Keynes as a Trader in Commodity Futures

Maria Cristina Marcuzzo and Eleonora Sanfilippo ()
Additional contact information
Eleonora Sanfilippo: University of Cassino and Southern Lazio

A chapter in Financial Markets in Perspective, 2022, pp 61-81 from Springer

Abstract: Abstract While Keynes is known for his theory of normal backwardation in futures markets, he is less known as a trader in these markets. The question arises whether his theory acted as a guide to his trading activity or, rather, whether it was his trading activity that shaped his theory. Backwardation was not viewed by Keynes as a permanent feature of futures market, but rather a situation which comes about only if prices do not increase by more than the risk premium and only when supply and demand are balanced. For the speculator, it will not be sufficient to pursue a constant strategy of being systematically long, as it would be the case if backwardation were the norm. Keynes’s activity shows that he did not act upon the assumption that backwardation was “normal,” but he engaged actively in collecting market information and assessing supply and demand conditions acting as an informed trader. But knowledge and information are by definition limited, and this may explain why his performance in commodity futures was not as stellar as is commonly believed. We provide evidence of his behavior, looking at his dealings in wheat, cotton, and tin which were the commodities in which he traded mostly.

Date: 2022
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:spshcp:978-3-030-86753-9_4

Ordering information: This item can be ordered from
http://www.springer.com/9783030867539

DOI: 10.1007/978-3-030-86753-9_4

Access Statistics for this chapter

More chapters in Springer Studies in the History of Economic Thought from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().