John Maynard Keynes’ Thoughts On Investing & Speculation
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John Maynard Keynes was an English economist. He put forward a new school of thought in the field of economics known as Keynesian economics. He is the author of “The General Theory of Employment, Interest and Money” published in 1936 which has deeply changed the economic policies and the way the government spends.
Even though, Keynes was a prominent economist, he was also a successful investor. In his early investing career, he used market timing strategy at which he failed miserably. After that, he became the practitioner of value investing strategy.
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Here are some of the thoughts (quotes) by John Maynard Keynes regarding investment and speculation.
Investing Quotes By Joh Maynard Keynes
“The central principle of investment is to go contrary to the general opinion, on the grounds that if everyone agreed about its merits, the investment is inevitably too dear and therefore unattractive.”
“Investing is an activity of forecasting the yield over the life of the asset. Speculation is the activity of forecasting the psychology of the market.”
“Successful investing is anticipating the anticipations of others.”
“Markets can remain irrational longer than you can remain solvent.”
“Day-to-day fluctuations in the profits of existing investments, which are obviously of an ephemeral and non-significant character, tend to have an altogether excessive, and even an absurd, influence on the market.”
“It is the duty of the long-term investor to endure great losses with equanimity.”
“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”
“The actual results of an investment over a long term of years very seldom agree with the initial expectation.”
“When the facts change, I change my mind.”
“There is no clear evidence from experience that the investment policy which is socially advantageous coincides with that which is most profitable.”
“The difficulty lies, not in the new ideas, but in escaping from the old ones.”
“If farming were to be organized like the stock market, a farmer would sell his farm in the morning when it was raining, only to buy it back in the afternoon when the sun came out.”
“It might have been supposed that competition between expert professionals, possessing judgment and knowledge beyond that of the average private investor, would correct the vagaries of the ignorant individual left to himself. It happens, however, that the energies and skill of the professional investor and speculator are mainly occupied otherwise. For most of the person are, in fact, largely concerned, not with making superior long-term forecasts of the probable yield of an investment over its whole life, but with foreseeing changes in the conventional basis of valuation a short time ahead of the general public. They are concerned, not with what an investment is really worth to a man who buys it “for keeps”, but with what the market will value it at, under the influence of mass psychology, three months or a year hence. “
“Professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that teach competitor has to pick not those faces which he himself finds prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view. It is not a case of choosing those which, to the best of one’s judgement are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be.”
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