Brief Book Review: Keynes's Way to Wealth
Posted: Sat Dec 19, 2020 6:03 pm
I just finished reading an obscure little book called Keynes's Way to Wealth. It's an interesting little tome that examines Keynes not as the economist, but as an investor. It's especially interesting because Keynes's ideas were being tested in live fire conditions within arguably the most tumultuous time for equity markets generally. That is, the 1920s and the 1930s.
It appears that Keynes's fortunes were devastated on multiple occasions during these decades (not surprisingly). He spent much of those early years grasping around for workable ideas and an investment framework. One must remember that systematic theories of investing, especially in equities, didn't really exist at that time.
In general, Keynes started out as a cyclical macroeconomic investor, attempting to use his superior information and knowledge of the real economy and apply that to capital markets. It didn't work. He bought every commodity and exotic instrument you could imagine of the era. The markets, however, stymied him.
Eventually Keynes settled on an equity bias after reading E. L. Smith's Common Stocks as Long-Term Investments. He further then became (surprise, surprise) a value investor. His results improved tremendously as he started posting market beating returns. To be fair, those market beating returns in the 1930s often simply meant he lost less money than the market.
I thought that overall it was quite a good read. Keynes's trading records from the era are remarkably well preserved, and it's interesting to see his musings. I'd recommend the book to any of the frequenters on the forum.
I was also pleasantly surprised to see that the foreword of the book was written by none other than John C. Bogle himself!!
It appears that Keynes's fortunes were devastated on multiple occasions during these decades (not surprisingly). He spent much of those early years grasping around for workable ideas and an investment framework. One must remember that systematic theories of investing, especially in equities, didn't really exist at that time.
In general, Keynes started out as a cyclical macroeconomic investor, attempting to use his superior information and knowledge of the real economy and apply that to capital markets. It didn't work. He bought every commodity and exotic instrument you could imagine of the era. The markets, however, stymied him.
Eventually Keynes settled on an equity bias after reading E. L. Smith's Common Stocks as Long-Term Investments. He further then became (surprise, surprise) a value investor. His results improved tremendously as he started posting market beating returns. To be fair, those market beating returns in the 1930s often simply meant he lost less money than the market.
I thought that overall it was quite a good read. Keynes's trading records from the era are remarkably well preserved, and it's interesting to see his musings. I'd recommend the book to any of the frequenters on the forum.
I was also pleasantly surprised to see that the foreword of the book was written by none other than John C. Bogle himself!!
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