This is a must watch for common sense investors. It’s absolutely imperative that people understand the ideas in these videos. In the United States, especially now, there is a dangerously widespread misunderstanding of what the free market is and how it really works.
Here at the Common Sense Investor, we’re going to start our multi-part series on the free market this week, including topics like spontaneous order and complex adaptive systems. These topics can help give people a better understanding of how the real free market works. We’ll try to make it as simple as possible, with plenty of videos and real world examples.
This past weekend, Editor-in-Chief of Slate, Jacob Weisberg, wrote an error-filled article titled “The End of Libertarianism”. The article is a disturbing look at the misunderstandings of the common media “intellectual”. Fortunately, intermediately after his article was published, an actual intellectual wrote a reply.
Jeffrey Miron, an economist lecturer at Harvard, filled in the missing bits from Weisberg’s bizarre account of history. Enjoy the show:
Whatever one’s views of libertarian policies, the incontrovertible fact is that the U.S. has not pursued such policies. Not in the past 10 years. Not in the past century. Indeed, except for a brief moment before Alexander Hamilton engineered the first U.S. bailout of financial markets, not ever. If the U.S. had truly been the “Libertarian Land” that Weisberg alleges, a huge range of policies that have helped fuel the current situation would have been radically different.
The current economic situation and the government’s response all center around one main issue: living within our means.
We have a fundamental choice: either we can work harder, produce more, and fuel our consumptive behavior, or we can start living within our means, pay as we go, and be smart investors.
Printing more green paper is not a productive act. Consuming more than we can afford is not a productive act. Investing blindly is not a productive act.
“Regarding the Great Depression, you’re right. We did it. We’re very sorry. But thanks to you we won’t do it again.”
-Actual quote from Ben Bernanke
There is an outstanding article over at the Motley Fool. It’s so good I have to re-print it here in it’s entirety. Read it and learn people. Read the rest of this entry »
Written by Vito Rispo on
October 17th, 2008. Posted in
Finance |
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When a certain industry is hot, a good idea is to invest in companies that profit from the companies selling the hot product. Make sense? Let me put it like this: If computers are selling like wildfire, don’t necessarily invest in the computer companies, like Compaq, invest in the companies that make the components, like Intel. Find companies that profit from all or most of the competing companies in some industry. Companies like that are also usually insulated from any major downturn in the industry. Plus they make money from everyone.
Warren Buffet may be doing just that. He recently purchased 225 million shares of the Chinese battery maker BYD for about $230 million dollars. That constitutes around 10 percent of the company. BYD is one of the leading producers of lithium-ion batteries. Read the rest of this entry »
Just as Jim Rogers predicted, we had a historic rally on Monday, but those gains were almost totally wiped out today by the 2nd largest points drop in history.
A weak retail sales report and gloomy forecasts from the Federal Reserve, coupled with the fact that the market is starting to realize the magnitude of our economic situation caused the huge sell off despite some fairly good earnings reports. Coca-Cola, Intel and quite a few very large companies posted better than expected profits. It wasn’t enough to counteract investors lack of confidence though. Read the rest of this entry »
Even though precious metal prices have fallen from the record high levels they set earlier this year, most dealers are still experiencing shortages. Retail buyers are having a difficult time finding gold and silver coins. For example, the U.S. Mint has actually sold out of its 1 oz gold and silver coins. The U.S. Mint has never before ran out of supply.
The problem is that the gold and silver bullion isn’t coming in as fast as it’s going out. Simple, right? But there is a disconnect between the paper market and the physical market for precious metals. That means, basically, that buyers who are able to find gold or silver coins will pay much more than the spot price. Read the rest of this entry »
Written by Vito Rispo on
October 15th, 2008. Posted in
Finance |
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This is a great Sinfest strip by Tatsuya Ishida. It’s about how the bailout is using our (taxpayers) money to “restore confidence” to the market and allow banks to give out loans to the very people they took the money from in the first place.
It reminds me of how politicians bribe the public with $1,000 or $500 dollar “stimulus checks” that are made up of our own money in the first place. They take our money, process it through the government machine, pay the government workers, then a small portion of the money pops out the other end, and we get some of that. And we’re all happy for it.
See the punchline: Read the rest of this entry »
Written by Vito Rispo on
October 15th, 2008. Posted in
Finance |
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The following is the complete text of Frédéric Bastiat’s great work, The Law for you’re enjoyment and education. It’s especially relevant today with our current economic crisis.
