On Keynes as an investor

J. E. Woods

Cambridge Journal of Economics, 2013, vol. 37, issue 2, 423-442

Abstract: As Keynes himself admitted in 1938, his approach to portfolio management changed dramatically during the course of his career. He abandoned 'speculation' in favour of 'investment'—namely, a 'careful selection of a few investments … having regard to their cheapness and potential intrinsic value over a period of years ahead'. In other words, he was applying the margin of safety, a concept we particularly associate nowadays with Benjamin Graham, who incorporated it inter alia into his magnum opus of 1934, Security Analysis. An examination of the writings of Keynes, on the one hand, and Graham, on the other, reveals considerable overlap between, not to say unity of, their respective conceptions. Such is their complementarity that it is reasonable to speak of a Keynes–Graham schema. We conclude that this is the natural starting point for the 2011 Kay Review of UK Equity Markets, as it should have been for The Myners Review of UK Institutional Investment a decade ago. Copyright , Oxford University Press.

Date: 2013
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