Customer Reviews

Keynes and the Market: How the World's Greatest Economist Overturned Conventional Wisdom and Made a Fortune on the Stock Market

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Justyn Walsh's first book is remarkably fact packed and well written. In only two hundred pages, including copious endnotes and a bibliography, it focuses on the evolution of the remarkable economist, John Maynard Keynes, as an extraordinary investor in times very much like ours. Walsh pulls together the diverse and manifold aspects of Keynes' life and personality into a surprisingly thorough portrait. As a young man Keynes quickly made a reputation in finance serving on the English delegation to the WWI peace conference. His renown soared when he quit and wrote a devastating analysis of the "peace process" correctly predicting that it would lead to disaster (WWII). This book traces his evolution from "momentum trader" and a speculator in currencies to his post-crash persona as a "value investor." As a trader, Keynes had great success but came to disaster in the Depression, where he transformed to an investor in common stocks of "intrinsic" value very similar to the Graham-Buffett approach to the market. When he died in 1946, Keynes estate totaled about $30 million in today's dollars. Along the way, he managed his college's endowment into a five-fold increase and participated in the affairs of several insurance companies and investment trusts - all this while serving his country in a variety of economic posts such as negotiating loans from the U.S. to Britain and providing significant guidance at the Bretton Woods monetary accord. While it is not a "how to" book, Keynes and the Market clearly shows the way Keynes developed his investment technique and succinctly states a number of principles and guidelines useful for today's investor. This book is a wonderful addition to the larger tomes on Keynes, such as Robert Sidelsky's. It should also be on every investor/trader's bookshelf.

This is an excellent book.The crucial divide between Keynes and the economics profession of the 1930's and 2000's was his deep understanding of the nature of the fundamental differences between decision making under conditions of uncertainty(partial ignorance) and/or ignorance(or D.Ellsberg's ambiguity or Benoit Mandelbrot's " wild " risk)as opposed to risk.Keynes understood that financial and stock markets were not efficient except under very special situations that would require an extremely heavy government regulatory apparatus aimed at minimizing the amount of speculation occurring in the financial,commodity,and stock markets over time.Keynes's formal,logical,technical mathematical analysis in the A Treatise on Probability(TP,1921;practically all of Keynes's relevant analysis was available in the fellowship dissertation that Keynes submitted to Cambridge University in 1908 ) ,that Walsh correctly describes as being understood by no more than 3 individuals,(The names of the 3 individuals were Bertrand Russell,Alfred North Whitehead and William Johnson.Unfortunately,there is only one individual alive today who understands what it was that Keynes accomplished .)allowed him to realize that the mathematical laws of the probability calculus[ the addition and multiplication rules at the heart of the " Modern " theory of finance constructed by the University of Chicago school of Markowitz,Treynor,Sharpe,Fama,Black,Merton,Scholes,etc.,as the foundation of the Efficient Market Hypothesis(EMH)] were greatly limited because no sample space of all possible outcomes or unique probability distribution could be defined in situations of partial or complete ignorance,in a world of constant,endogenous technological and financial change,which was the rule .Keynes realized that the Normal distribution, used automatically by all practitioners of the EMH in applications to financial markets ,and taught to all MBA students as " The Truth ", was NOT normal in financial markets.In fact, it was rarely the case(Here Walsh could have improved his book somewhat if he had spent some time showing the connections between J M Keynes's line of reasoning and the analysis of B Mandelbrot and N.N.Taleb).Only under conditions of risk would the EMH be a reliable theory to use to underpin financial portfolio analysis.There is no empirical,historical,or statistical support for the EMH.ALL goodness of fit tests presented in published work in the 20th century show that the probability distributions are not even half way close to being even approximately Normal .
Walsh ,similarly,shows the connections between the investment strategy and philosophy of the " later " Keynes, who had finally realized the immense damage to the economy caused by speculators, and those of Graham and Buffett( Soros is also very close to Keynes in his understanding of the impacts of uncertainty on financial decision making as well as having realized the severe damages inflicted on the economy by speculation.Both Soros and Keynes finally understood the ancient wisdom of Adam Smith in this area).

I have deducted one half star because Walsh appears not to realize that all of Keynes's insights into financial decision making arise from Keynes's discussions of decision making in the TP.Keynes was the first to put forth an explicit ,formal mathematical analysis of " safety first" considerations in decision making in chapters 26 and 29 of the TP.

As one of the above reviewers point out, you learn very little about Keynes in this book. Instead, the author puts together a hodgepodge if investment tidbits that tie very loosely together.

If you're not at all familiar w/investments, this book may be of mild interest. Otherwise, I would strongly suggest against it. I learned much more about Keynes and investing in Barton Biggs' Hedgehogging

Now that everybody seems to be a Keynesian again, the perfect time may have arrived to revisit Keynes's oft-overlooked - and wildly successful - strategies for succeeding in the stock market. This lively look at Keynes's evolution as an investor is sure to convince readers that value investing is a wise approach. With pithy language and an engaging style, investment banker and financial reporter Justyn Walsh points out that Warren Buffett isn't the only value investor worth emulating. Investors familiar with Buffett's mantras will find little new advice here, but Walsh does an admirable job of casting Keynes's life in a new light. He also concisely sums up Keynes's economic theory. getAbstract recommends this book to investors looking for insight from one of capitalism's great minds.

Well written and right on target from the viewpoint of explaining the markets and the framework for success in investing. This is not a "how to" book but a book of practical principles for how Keynes and other successful investors have approached the markets. Keynes is very quotable and this book collects a lot of his pithy investing comments in one well-organized study. To paraphrase Keynes, the book is both vaguely and precisely right.

The author produced a value investing concoction (based on Warren Buffet and Benjamin Graham) and attributed it as being Keynes' (later) investment style. Might have been. While the book makes a pleasant reading it looks like the author either did not know what stocks Keynes picked (I mean there is no example regarding specific companies)or he might have not wanted to tell. Under-research or lack of access to information. Either way a better descriptive title would have been "Keynes, a Light Biography". So if you look about details of Keynes's investment style you will find none in this book. Otherwise, it makes a good reading.