An Austrian approach to Investing

No one knows what will happen.

But if we are humble and respectful of our own human nature and that of the markets, we will acknowledge some fundamental truths, or Principles, that can guide our investment process.

First, we do know that, regardless of the causes, the economy and markets cyclically fall into one or more of their five basic attractors —in no particular order or length: Growth, Recession, Inflation, Deflation and Crisis— and these regimes affect asset classes in diverse ways.

Traditional approach to investing usually involves predicting future scenarios and its effects in the asset classes. But no matter how appealing the narratives about what might happen are, this approach is a dead end because —as Austrian Economics and Complex Theory teaches us— no one can forecast the future consistently.

Secondly, we know that human nature does not change. Today’s investors are the same human beings —subjected to the same fears, desires, and bias— as centuries ago. This gives the stoic investor an edge, who can use other investors’ biases to his advantage rather than letting them work against himself.

So, while we accept the Principles that…

  • Future is unpredictable
  • Human nature never change
  • Cycles are inevitable

…we will have the appropriate conceptual framework to deduce the portfolio I propose in my AMAP Newsletter:

AMAP aims to provide equity-like returns over the long term, but with half their volatility and drawdowns. Built with ETFs and easy to implement just once a month.

My Newsletter, although in practice it seems simple and is easy to implement, is the product of my 20+ years of experience in the markets and the conclusions I have arrived at. Conclusions that I have reached through multiple paths, because investing, as a manifestation of human action, cannot be a closed discipline of knowledge:

This image has an empty alt attribute; its file name is image-2.png

Do you want to know more? Feel free to explore the different concepts and sections of the web through their key concepts hyperlinks and sections, and do not hesitate to contact me if you have any questions.