Outside Economics

Insider’s Clever Quotes From Wall Street

Posted by Wendell Brock, MBA, ChFC on Fri, May 19, 2017

“Nothing can make the spirit fly higher than finding a bargain when you’re the buyer. And nothing can make the spirit sink deeper than finding it later a whole lot cheaper.” Has been one of my favorite sayings over the years. A few years ago I submitted that saying to my friend, Mark Skousen who was writing a book, The Maxims of Wall Street. Maxims of Wall Street.jpg

I went a few months ago to listen to Mark speak at a conference and to my surprise he quoted this saying in his presentation; he told my he uses it in all his presentations now and always gets a good laugh! (It's very important for an economist to get a laugh!)

Mark is considered to be one of the top twenty economists in the country, and is frequently interviewed by various news outlets on economic issues. 

This book is full of whit and wisdom from many of Wall Street’s finest investors, some of our nations greatest thinkers, and many brokers is a fun read. Many of the sayings are very true and others are … clever old sayings.

Some sections include: How to Make a Million, Market Timing, Bargain Hunting, Contrary Investing, Only a fool holds out for top dollar, Risk and Reward, Leverage and Debt, Fear and Greed, you get the idea. If there was a Maxim on Wall Street it is in the book.

Allow me to entertain you with a few exerts from his book:

“A mariner does not become skilled by always sailing on a calm sea.” - Heber J. Grant

“The market does what it should do, but not always when.” - Jesse Livermore

“I am often in error, but seldom in doubt.” - Ira Cobleigh

“One of the most dangerous enemies to a trader is a magnetic personality.” - Edwin Lefevre

“A trend in motion stays in motion, until it stops.” - Jim Dines

“Don’t confuse brains with a bull market.” - Humphrey B. Neill

“If you are a long term investor, you will view a bear market as an opportunity to make money.” - John Templeton

“Haste makes waste.” - Ben Franklin

“You should give your kids enough money to do anything but not enough money to do nothing.” - Warren Buffett

“Bad news travels faster than good news.” - Poor Richard’s Almanac

Now that you have a feel for what is in the book - go get a copy! 

Wall Street and the entire financial industry has certainly produced some interesting characters over the years. I don’t recall promoting or reviewing a book before on my blog, so let me know what you think? Some maxims are true while others are false, which adds to the humor of this book. The maxims clearly provide a little insight into the person who said it. You can get a copy of Mark’s book by clicking here. It certainly is a fun read!



"The worst thing that can happen to an investor is to make money on his first trade. He thinks investing is easy."

- Mark Skousen

Topics: Economists, Wall Street, Mark Skousen

John Smith the First Economist in America

Posted by Wendell Brock, MBA, ChFC on Wed, Nov 26, 2014

As this week is Thanksgiving, I thought I would write aboutone of our first settlers in America, whose influence on America has been profound. John Smith's impact has been felt both in the American spirit as well as in the American economy. We are all familiar with the story of John Smith being saved by Pocahontas, but this is just one of many examples of his narrow escapes and the influence these experiences gave him in becoming a great leader.

john-smith-portraitJohn Smith was born in 1580, near the bottom of the social scale in Willoughby, England. His father was a farmer, which was one level above being a peasant. He was able to attend grammar school in his youth. He had no desire to remain a farmer and even tried to run away when he was 13. His father eventually made him an apprentice to a merchant. He was miserable, and could see little way to break free of the feudal institutions so strongly in place in those days.

After a year or two of being an apprentice, his father died. This bittersweet event allowed John Smith to leave the merchant and pursue the one door open to his ambitious, adventure-craving spirit: the military. During his time in the military, he rose quickly to rank and earned the respect of the men he fought with and for. After a few years, he went home and studied military arts and eventually returned to fight again.

By the time he was in his early twenties, he had fought in many battles, rising to the rank of a captain, and honored by princes and kings for incredible acts of bravery; he had been robbed and beaten and left for dead in the forests of France; he had been thrown overboard a ship, Jonah-like, only to be rescued later by another ship whose captain happened to have friends in common with John Smith and therefore treated him well; he had toured Rome and met the Pope; he had been captured in battle and sold as a slave, and eventually regained his freedom and made it back to England just in time to sail to America.

