John Maynard Keynes is one of the greatest economists of all times. While he is mostly known for his highly influential economic theories, little is known about his market experience, often understated, but which provides a unique contribution to the future practice of investment management…
>To start with:
get an idea of Keynes view on “Mr. Market”: Robert Shiller applying Keynes’s beauty contest metaphor to the 2011 market volatility
“The … best explanation for the market’s back-and-forth swings is that each day we are conducting a Keynesian beauty contest, and reassessing what others think that still others are thinking.” (economistsview.com)
His investment style evolved through time…
“Before the crisis of 1929, Keynes was a speculator, a gambler […] After the crisis, Keynes became a value investor. “ (skuzet.nl)
“Such great investors as Benjamin Graham, Peter Lynch, John Templeton and Warren Buffett beat the market by an annual average of three to 13 percentage points over their careers. Most of them, however, didn’t have to cope with the Great Depression or World War II.” (wsj.com)
Keynes: An Innovator
“Any £100 Keynes invested at the outset would have been worth £1,675 by his death 22 years later… […] The same money invested in an index of UK stocks would have grown £424.” (ft.com)
“Although his estate was worth at least $22 million (in 2013 dollars) when he died, his contribution to the arts, modern economics and a more stable global economic climate is incalculable.” (res.org.uk)
Nb: this does not include his extensive collection of artwork (encompassing artists such as Matisse, Seurat and Picasso) and rare manuscripts
Keynes: A Pioneer
“He learned that this stuff he called ‘animal spirits’ you couldn’t predict” (marketwatch.com)
”Keynes anticipated Eugene Fama, the 2013 Nobel Economics Prize co-winner, in that he clearly did not believe that stock prices must be good indicators of fundamental value” (nytimes.com)
Keynes in Today’s environment: “Would Keynes Have Been Fired as a Money Manager today?”
“ Short-termism and status quo are so widely practiced in the institutionalized world of investing that it’s highly unlikely that investors would have the requisite patience to stick with someone like Keynes today” (awealthofcommonsense.com)
> to Sum up:
12 quotes from Keynes summing up his investment philosophy
[#11: “When the facts change, I change my mind. What do you do sir?”] (25iq.com)
Lessons to be learned from Keynes as Investor
“He did not believe that markets were efficient” (cfainstitute.org)
=> for more detailed & comprehensive material:
“Intelligent investing ultimately depends on having an intelligent theory of the economy. This story of Keynes’s life as an investor illustrates this beautifully.” – Robert Shiller
• Academic Paper – Keynes the Stock Market Investor: A Quantitative Analysis
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