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Pvincent87

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Re: Does learning Austrian economics make you a better investor?
« Reply #11 on: May 27, 2009, 08:32:43 PM »

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LOL, ok.  Everybody knows the HUI is the market. 

Wow, you're a dick. You're a moderator here? I think I'll leave. Thanks, good luck turning your thousand dollars into $10,000.
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BonerJoe

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Re: Does learning Austrian economics make you a better investor?
« Reply #12 on: May 27, 2009, 08:34:17 PM »

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LOL, ok.  Everybody knows the HUI is the market. 

Wow, you're a dick. You're a moderator here? I think I'll leave. Thanks, good luck turning your thousand dollars into $10,000.

LOL ANNOYING GUY WITH FSP AVATAR LEAVES BIG LOSS BOOHOO. NEXT.
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digitalfour

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Re: Does learning Austrian economics make you a better investor?
« Reply #13 on: May 27, 2009, 09:48:05 PM »

I have better things to do with a thousand bucks, like turning it into ten thousand bucks.

How do you do that?
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Bill Brasky

  • Guest
Re: Does learning Austrian economics make you a better investor?
« Reply #14 on: May 27, 2009, 09:58:04 PM »

Quote
LOL, ok.  Everybody knows the HUI is the market. 

Wow, you're a dick. You're a moderator here? I think I'll leave. Thanks, good luck turning your thousand dollars into $10,000.

Yeah, I am a dick. 

Every index on earth bottomed in March.  Except for that one.  When people say "the market bottom" they are generally talking about "the market".  Not some obscure fuckin' index that tracks berber carpet or golf balls. 
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