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Investing and economics
How prices form, why markets get it wrong, and what not knowing that costs you.
14 ideas · 12 min
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Philosophy
Intelligence analysis
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The reading track
14 lessons
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All authors
Adam Smith · 2
John Maynard Keynes · 2
01
Collective decisions can be more accurate than individual ones, but only if the group is diverse, independent, and decentralized.
The Wisdom of Crowds · James Surowiecki · 2004
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02
When each participant pursues his own interest in a free market, the aggregate result can serve society better than the declared intention of any single actor.
An Inquiry into the Nature and Causes of the Wealth of Nations · Adam Smith · 1776
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03
The comfort of long-run explanations helps no one who must decide now: economic policy and choices are judged by what they do in the present storm, not by the equilibrium beyond it.
A Tract on Monetary Reform · John Maynard Keynes · 1923
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04
Galbraith names the bezzle: the stock of undiscovered fraud and abuse that grows in good times and is suddenly exposed when the cycle turns.
The Great Crash 1929 · John Kenneth Galbraith · 1955
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05
The price of a financial asset should reflect the future income streams it will generate, not just speculative market movements.
The Theory of Investment Value · John Burr Williams · 1938
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06
Relevant economic knowledge is dispersed across millions of minds and can never be gathered in one place; the price system is the mechanism that transmits these scattered fragments.
The Use of Knowledge in Society · Friedrich A. Hayek · 1945
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07
Bubbles spread not through numbers but through social comparison: the discomfort of falling behind someone close pushes you in late and dear.
Manias, Panics, and Crashes: A History of Financial Crises · Charles P. Kindleberger · 1978
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08
Your mind has two ways of thinking — one fast and instinctive, one slow and careful — and the fast one often tricks us without our noticing.
Thinking, Fast and Slow · Daniel Kahneman · 2011
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09
The most important events in history are rarely the predictable ones — they are the huge, rare surprises nobody saw coming.
The Black Swan · Nassim Nicholas Taleb · 2007
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10
A community can manage a shared resource — a forest, an irrigation canal — together, without needing either the state or a single private owner.
Governing the Commons · Elinor Ostrom · 1990
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11
The baker does not make your bread out of kindness but for his own profit — and that self-interest, through the market, ends up feeding the whole town.
The Wealth of Nations · Adam Smith · 1776
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12
When people get scared and suddenly stop spending, the economy can get stuck at a low level, and the government can help by spending itself.
The General Theory of Employment, Interest and Money · John Maynard Keynes · 1936
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13
When a single government tries to plan every detail of the economy, it risks gathering so much power that ordinary people's freedom shrinks step by step.
The Road to Serfdom · Friedrich Hayek · 1944
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14
People buy expensive things not because they are better, but to show they have money.
The Theory of the Leisure Class · Thorstein Veblen · 1899
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