The Dao Of Capital (austrian Investing In A Distorted World)

As today''s preeminent doomsday investor Mark Spitznagel describes his Daoist and roundabout investment approach, "one gains by losing and loses by gaining." This is Austrian Investing, an archetypal, counterintuitive, and proven approach, gleaned from the 150-year-old Austrian School of economics, that is both timeless and exceedingly timely.

In The Dao of Capital, hedge fund manager and tail-hedging pioneer Mark Spitznagel—with one of the top returns on capital of the financial crisis, as well as over a career—takes us on a gripping, circuitous journey from the Chicago trading pits, over the coniferous boreal forests and canonical strategists from Warring States China to Napoleonic Europe to burgeoning industrial America, to the great economic thinkers of late 19th century Austria. We arrive at his central investment methodology of Austrian Investing, where victory comes not from waging the immediate decisive battle, but rather from the roundabout approach of seeking the intermediate positional advantage (what he calls shi), of aiming at the indirect means rather than directly at the ends. The monumental challenge is in seeing time differently, in a whole new intertemporal dimension, one that is so contrary to our wiring.

Spitznagel is the first to condense the theories of Ludwig von Mises and his Austrian School of economics into a cohesive and—as Spitznagel has shown—highly effective investment methodology. From identifying the monetary distortions and non-randomness of stock market routs (Spitznagel''s bread and butter) to scorned highly-productive assets, in Ron Paul''s words from the foreword, Spitznagel "brings Austrian economics from the ivory tower to the investment portfolio."

The Dao of Capital provides a rare and accessible look through the lens of one of today''s great investors to discover a profound harmony with the market process—a harmony that is so essential today.

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-B