 The safety of speculation …J E Woods Cambridge Journal of Economics, 2021, vol. 45, issue 5, 1069-1097 Abstract: Doubtless writing tongue-in-cheek to the Estates Committee of King’s College in 1938, Keynes remarked that it was safer to be a speculator than an investor. In the 1920s when first assuming responsibility for the College endowment, he had been a speculator, experiencing a remarkable conversion in the early 1930s to become a genuine long-term investor. Viewing the development of portfolio practice through Keynesian lenses, we demonstrate the essential continuity in conventional practice from Keynes’ time to the present day, the enduring characteristic being the treatment of uncertainty as if it were risk. Current practice is technically sophisticated, manifested in the reliance on benchmarks and risk controls to such an extent that we can refer to the fetish of benchmarking. In contrast, Keynes’ indirect, allusive, indeed elusive, approach embodies a unique insight—one that has been totally obscured by the conventional emphasis on ‘capital appreciation and depreciation generally’. Keywords: J M Keynes; Uncertainty; Risk; Speculation; Investment; Benchmarking (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:cambje:v:45:y:2021:i:5:p:1069-1097. Ordering information: This journal article can be ordered from Access Statistics for this article Cambridge Journal of Economics is currently edited by Jacqui Lagrue More articles in Cambridge Journal of Economics from Cambridge Political Economy Society Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. |
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