In an age when an algorithm is the main competitor for many fund managers, what can we know that they don’t? Algos understand the data trail of history, but this trail provides only limited insight into the key lessons of financial history for investors. In this talk, first provided at the 62nd Annual CFA Institute Financial Analysts Seminar, Russell Napier discusses those 21 most important lessons from financial history that allow human beings to profit at the expense of the machines. 1 Hour on-line seminar Feb. 1, 2018. Register (CSInvesting.org: I believe it is free: https://www.cfainstitute.org/learning/events/Pages/02012018_138012.aspx
Regardless of whether you can attend, read relentlessly about financial, economic, and common history. Note what Jim Grant of Grant’s Interest Rate Observer says:
But our main goal is to tell you the next important event in the markets. And sometimes we succeed.
– As with the tech bubble in 1999
– The 2008 mortgage crash
– The 2009 recovery in financials
– And the 2012-13 rise in house prices
How have we been so prescient over the years?
We don’t have fancy, financial computer models or a team of MBAs and Ph.D.’s to help us make these predictions. And we don’t have access to any kind of special information.
But we have been immersed in the markets for over 30 years. And we’ve studied the financial history of the past 200 years. None of which guarantees clairvoyance—nothing does. What we do claim is the capacity to see the present in the context of the helpful lessons of the past.
Like when we warned about the mortgage debt bubble in September 2006.
From the Sept. 8, 2006 Grant’s:
“Overvalued,” we, in fact, judge trillions of dollars of asset-backed securities and collateralized debt obligations to be, and we are bearish on them. Housing-related stocks may or may not be prospectively cheap; they at least look historically cheap. But housing-related debt is cheap by no standard of value. For institutional investors equipped to deal in credit default swaps, there’s an opportunity to lay down a low-cost bearish bet.
368353935-GMOMeltUp J. Grantham says that the current market does not YET show the characteristics of a bubble despite being highly valued.
Advanced Seminar in Human Action
12/06/2017 Mises Institute
Arguably one of the greatest thinkers of the twentieth century, Ludwig von Mises created a framework for all of economic science beginning with the simple axiom that individuals act. In his magnum opus, Human Action, he described economics as a branch of the theory of human action and stressed how broadly it spans, far beyond a discussion of mere money and prices. Mises said, “Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man’s human existence.” For Mises, it was imperative that everyone learns economics, calling it “the main and proper study of every citizen.”
Human Action is a challenging read. With over 800 pages of dense material, study tools are very helpful. The course, Advanced Seminar in Human Action, is a useful addition to other materials like the Human Action Study Guide.
In this course, leading Austrian economists walk the student through Human Action a chapter at a time.
If you’ve ever wanted a push to help you get through the book or if you’ve wondered about your own reading of the material, here is your opportunity to study Human Action with David Gordon, Joe Salerno, Jeffery Herbener, Peter Klein, Guido Hülsmann, and Mark Thornton.
Human Action by Ludwig von Mises is available for free on Mises.org and for purchase as a paperback and hardcover in the Mises Bookstore.
The teachers are excellent and Human Action is the Magnum Opus of Ludwig von Mises. The book is a DIFFICULT read but there is a study guide, lecture videos, and lecture slides for all the chapters of the book. You will have a strong grounding in economics and improve your reading and critical thinking skills, but if you are a beginner, I would opt for https://www.mises.org/library/economics-one-lesson