Clearly John Smith had not only lived a life of adventure, but he had experienced every economic situation that is possible to experience! These experiences laid the foundation for him to be the right man, at the right time, in the right place to give success to the Jamestown settlement.

The bylaws of the Jamestown settlement were set by the financiers of the trip. They put in place a system, not unlike communism, whereby everyone was rationed the same, whether they worked or not. The environment was harsh and untamed. The provisions were meager. Many settlements had tried and failed in the hundred plus years between Columbus and Smith. If Jamestown had maintained these practices, it is probable it would have met with the same fate as so many settlements had previously. But there was something in John Smith that became the catalyst for success in Jamestown!

The settlement was in constant need of replenishing men and supplies from England. The first year saw a 60% casualty rate! The provisions were never enough, which led to a perpetual need to trade with the Indians, which had its own inherent risks!

As John Smith later reflected on those early days, he observed, “Glad was he (who) could slip from his labour, or slumber over his taske he cared not how, nay, the most honest among them would hardly take so much true paines in a weeke, as now for themselves they will do in a day.” He had keen insight into human nature and knew that, even though in theory equal pay sounded good, in practice it was leading to disaster! John Smith finally decided it was time to abandon the bylaws that had been instituted by the financiers of Jamestown. With a musket in hand, John Smith boldly declared that anyone who did not work, would not eat! This basic fundamental economic principle is why I call him the first Economist in America.

The financiers eventually realized the flaw in their bylaws and officially abandoned communism. In its place they allowed the settlers private property rights as well as the ability to live by their own initiative. Something amazing began to happen in Jamestown! All those who eagerly embraced these new laws began to flourish and prosper. They improved their situation so well that word spread back to England and America began to be settled!

When John Smith came to America, he realized the two profound opportunities this land had to offer: Freedom of economic movement and the ideal of liberty! These two principles were the basis for what made America great and were cannonized in the Declaration of Independence and the US Constitution.

“Here (in New England) every man may be master and owner of his owne labour and land; or the greatest part in a small time. If he have nothing but his hands, he may set up his trade; and by industrie quickly grow rich...

“Therefore let all men have as much freedome in reason as may be, and true dealing, for it is the greatest comfort you can give them, where the very name of servitude will breed much ill bloud, and become odious to God and man.”

This vision of what America could become for mankind was indeed the catalyst that allowed America to grow, flourish and prosper! At this Thanksgiving time, let us remember the ideals and visions of those who came before and as we give gratitude for the many blessings we have, let us also promise in our hearts to do our part to maintain their inspired ideals! Happy Thanksgiving!

Love and Hate in Jamestown by David A. Price
The Majesty of God's Law by Cleon Skousen
Quotes from:
Description of New England by John Smith
Generall Historie by John Smith

Topics: Economists, America, Thanksgiving

Economic History - Lessons To Learn

Posted by Wendell Brock, MBA, ChFC on Thu, Jul 17, 2014

The Fed and the politicians as well as many modern economists featured in the main stream media continually hearken back to the Great Depression, as if that is the only time in history our country went through a decline in the economy. There have been other depressions that are noteworthy examples to compare and contrast with the Great Depression. Perhaps there is some instruction we can glean from the depression of 1920-21.220px Warren G Hardiing 1923 Issue 2c

This time period is continually ignored by the powers that be because it proves the absurdity of their policies. The conventional wisdom holds that without government countercyclical policy, whether fiscal or monetary (or both), we cannot expect economic recovery—at least, not without an intolerably long delay. Yet the very opposite policies were followed during the depression of 1920–21, and recovery was in fact quite swift.

That particular depression, although short lived, was as difficult and as steep in it's slump as that of the years of 1929-33. The simple difference is that it ended quickly. Here are some of the stats from that time period: From the spring of 1920 to summer 1921, nominal GDP fell by 23.9%, wholesale prices by 40.8% and the CPI by 8.3%. Unemployment topped out at about 14% from a preceding low of as little as 2%.

The depression also saw an extremely sharp decline in industrial production. From May 1920 to July 1921, automobile production declined by 60% and total industrial production by 30%. At the end of the recession, production quickly rebounded. Industrial production returned to its peak levels by October 1922. The AT&T Index of Industrial Productivity showed a decline of 29.4%, followed by an increase of 60.1% – by this measure, this depression of 1920–21 had the most severe decline and most robust recovery of any between 1899 and the Great Depression.

