Saturday, June 23, 2012

The Economist Promotes Propaganda about Keynesian Investing Skills

The Economist is the latest to spew Keynesian propaganda in a report on a paper that shows that Keynes as a genius investor. They tell us the Keynes started out a terrible investor::
Up until the early 1930s, Keynes invested on the basis of large-scale macroeconomic predictions. No doubt this seemed sensible: he all but invented the field. Unfortunately - and ironically - it seems that where investing was concerned macroeconomics was not Keynes’s strong point. From 1924-32, his buys actually underperformed the market by 4% in the 12 months after purchase.
This is true. In other words, the so-called macro-economic genius had no clue in what direction the macro-economy was going.

But The Economist then says:
Fortunately, Keynes had another trick up his sleeve. During the early 1930s he adjusted his strategy towards investing heavily in equities, a radical decision given that it was considered to be an emerging asset class at the time...
The mag touts his success during this period and concludes:
He also had the confidence to depart from the current consensus, and take advantage of the new asset class of equities in a way few others dared to. Investors looking for modern-day money managers with a similarly individual view had best hope they put their money with someone of similar acumen.
Yeah right, in truth he along with Bernard Baruch loaded up on gold mining stocks and pushed FDR to prop up the price of gold. They both made fortunes owning the stocks. At one point his portfolio consisted of 80% gold mining stocks. No one else at the time thought gold was going to go up, since FDR banned Americans from owning gold. But, of course, no one else had the inside information that FDR  was about to prop up the price. Keynes made his money the crony Keynesian way, by being in cahoots with government,

For more, see: The Super Myth of Keynes as a Great Stock Market Investor

1 comment:

  1. Other than the WSJ, this is why I avoid mainstream "economics" publications. Even Bloomberg, when veering into economic analysis, is full of shit. Good for company news, horrendous for anything else.