Justyn Walsh - Investing with Keynes: How the Worlds Greatest Economist Overturned Conventional Wisdom and Made a Fortune on the Stock Market

Investing with Keynes

How the world's greatest economist overturned conventional wisdom nad made a fortune on the stock market

Justyn Walsh

PRAISE

A fascinating account of Keyness career as an investor. It shows very well the link between Keyness experience as an investor, speculating on the markets, and his theory. As an investor Keynes became more and more aware of the markets uncertainty and volatility.

Lord Robert Skidelsky, acclaimed biographer of Keynes

Provides an opportunity to reflect on what made Mr Keynes also arguably the most astute observer of the investment game that ever lived.

Financial Times

Fascinating what the managers of endowment funds can learn from Keynes doing the same job.

Venture capitalist and entrepreneur Marc Andreessen

INVESTING WITH KEYNES

Pegasus Books, Ltd.

148 West 37th Street, 13th Floor

New York, NY 10018

Copyright 2021 by Justyn Walsh

First Pegasus Books edition March 2021

All rights reserved. No part of this book may be reproduced in whole or in part without written permission from the publisher, except by reviewers who may quote brief excerpts in connection with a review in a newspaper, magazine, or electronic publication; nor may any part of this book be reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, mechanical, photocopying, recording, or other, without written permission from the publisher.

Jacket image/design courtesy of Black Inc.

Library of Congress Cataloging-in-Publication Data is available.

ISBN: 978-1-64313-756-8

Ebook ISBN: 978-1-64313-757-5

Distributed by Simon & Schuster

www.pegasusbooks.com

For Joe, Tom, Dan & Ada

JOHN MAYNARD KEYNES CONFERRED a distinct glamor on the dismal science of economics. He was a Cambridge don, key member of the Bloomsbury set, best-selling author, husband of a world-famous ballerina, father of modern macroeconomics, valued government adviser, ennobled member of the House of Lords, and midwife to the IMF and the World Bank. His bracing response to the doldrums of the Great Depression The patient needs exercise, not rest heralded the Keynesian era of managed capitalism and pump-primed Western economies. Renowned almost as much for the variability of his opinions as for the vigor, style, and intelligence with which they were advanced, Keynes delighted in assaulting conventional wisdom and deployed pungent prose as his weapon of choice.

Despite affecting an aristocratic disdain for the profession of money-making, Keynes was also an incredibly successful stock market investor. At the time of his death, his net worth largely accrued through his investment activities and supplemented by judicious art purchases amounted to the present-day equivalent of $30 million. The Cambridge college fund administered by Keynes recorded a twelve-fold increase in its value while under his stewardship, a period during which the broader market averages failed even to double. In his role as chairman of one of Britains most venerable life assurance companies his speeches were, according to a journalist at the time, so highly regarded by the City that his prediction of a trend was enough to jiggle the stock market. Keynes was that rarest of beasts an economist who, having clambered down from his ivory tower, mastered the financial markets in practice as well as in theory.

Notwithstanding his financial success, one might reasonably query how an analysis of Keynes stock market techniques can profit the modern investor. Keynes was, after all, a child of the Victorian era and died three-quarters of a century ago. He lived in a different, more decorous time than our own Keynes could have been describing himself when he conjured the image of the inhabitant of London sipping his morning tea in bed, languidly contemplating whether to adventure his wealth in the new enterprises of any quarter of the world. He invested in whaling companies and other now-defunct industries, and was directed by editors to ensure that his magazine articles were of sufficient length to allow readers to work through at least three glasses of port. Redolent as he is of another age, is there anything to be gained from an appraisal of Keynes investment principles in this era of day traders, delta ratios, and dot-coms?

The answer, perhaps surprisingly, is a resounding yes. After a couple of false starts, Keynes alighted on a set of precepts that won him singular stock market success. In the twilight of his long investment career, he declared with characteristic immodesty that:

the financial concerns where I have had my own way have been uniformly prosperous My difficulties in financial quarters all through have been the difficulty of getting unorthodox advice accepted by others concerned.