Worldly wisdom teaches that it is better for the reputation to fail conventionally than to succeed unconventionally.
- John Maynard Keynes, famous 20th century British economist.
On this single point we agree with Keynes. Who does not find a feeling of safety in numbers? Therefore, it is easy for investors to find comfort in copying the actions of the investment community at large. If they lose when markets collapse, at least they are no worse off than most others. And no doubt the investor’s wealth manager will console them by pointing out that “no one saw this coming.”
This happened with technology stocks, then with housing, and most recently with the stock market as a whole. Why did the investment community fail to see these past bubbles and advise their clients accordingly? There are a number of reasons which we discuss here, but ultimately it is their misplaced faith in the economics of John Maynard Keynes.
Today the financial community generally adheres to Keynesian economic philosophy. They believe government, through significant regulating, spending, and the printing of money, can steer economies towards prosperity and avoid financial calamities. We disagree. In subscribing to the free market-based Austrian School of Economics, we understand the inevitable repercussions of government intervention.
So why are we “entrepreneurial-minded advisors”? Conventional wisdom associates the word “entrepreneur” with the assumption of risk. While risk can never be fully avoided, what actually makes entrepreneurs unique is their understanding of risk. Our unique insight of the risks posed by governmental interference in the economy serves to protect our clients’ wealth. As entrepreneurial-minded advisors, we emphasize independent and creative thought to boldly seize opportunities while minimizing key risks.