TIP794: Keynes And The Markets w/ Kyle Grieve

You're listening to TIP. John Maynard Keynes compounded capital at roughly 16% per annum for over two decades, beating the broader UK index by nearly 6% annually during that stretch. But probably the most incredible part of this was that he achieved those returns while navigating some of the most tumultuous times in human history. He did this through the end of World War I, the Great Depression, and all of World War II. He had to not only figure out which businesses were good, but also which would survive potential damage to their operations, all while trying to withstand the volatility that the market would throw at him during peak periods of uncertainty.

In today's life, most of the uncertainty that we face stems from factors such as interest rates and inflation. Keynes had to deal with the uncertainty of whether his country would still exist or whether a manufacturing plant would be bombed out and no longer able to produce any revenue. But most investors don't really think of Keynes in this light. They think of him as an economist who had a large impact on economics and then just stop there. But in reality, Keynes developed some of the most impactful investing concepts much earlier than most of the investing legends that we discussed on this show.

But because many of his concepts are just, you know, buried in boring old economic textbooks, they aren't widely known to the general investing community. Another often cited problem with Keynes was that he went broke twice, and while these two events were obviously very painful for him, I also think that they were basically his tuition to help him understand that he just couldn't rely on his great intellect to deliver meaningful and sustainable returns. As a result of reflecting on this, he drastically evolved his thinking about time horizons and went from trying to generate returns you know, as fast as possible, to understanding that the key to investing success was lengthening his holding periods and avoiding the overactivity that just plagues the average investor. Some of the biggest gifts that he had to the investing world were around understanding that markets are largely social systems.

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