The Dao of Capital: Austrian Investing in a Distorted World

( 1 )


As today's preeminent doomsday investor Mark Spitznagel describes his Daoist and roundabout investment approach, "one gains by losing and loses by gaining." This is Austrian Investing, an archetypal, counterintuitive, and proven approach, gleaned from the 150-year-old Austrian School of Economics, that is both timeless and exceedingly timely.

In The Dao of Capital, hedge fund manager and tail-hedging pioneer Spitznagel takes the reader on a gripping, circuitous journey from the ...

See more details below
$24.51 price
(Save 18%)$29.95 List Price

Pick Up In Store

Reserve and pick up in 60 minutes at your local store

Other sellers (Hardcover)
  • All (14) from $15.34   
  • New (8) from $17.27   
  • Used (6) from $15.34   


As today's preeminent doomsday investor Mark Spitznagel describes his Daoist and roundabout investment approach, "one gains by losing and loses by gaining." This is Austrian Investing, an archetypal, counterintuitive, and proven approach, gleaned from the 150-year-old Austrian School of Economics, that is both timeless and exceedingly timely.

In The Dao of Capital, hedge fund manager and tail-hedging pioneer Spitznagel takes the reader on a gripping, circuitous journey from the Chicago trading pits, over the coniferous boreal forests and canonical strategists from Warring States China to Napoleonic Europe to burgeoning industrial America, to the great economic thinkers of late 19th-century Austria, ultimately arriving at his central investment methodology of Austrian Investing. Victory comes not from waging the immediate decisive battle, but rather from the roundabout approach of seeking the intermediate positional advantage (what he calls shi), of aiming at the indirect means rather than directly at the ends. The monumental challenge is in seeing time differently, in a whole new intertemporal dimension, one that is so contrary to our wiring.

With one of the top returns on capital of the financial crisis, as well as over a career, Spitznagel is the first to condense the theories of Ludwig von Mises and his Austrian School of Economics into a cohesive and highly effective investment methodology. From identifying the monetary distortions and non-randomness of stock market routs (or black swans, Spitznagel's bread and butter) to scorned highly-productive assets, The Dao of Capital, in Ron Paul's words from the Foreword, "brings Austrian economics from the ivory tower to the investment portfolio."

The Dao of Capital provides a rare and accessible look through the lens of one of today's great investors to discover a profound harmony with the market process—a harmony that is so essential today.

Read More Show Less

Editorial Reviews

From the Publisher
"Spitznagel has written an essential new book. Indeed, might be one of the most important books of the year, or any year for that matter."

"The Dao of Capital: Austrian Investing In A Distorted World by Mark Spitznagel (Wiley, 2013) is a beautifully crafted book, one I can recommend to readers of all political/economic persuasions… it is impossible not to be shaped by its carefully presented history and logic."
Seeking Alpha

"There is no shortage of market bears who take a grim view of the stock market. But Mr. Spitznagel has gained credibility in the investment world by predicting two market routs in the past decade, first in 2000 and then in 2008. Still, Mr. Spitznagel's approach is unusual for a money manager."
The New York Times

"A fascinating and radical break from the investment dogma of the past several decades"

"While The Dao of Capital makes for demanding reading, it repays the effort as a heady historical and intellectual feast."

"Spitznagel could simply have written that investors need patience and must avoid the temptation of the quick profit; that building a successful strategy, and life, involves a longer-term approach foregoing instant gratification; that establishing a solid foundation while appearing not to create progress puts you in position for much greater success later on. He did not do that. Instead, he takes you on a tour of history and nature that illuminates these long held truths. In the end his message is simple, but by providing the historical underpinnings he brings them to life in a much more vibrant way."
Futures Magazine

Among the "12 Books That Every Investor Should Read... deeply informative and will leave an impact on you."
Business Insider

"A memoir and free market manifesto... that bring(s) theoretical concepts down to the practical-level."
Institutional Investor

"I applaud the book as a look into the thinking process of a great investor, especially one that has a clear and consistent understanding of the market process, the dangers of government intervention, and the benefits of Austrian economics."
Ludwig von Mises Institute

Read More Show Less

Product Details

  • ISBN-13: 9781118347034
  • Publisher: Wiley
  • Publication date: 8/26/2013
  • Edition number: 1
  • Pages: 368
  • Sales rank: 212,541
  • Product dimensions: 6.10 (w) x 9.10 (h) x 1.40 (d)

Meet the Author

Mark Spitznagel is the founder and President of Universa Investments, an investment advisor that specializes in equity tail-hedging—or profiting from extreme stock market losses as a means of enhancing investment returns. In addition to hedge fund investing, Spitznagel's twenty-year investment career has ranged from independent pit trader at the Chicago Board of Trade to proprietary trading head at Morgan Stanley. He also owns and operates Idyll Farms in northern Michigan.

