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To: Ilaine who wrote (106909)	6/6/2001 1:40:11 PM
From: yard_man	Read Replies (1) \| Respond to of 436258

I was talking about the definition of malinvestment with respect to Austrian Economic thought -- it's not about pieces of paper or even claims on assets -- it's about the direction (or allocation) of productive economic resources -- whether and to what extent those directions (or allocations) are adversely affected by monetary policy. that's the issue when Tice, Noland or somebody discusses the term malinvestment in that context That's why I said you misunderstand the term as it is used in the common parlance ... Nevermind ...

To: Ilaine who wrote (106909)	6/6/2001 1:40:45 PM
From: yard_man	Respond to of 436258

I was talking about the definition of malinvestment with respect to Austrian Economic thought -- it's not about pieces of paper or even claims on assets -- it's about the direction (or allocation) of productive economic resources -- whether and to what extent those directions (or allocations) are adversely affected by monetary policy. that's the issue when Tice, Noland or somebody discusses the term malinvestment in that context That's why I said you misunderstand the term as it is used in the common parlance ... Nevermind ...

To: Ilaine who wrote (106909)	6/6/2001 3:05:47 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 436258

CB - ...I think you are setting up a false dichotomy. Buying "securities" isn't buying pieces of paper, it's buying a share of a going concern, a business.... As Tippet noted, he was referring to business investment from an Austrian viewpoint. Buying securities is similar in many ways, but is also fundamentally distinct. First, unless you are making an IPO investment, or subscribing to a secondary offer, you are NOT investing (in the enabling sense) in a business venture per se, but rather making a side bet in a related, but different, game. If you day trade stocks, this is a zero sum game, negative sum including transaction and other costs. This doesn't mean that it isn't the greatest thing since sliced bread, just that you need to find a continuing supply of losers to take advantage of. If you buy stocks with the intent to hold them for an extended (undefined) period of time, this CAN be a positive sum game, but it requires value judgements that relate current market prices to both future prices and future business results. Even ignoring market price action, an investment in a stock whose price is so high that your future share of earnings (loosely defined) represents a less than risk-free return is a failure. The source of the potential positive returns is due both to the future business earnings and to the supply of insider stock on to the market at a discount, at least if the market insists on one. This is the result of the diminishing subjective marginal utility of the large holdings of the insiders, as compared to initial zero holdings, and higher valuations, of public investors. This is the purpose of the stock market, both day traders and investors, to provide a liquid sink for insider shares, at least potentially at good value. Regards, Don