The Dao of Capital: Austrian Investing in a Distorted World

Chapter Two

The Forest in the Pinecone

The Roundabout and the Logic of Growth

In Everett Klipp’s last years, I made a point to visit him whenever I passed through Chicago. I would always try to bring him books, ranging from Austrian economics (for which he not surprisingly seemed to have a natural affinity) to probability (which often made no practical sense to this intuitive old grain trader). As we sat and talked (typically with his golf on in the background—for mood), our conversations were punctuated by his favorite sayings—the “Klippisms” that I had heard so many times before. Since leaving the pit, however, one adage in particular took on greater meaning and resonated more deeply with me, despite its banality: “Anyone can see the pinecones in the tree. None can see the trees, none can foresee the forest in the pinecone.”

In this simplest of sayings, once again, was Klipp’s great disdain for focusing only on the immediate, the tangible, the seen. And in it was also a dramatic story of struggle and conquest. Indeed, from the single cone to the finite numbers produced now, the immediate pales in comparison with all the trees to follow, and then all the pinecones produced by those new trees, and so forth. We shift our sights beyond only what is visible now—a pinecone—to the seedling, the seedpod-producing conifer, and eventually the forest of “look-ahead trees,” over many iterative generations unfolding from countless changing environments and intertemporal ebbing and flowing ...