Quarterly Journal of Austrian Economics 20, no. 2 (Summer 2017)
ABSTRACT: In four ways, say Rapp, Olbrich and Venitz (2017), “the seeming compatibility between value investing and Austrian economics must be characterized as a myth.” I disagree. The authors’ major contention—namely that “value investing’s definition of value is fundamentally at odds with the Austrian value concept”—is demonstrably false. Using fundamental sources, none of which Rapp, Olbrich and Venitz cite, it is easy to draw a direct intellectual line from the “marginal revolution”—in which Carl Menger figured prominently—to the founder and today’s most prominent practitioner of value investing. It is quite possible that Warren Buffett has never heard of Menger or the Austrian School. Yet Buffett’s actions as an investor, like Benjamin Graham’s, demonstrate the diametric
opposite of what Rapp, Olbrich and Venitz claim. It is not a myth, it is a fact: value investors’ conception and assessment of value are congruent with the Austrian School’s.
