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Economics in One Lesson

Economics in One Lesson, written in 1946 by Henry Hazlitt, is an excellent book. From Chapter 1:

Doesn’t everyone know, in his personal life, that there are all sorts of indulgences delightful at the moment but disastrous in the end? Doesn’t every little boy know that if he eats enough candy he will get sick? Doesn’t the fellow who gets drunk know that he will wake up next morning with a ghastly stomach and a horrible head? … do not the idler and the spendthrift know, even in the midst of their glorious fling, that they are headed for a future of debt and poverty.

Yet when we enter the field of public economics, these elementary truths are ignored. These are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as a way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: “In the long run we are all dead.” And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.

Sound familiar to anyone?

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Here’s the One Lesson Hazlitt shares in Chapter One and then illustrates through the rest of the book:

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

The gist of the book is that economic policies are enacted to fix or change something. That is the visible side of the policy eg., the public works project to provide jobs visibly shows jobs and a bridge as a result. Why almost all policies fail is that there is an invisible side of every policy, a side that takes critical thinking to discover as the impact is higher taxes and lost opportunity for all industries not in the bridge building business.

 

 

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Book review: The Boy Plunger

The Boy Plunger is a biography of J.L. Livermore. J.L. Livermore (Jesse to those who didn’t know him) is the same person who is the subject of the seminal (no homo) investing tome Reminiscences of a Stock Operator.

While Reminiscences was known to be loosely based on Livermore’s life, The Boy Plunger endeavors to be a¬†historically accurate biography of one of the most interesting financial figures ever born.

If J.L. Livermore were alive today he’d be selling¬†Tim Cook’s gay AAPL short at 30 to 1 margin on Monday and by Tuesday be long 50 to 1. He was a fucking madman, much like our good patron saint of these halls, Le Fly. He made $100 Million in ONE week during the crash of 1929. That’s recorded as the most money ANYONE has made in seven days. Including that fuckface Zuckerberg. A few years later J.L. Livermore was bankrupt.

As appropriate to a man who became the richest person in the world inside of 7 days and then a few years later filing bankruptcy the story ends when he blows his brains out in a coat room at a NY hotel. It’s reported he did the deed with very little mess incurred. A gentleman to the end.

We pick up the story where young JL he left his mother at age 14 to move to Boston whereupon he walked into a bucket shop and lied to get his first job. A few short years later he is rubbing elbows with EF Hutton and then agreeing to being the savior Pierpont Morgan asked for (no Batman) when the entire market was going to collapse. You get a blow by blow account of the triumphs and tribulations of Mr Livermore and his impact on markets and companies that are still around today.

While his stock trades were interesting enough for several other books as a biography you really get a sense of the man who purchased and sold yachts for sport, bought a house that put William Chrysler to shame, used the Ziegfeld Follies as his personal farm system for mistresses and generally swung his enormous sack around on both the bull and bear side of the market for more than 25 years.

Throughout all the ups and downs J.L. maintains a stoic attitude and personal responsibility for every success and failure. He’s grounded 100% in what it is to be a Stock Operator. There are numerous quotes all of which are lessons in objectivity, controlling one’s emotions and being brutally honest with oneself when on the wrong side of a trade.

Cheers to you Mr Livermore.

(I highly recommend this book)

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