Read More Show Less

Table of Contents

Foreword xvii

Introduction xxiii

Klipp's Paradox 1

The Old Master 3

The Soft and Weak Vanquish the Hard and Strong 6

Into the Pit 9

The Privileges of a Trader 12

Robinson Crusoe in the Bond Pit 15

Fishing in "McElligot's Pool" 18

Enter the Austrians: A von Karajan Moment 18

A State of Rest 21

Guiding into Emptiness . . . 23

Moving On 26

The Wisdom of the Sages 29

The Roundabout and the Logic of Growth 33

The Forest and the Tree 36

The Slow Seedling 39

Wildfire and Resource Reallocation 41

The Conifer Effect 43

A Logic of Growth 49

Chapter Three: SHI
The Intertemporal Strategy 51

The Dao of Sun Wu 56

Shi and the Crossbow 58

Li—The Direct Path 59

Shi and Li at the Weiqi Board 60

A Common Thread, from East to West 64

An Attack of Misunderstanding 68

On War—An Indirect Strategy 70

Shi, Ziel, Mittel, und Zweck 74

The Roots of the Austrian Tradition 75

That Which Must Be Foreseen 78

At the Viennese Crossroads Between East and West 85

The Teleology of Baer’s Butterfly 88

Menger Establishes the Austrian School 89

Tutor to the Prince 93

Methodenstreit 97

Österreichische Schule 101

Chapter Five: UMWEG
The Roundabout Path of the Unternehmer 103

Postulating the "Positive" 105

Produktionsumweg 108

Böhm-Bawerk, the Bourgeois Marx 113

Faustmann’s Forest Economy 116

Rings of Capital 122

Henry Ford: The Roundabout Unternehmer 125

The Roundabout of Life 134

Overcoming That Humanness About Us 139

"Radical" Böhm-Bawerk and the Psychology of Time Preference 145

The Curious Case of Phineas Gage 149

The Shi and Li Brain 151

The Subjectivity of Time 153

The Trade-Off of an Addict 158

No Zeal for Ziel on Wall Street 161

Adapting to the Intertemporal 164

Chapter Seven: "THE MARKET IS A PROCESS" 167
The Man Who Predicted the Great Depression 169

Fleeing the Nazis 173

Human Action 175

Unternehmer in the Land of the Nibelungen 179

Genuine Change Is Afoot in Nibelungenland—A Market-Induced Drop in Interest Rates 187

Distortion Comes to Nibelungenland—The Central Bank Lowers Rates 190

Time Inconsistency and the Term Structure 194

The Day of Reckoning Comes to Nibelungenland 198

The Austrian View 199

The Market Process Prevails 201

Chapter Eight: HOMEOSTASIS
Seeking Balance in the Midst of Distortion 203

The Teleology of the Market 205

The Yellowstone Effect 207

Lessons from the Distorted Forest 209

Market Cybernetics 213

How Things "Go Right" 216

Spontaneous Order 217

Distortion 219

The Sand Pile Effect 220

Distortion’s Message: "Do Nothing" 222

The Shi of Capital 223

Exploiting Distortion with Misesian Tools 227

Homeostasis en force 229

Witness to the Distortion 231

An Initial Misesian Investment Strategy 236

The Eagle and the Swan 240

Case Study: Prototypical Tail Hedging 244

The Ziel and the Zweck: Central Bank Hedging 248

The Roundabout Investor 251

Exploiting the Böhm-Bawerkian Roundabout 253

Siegfried, the Dragon Slayer 255

Case Study: Buying the Siegfrieds 263

Value Investing: Austrian Investing’s Estranged Heir 269

A Zweck Finally Attained 275


The World Learns Sisu from the Victorious Finns 278

Sisu—Of Character and Character-Building 284

Notes 293

Acknowledgments 309

About the Author 311

Index 313

Read More Show Less

Customer Reviews

Average Rating 4
( 1 )
Rating Distribution

5 Star


4 Star


3 Star


2 Star


1 Star


Your Rating:

Your Name: Create a Pen Name or

Barnes & Review Rules

Our reader reviews allow you to share your comments on titles you liked, or didn't, with others. By submitting an online review, you are representing to Barnes & that all information contained in your review is original and accurate in all respects, and that the submission of such content by you and the posting of such content by Barnes & does not and will not violate the rights of any third party. Please follow the rules below to help ensure that your review can be posted.

Reviews by Our Customers Under the Age of 13

We highly value and respect everyone's opinion concerning the titles we offer. However, we cannot allow persons under the age of 13 to have accounts at or to post customer reviews. Please see our Terms of Use for more details.

What to exclude from your review:

Please do not write about reviews, commentary, or information posted on the product page. If you see any errors in the information on the product page, please send us an email.

Reviews should not contain any of the following:

  • - HTML tags, profanity, obscenities, vulgarities, or comments that defame anyone
  • - Time-sensitive information such as tour dates, signings, lectures, etc.
  • - Single-word reviews. Other people will read your review to discover why you liked or didn't like the title. Be descriptive.
  • - Comments focusing on the author or that may ruin the ending for others
  • - Phone numbers, addresses, URLs
  • - Pricing and availability information or alternative ordering information
  • - Advertisements or commercial solicitation


  • - By submitting a review, you grant to Barnes & and its sublicensees the royalty-free, perpetual, irrevocable right and license to use the review in accordance with the Barnes & Terms of Use.
  • - Barnes & reserves the right not to post any review -- particularly those that do not follow the terms and conditions of these Rules. Barnes & also reserves the right to remove any review at any time without notice.
  • - See Terms of Use for other conditions and disclaimers.
Search for Products You'd Like to Recommend

Recommend other products that relate to your review. Just search for them below and share!

Create a Pen Name

Your Pen Name is your unique identity on It will appear on the reviews you write and other website activities. Your Pen Name cannot be edited, changed or deleted once submitted.

Your Pen Name can be any combination of alphanumeric characters (plus - and _), and must be at least two characters long.

Continue Anonymously
Sort by: Showing 1 Customer Reviews
  • Anonymous

    Posted October 7, 2013

    Great Book

    An excellent read, gives you a different perspective on things in the economy(s)

    Was this review helpful? Yes  No   Report this review
Sort by: Showing 1 Customer Reviews

If you find inappropriate content, please report it to Barnes & Noble
Why is this product inappropriate?
Comments (optional)