What Can We Learn From Keynes the Investor?

Keynes’s legacy extends beyond theory to the world of action, speculation, and ambition

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Keynes the philosopher

Keynes was the most brilliant non-economist to ever apply himself to the field of economics. His economic philosophy reflected his personal experience as a speculator and investor. Much like George Soros or Warren Buffett of today, Keynes strove for a deep and philosophical understanding of how markets operate. His practical insights into human psychology, coupled with his professional experience as a director of the Bank of England and an investor and trustee for numerous funds, produced some of the most important treatises on economics that remain the foundation of the field today.

Keynes the investor

Curiously, while Keynes was known for his macroeconomic thinking, his macro-based investment strategies did not perform particularly well. Keynes’s early forays into investing, as a trustee for his university’s endowment and as the manager of a small private fund, his top-down approach disappointed throughout the 1920s, and there is no evidence that Keynes had any market timing ability at all. With funds raised mostly from his associates in the Bloomsbury group of intellectuals, Keynes experimented with his own probabilistic models, investing like a hedge fund before the term was even used.

True knowledge comes through action

Not only did Keynes leave us with a towering economic legacy, he also gave us the foundations of a methodical, value-based investment strategy with a proven track record of success. No doubt Keynes’s attempt to develop a synthesized economic theory helped him to better understand markets, but equally his firsthand experience as a money manager and speculator surely led to some critical economic insight.

Writer and analyst based in Melbourne, Australia. Investing, markets, politics, history of economic thought. More at: https://www.gordontoy.com/

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