Mark Spitznagel - The Dao of Capital: Austrian Investing in a Distorted World

Contents

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 of Austrian capital theory. Using thought-provoking examples from both the natural world and the historical world, The Dao of Capital shows how a seemingly difficult immediate loss becomes an advantageous intermediate step for greater future gain, and thus why we must become patient now and strategically impatient later.

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. It also makes the point that government intervention to help the economy is as destructive as the now-discredited policy of suppressing forest fires. Dazzling!

Steve Forbes , Chairman and Editor-in-Chief, Forbes Media

This is a magnificent, scintillating book that I will read over and over again. It provides a theoretic and practical framework for understanding the insights of all the greats that a student of markets will encounterSoros, Baldwin, Klipp, Buffett, Cooperman (albeit these greats might not realize or acknowledge it). It teaches you things about war, trees, martial arts, opera, baseball, board games. Every page is eye-opening, with numerous areas for testing and profits in every chapter. I will share the book with all my traders, friends, and circles of influence. Heres 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. Spitznagels approach is refreshingscholarly 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provides a brilliant demonstration that the gang of money printers currently resident in the Eccles Building have not repealed the laws of sound money nor have they rescinded the historical lessons on which they are based.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

We live in a world warped by faulty assumptions and bad policies. Conventional wisdom explains very little because its more convention than wisdom. Mark Spitznagel assembles the best insights in human nature and economics to bring order out of the chaos. 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

Spitznagels 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. As Mark says, in my native tongue, Wir sind jetzt alle sterreicher .

Marc Faber , Publisher of The Gloom, Boom & Doom Report

In The Dao of Capital , Mark Spitznagel stresses sound analytical foundations combined with shrewd strategic thinking to provide the reader with a broad philosophy of investing, where understanding the process that puts you in a position to win is more important than simply stating the goal of winning. The Austrian economics he employs unlocks not only the mystery of market coordination, but explains clearly the distortionary consequences of the manipulation of money and credit. Spitznagel guides the reader, not with point predictions, but with pattern predictions and strategic positioning for long run success in wealth creation. 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. Whats 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

In The Dao of Capital , Mark Spitznagel has undertaken a sweeping study of the Austrian School and its correlative thought throughout history. A highly successful investor, Mark brings Austrian economics from the ivory tower to the investment portfolio, by demonstrating that its principles of capital, roundabout production, and free markets can and indeed should be applied to entrepreneurial investment.

Ron Paul , Former U.S. Congressman (from the Foreword)

Cover image: iStop/Jupiter Images

Cover design: Wiley

Copyright 2013 by Mark Spitznagel. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

Artwork by Tim Foley.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com . Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/go/permissions . Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com . For more information about Wiley products, visit www.wiley.com .