phyllostachys ten: John Maynard Keynes

An acquaintance at the public health club where I swim asked me "who do you think are the greatest investors?" My answer was that other than an investing great like Warren Buffett, I'd say someone who has amassed wealth by investing time, sweat and money in building their own company - Bill Gates, Steve Jobs and Larry Ellison all jump to mind. My acquaintance asked if I'd heard of Keynes.

Well-read investors should have heard of Keynes...and I have, having first been introduced to him by Louis Rukeyser's book-on-tape series on the history of Economics. Keynes was the British Economist known primarily for developing the policies that most readily led the US and Britain out of the woods after the "Great Depression" of the '30's.

According to Time Magazine:
"Keynes' basic idea was simple. In order to keep people fully employed, governments have to run deficits when the economy is slowing. That's because the private sector won't invest enough. As their markets become saturated, businesses reduce their investments, setting in motion a dangerous cycle: less investment, fewer jobs, less consumption and even less reason for business to invest. The economy may reach perfect balance, but at a cost of high unemployment and social misery. Better for governments to avoid the pain in the first place by taking up the slack."
The Time 100

My acquaintance said that in addition to being an effective and well-respected ecomonist, was also a very successful investor. Said Keynes, "Successful investing is anticipating the anticipations of others," which is, of course, what the markets are all about - successfully navigating the torrential runs of human emotion in trading. After this conversation, I went home and did some Google searches on Keynes and investing....and found some interesting guidelines...which sounded eerily like a quote from the Oracle of Omaha. Now, of course, I cannot refind that quote...I'll relay in a later post.


On the subject of books, I noticed that my acquaintance had brought a book for reading on the treadmill. He showed me Jeremy Siegel's new book, The Future for Investors. I'd never heard of Siegel, but have since learned that he's a Wharton School finance professor who wrote Stocks for the Long Run in 1994, in which he touted that stocks have been the best investment vehicle since 1802 -- he touted this just before one of America's greatest bull markets. Siegel has his own website (see below) and was featured in a WSJ article on 05/05/05 about his new theory that retiring baby boomers will sell all their assets...and the markets won't be saved unless billions of Indian and Chinese investors step in. A controversial idea, of course....but how the heck else do you get people to argue and plan for the future? :-)


..phyllostachys.

BTW, today is the inauguration of the use of Google's adsense on this site...let's see how we do. :-)

For more on Keynes, see:
The History of Ecomonic Thought website

For more on Siegel, go to:
Jeremy Siegel's website