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The investment method of Sir John Maynard Keynes

The investment method which mad Keynes rich, was the fundamental method of value investing. He focused on the income of companies. Besides that, Keynes only invested in companies with a true competitive advantage. Keynes thought that companies should be able to secure their income over long periods of time.

Keynes was also not blind for the current sentiment. He invested against the current sentiment, and thus was a contrarian investor. He bought the companies that were unpopular at that moment, and did not even look at the popular companies. He thought that the popular companies were too expensive.
In 1938, Sir John Maynard Keynes wrote his manifesto for successful investing:

Select a limited number of investments carefully. These investments should have a low valuation relative to their intrinsic value and probable value over time. Compare these investments with alternative investments. Keep a firm stance on your investments. Hold the selected investments through good and bad times, until the promise of value is met or it is clear that you have done a bad investment. Build a balanced portfolio. Balance the different and preferably opposite risks.

Another aspect that Keynes was aware of, was the dividend yield. Companies that paid a high dividend, were Keynes' favorite.

As mentioned, Sir John Maynard Keynes was not a trader in his later days. He hold on to companies he thought were undervalued, even when the price went down. Keynes also limited his investments to companies of which he understood the revenue model. He did not believe that dividing his money over more investments would reduce the risk he would run.

The above mentioned investment method made Sir John Maynard Keynes one of the most successful investors ever.
On this site, you can find tools that can help you to invest just like Sir John Maynard Keynes did:

Compare the dividend yield of companies. Compare the intrinsic value of companies against the actual value. Calculate the probable future value of a company.

If Keynesians Are Against Speculation Then How Come Keynes Was a Speculator?
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One of the more tiresome tropes of current times is that speculation is in some sense bad. The argument tends to come from those who would consider themselves Keynesians. Theres this good stuff, investment, which means putting money into building something real and new. Then theres speculation which is just the buying and selling of second hand stocks or bonds. As theres no new money going into anything then this is bad and should be stopped or at least heavily regulated. The problem with this as a Keynesian argument is that Keynes himself was very definitely a speculator. Indeed, we could in fact call him one of the firsthedge fund managers.
The macroeconomics of John Maynard Keynes continue to dominate the global economic policy debate to this very day. But many have forgotten that the great intellectual was also one of the most active investors of his era. He made and lost several fortunes, for himself, his friends, his college (Kings, Cambridge) and for City institutions which he chaired or founded. In some respects, he was an early hedge fund investor, first in macro in the 1920s, and then in equities in the 1930s. He ended as one of the most successful investors of the first half of the last century, but along the way he learnt many lessons which resonate to this day.

Theres more to it than that as well. He invented some of the techniques which those much loathed hedge funds use today:
He also identified other risk premiums which have since proven durable, by investing mainly in small- or midcap stocks, high-dividend payers, and other value stocks. He became a contrarian investor, mainly buying stocks which had recently underperformed the general market. He used leverage, but by now applied concerted discipline to contain his risks. Many of these techniques are used by the most successful equity long/short funds today.

The truth is that theres nothing inherently wrong with speculation at all. Indeed, Adam Smith takes some pages to point out how much we prosper as a result of wheat merchants speculating in the price of wheat. What is actually happening in this confusion between investment/speculation and the identification with Keynesian ideas is that its actually nothing at all to do with Keynes.

Theres a large population of people who comment upon economics without actually being economists: Im one of them. And in this population theres always a temptation to identify what you believe to be true for other reasons with the gurus of your sort of economics. Keynes is much more popular with those on the left of the political aisle than he is with those on the right (please note, this is not about economists, there are plenty of right economists who are quite happy with the modern versions of Keynesianism, indeed have helped develop it). The idea that investment good, speculation bad is similarly more popular as one moves left. But theres no connection between that idea and Keynes economics. The two just happen to be believed by the same sort of people and thus one is ascribed to the other.

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