The climate was terrible for businesses – from 1919 to 1922 the rate of business failures tripled, climbing from 37 failures to 120 failures per every 10,000 businesses. Businesses that avoided bankruptcy saw a 75% decline in profits.

It is instructive, as well, to compare the American response in this period to that of Japan. In 1920, the Japanese government introduced the fundamentals of a planned economy, with the aim of keeping prices artificially high. According to economist Benjamin Anderson, “The great banks, the concentrated industries, and the government got together, destroyed the freedom of the markets, arrested the decline in commodity prices, and held the Japanese price level high above the receding world level for seven years. During these years Japan endured chronic industrial stagnation and at the end, in 1927, she had a banking crisis of such severity that many great branch bank systems went down, as well as many industries. It was a stupid policy. In the effort to avert losses on inventory representing one year’s production, Japan lost seven years.”

The U.S., by contrast, allowed its economy to readjust. “In 1920–21,” writes Anderson, “we took our losses, we readjusted our financial structure, we endured our depression, and in August 1921 we started up again. . . . The rally in business production and employment that started in August 1921 was soundly based on a drastic cleaning up of credit weakness, a drastic reduction in the costs of production, and on the free play of private enterprise. It was not based on governmental policy designed to make business good.”

Instead of “fiscal stimulus,” President Warren Harding cut the government’s budget nearly in half between 1920 and 1922. The rest of Harding’s approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third. The Federal Reserve’s activity, moreover, was hardly noticeable. As one economic historian puts it, “Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction.” By August of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and was only 2.4 percent by 1923.

The federal government did not do what Keynesian economists ever since have urged it to do: run unbalanced budgets and prime the pump through increased expenditures. Rather, there prevailed the old-fashioned view that government should keep spending and taxation low and reduce the public debt.

Those were the economic themes of Warren Harding’s presidency. In his 1920 speech accepting the Republican presidential nomination, Harding declared:

“We will attempt intelligent and courageous deflation, and strike at government borrowing which enlarges the evil, and we will attack high cost of government with every energy and facility which attend Republican capacity. We promise that relief which will attend the halting of waste and extravagance, and the renewal of the practice of public economy, not alone because it will relieve tax burdens but because it will be an example to stimulate thrift and economy in private life.

“Let us call to all the people for thrift and economy, for denial and sacrifice if need be, for a nationwide drive against extravagance and luxury, to a recommittal to simplicity of living, to that prudent and normal plan of life which is the health of the republic. There hasn’t been a recovery from the waste and abnormalities of war since the story of mankind was first written, except through work and saving, through industry and denial, while needless spending and heedless extravagance have marked every decay in the history of nations.”

It is hardly necessary to point out that Harding’s counsel—delivered in the context of a speech to a political convention, no less—is the opposite of what the alleged experts urge upon us today. Inflation, increased government spending, and assaults on private savings combined with calls for consumer profligacy: such is the program for “recovery” in the twenty-first century.

Not surprisingly, many modern economists who have studied the depression of 1920–21 have been unable to explain how the recovery could have been so swift and sweeping even though the federal government and the Federal Reserve refrained from employing any of the macroeconomic tools—public works spending, government deficits, inflationary monetary policy, TARP, bailouts, QE—that conventional wisdom now recommends as the solution to economic slowdowns. The Keynesian economist Robert A. Gordon admitted that “government policy to moderate the depression and speed recovery was minimal. The Federal Reserve authorities were largely passive. . . . Despite the absence of a stimulative government policy, however, recovery was not long delayed.”

While there were many problems with Harding's presidency, his counsel applies to us today just as much as it did back back then. Sound fiscal policies, whether in government or in our homes require us to practice the principle of thrift and sacrifice; to learn to live a more simplified life, with less extravagance, and to live within our means.

What do you think about the solutions the Fed and the politicians are offering us today? Do you see ways we can return to the wisdom of the past? Join in the discussion with your comments.

Topics: Economy, Economists, Great Depression


Wendell W. Brock, MBA, ChFC

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