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Profits of Chaos

Austrian Economics, Investing and Entrepreneurship. With Professor Peter St Onge. If you haven’t yet, sign up for free updates here.

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Suspicious_fbbb44_1219122One refrain we hear from cynics is that investing in the stockmarket is a scam.

That we are idiots for thinking the market goes up forever when, everybody knows, “what goes up must come down.”

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[Today's post is excerpted from the October Austrian Investment Monthly newsletter. To subscribe please visit St Onge Research]

2014 has been a nail-biter for GDP watchers. After a 2.1% decline in Q1, the worst in years, Q2 rebounded with a ripping 4.6% print. Why all the excitement?

In any story you first decide where to begin. And 2014 starts with 2011. Why 2011? Because that’s when the economy grew out of the 2008 rebound and started getting nervous.

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Nara-Dreamland-abandoned-2Okay, the picture is Japan, but it’s what I imagine a roller-coaster in Liberia probably looks like right about now.

And what a roller-coaster it’s been for markets. After months of zombie-marching to new highs, in the past month the main US indices are down about 7%, while Europe is down even harder. If you’re long the market, it’s been painful. If you’re short, you’re probalby in Aruba right now trying not to spill your Mai Tai.

What’s going on? Is it the end of the world? Will we have to live in the car? Will Jimmy get his braces?

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My latest at Mises Institute:6917

A panel discussion at the 2014 Mises University addressed the question of whether Austrian economics can improve financial predictions. [click to continue…]

Is Keynes an Economist?

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J.M.Keynes-seatedWell, if I garden on the weekends, am I a gardener? In this sense John Maynard Keynes would indeed be an economist.

On the other hand, in science we might expect some “weeding-out” process analogous to natural selection that kills off bad ideas and promotes good ideas. Did Keynes go through this process? Or did his prominence come through some other channel? The historical record is pretty clear — Keynes is a naked emperor crowned by bureaucrats.

Keynes’ resume is fairly sordid for an alleged economist: after bouncing around India aimlessly, [click to continue…]