Listening to Libertarians

I am an advocate of reading and studying libertarianism and Austrian economics.  You can learn a lot and do your part in helping the fight for freedom.  As far as investments, you should be cautious what you listen to.  You can read some brilliant pieces by different authors who have a great grasp of the libertarian philosophy.  Unfortunately, you can also get some really bad investment advice from the same people.

That is why I really like Richard Maybury.  He is humble and he understands that he can't time or even predict what the markets will do.  He is cautious and he tells his readers to be cautious.

It is amazing how many times I will read other libertarians who think they can make these forecasts and it is also amazing how sure they seem of themselves.  You will see predictions of a crash in bonds or predictions of $5,000 an ounce gold within the next year.  You will see predictions that real estate still has to fall 40% (or whatever number).  You will see some predict that hyperinflation of the U.S. dollar is right around the corner.  While it is possible that some of these predictions could come true, how can these people be so certain?  The number one rule of Austrian economics is that economics is not scientific.  It is the study of human action.  Therefore, it is virtually impossible to predict anything with complete accuracy and timing.

There were libertarians predicting a crash in bonds over 5 years ago.  If you had shorted bonds back then, you would be broke now.  It is not to say that it can't happen now, but it may or may not.  I am inclined to think that interest rates will go up significantly, but even then it is very hard to time it.

This isn't meant to be investment advice other than pointing out that all investments by themselves carry risk.  You should recognize that humans act freely, so while fundamentals may point to a higher gold price, it could just as easily go down tomorrow.  You should recognize that there are no guarantees when you are speculating.  Most of all, you should recognize that even highly intelligent libertarians can often be completely stupid when it comes to investing.  It is good to read different points of view, but make your own decisions and remember that Austrian economics is the study of human action.