Friday, November 7, 2008

Keynes on Investing

I was reviewing in my journal this evening and I found a quote from John Maynard Keynes about investing in troubled markets. I think it's particularly relevant in the current circumstances.

"I feel no shame at being found still owning a share when the bottom of the market comes…I would go much further than that. I should say that it is from time to time the duty of a serious investor to accept the depreciation of his holdings with equanimity and without reproaching himself. Any other policy is anti-social, destructive of confidence, and incompatible with the working of the economic system. An investor…should be aiming primarily at long-period results, and should be solely judged by these."

While many people think they know Keynes' ideas on the role of government in the economy; not enough know about him as an investor. This speaks volumes, I think. And I think it can be used as a class-starter when studying financial markets.

Have a nice weekend.


kbaxa said...

I'm a little confused on Keynes' quote. But what I think he is trying to say is that it's our duty to invest in our market, even when we know it's not very strong. And if we do not, then our markets will never grow strong and prosperous. And finally that we have to be investing for the long run, or we will never see the results we want and again the markets will never grow.
Hopefully I'm reading that right.

But the problem is most Americans are not informed on this aspect of economics, so they will never take the risk with their money.

Tim Schilling said...

You got it. Short-sighted behavior, while it appears rational, can have negative effects for the larger economy.