Radicals for Capitalism - Part II
Independence is a Virtue
On July 26, 2025, Forbes published a review written by John Tamny of my book, The Moneyball Method. It was also published on July 18, 2025, at RealClearMarkets.com. This brief essay will focus on a quote from their twenty-fourth paragraph:
The question itself (risk tolerance) would elicit as many answers as there are people, along with wildly different answers from those same people depending on the direction of the stock market. Which seemingly helps this reviewer to provide a simplified approach to Shupe’s more detailed technique. Put in Moneyball terms, how to avoid getting outs? Or per Munger, how to be “consistently not stupid.”
In the previous essay, “risk capacity” was introduced as an objectively derived measure of your ability to absorb market volatility. In contrast, Tamny accurately describes “risk tolerance” as subjectively derived: “depending on the direction of the stock market.” That is because when market trends are up, risk tolerance tends to go up; when values are falling, risk tolerance goes down.
Put another way, when stock market values are rising, you (advisor or investor) are a genius. When they fall, everyone else (your advisor or other investors) is to blame. In contrast, dealing with root causes and fundamentals is radical, by definition - and a big step toward independence.
But how? In personal finance terms, the answer to the questions: “how to avoid getting outs” and “how to be consistently not stupid,” can be found in “how to gain independence.” That is the goal, but first we must define “independence,” and there is no better source than novelist and philosopher Ayn Rand, “Live and act within the limit of your knowledge and keep expanding it to the limit of your life. Redeem your mind from the hockshops of authority.”
In financial terms, those “hockshops of authority” reveal themselves in behavioral finance theory, inefficient market theory, forward-looking assumptions, manager outperformance, reversion to the mean, and negative “externalities.”
Taken separately, they have internal contradictions. Taken as a whole, they do not meet your need and your right to live the one life you have with confidence. The “hockshops of authority” may attempt to replace reason with conditioned responses and capitalism with collectivist ideals, but you have a choice. You have alternatives. You have judgment.
And you have the knowledge of introspection that leads to the defined goals and aspirations that become your new investment performance benchmark. But it is Rand’s first sentence, “keep expanding it to the limit of your life,” that is essence of The Moneyball Method.
To learn more about becoming a radical for capitalism, please click the link below:
https://www.amazon.com/Moneyball-Method-Middle-Class-Manifesto-Objective/dp/1696009111/