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7 Insightful Keynes Quotes about Economics and the Stock Market

John Maynard Keynes was a British economist who really changed the thought process on macroeconomics over time, and as you might expect with any great mind, there are always going to be some great quotes to live by, so let’s checkout these 7 insightful Keynes Quotes!

But first – who is John Maynard Keynes?

Keynes was a big advocate for government intervention, when needed, to help pull an economy out of a depression. 

Essentially, he thought that if workers were willing to work for any wage (likely lower than normal) and the government could help encourage spending by reducing taxes (or maybe a stimulus check? …looking at you COVID-19), then the economy could slowly come out of that depression but much faster than they could’ve otherwise.

He also came up with his own ‘Keynesian Economics’.  Investopedia has a really great article explaining this better than I can, so I’d recommend you take a look at the article , but the main takeaways are:

  • Keynesian Economics focuses on using active government policy to manage aggregate demand in order to address or prevent economic recessions.
  • Keynes developed his theories in response to the Great Depression, and was highly critical of classical economic arguments that natural economic forces and incentives would be sufficient to help the economy recover.
  • Activist fiscal and monetary policy are the primary tools recommended by Keynesian economists to manage the economy and fight unemployment.

Truthfully, after living through something like COVID and really seeing this for the first time as an adult (or first that actually really impacted me), I think I agree with Keynes. 

I think that the government’s role has helped create potential inflation and not deflation and that is going to allow us to come out of this quicker than we would’ve otherwise.

But, I feel myself going down this rabbit hole and regurgitating my Economy 101 post (which you should checkout if this is over your head) so let me just stop right now and get into my 7 favorite Keynes quotes!

“Markets can remain irrational longer than you can remain solvent.”

I really take this quote as in that we need to play for the long-term.  Not only is this the advice that people always give, but the data actually backs it up that long-term investing is better than short-term investing.

As you can see below, the longer that you keep you can keep your money in the market, the better your returns are going to be.  You can see that the longer you hold, the “% better” grows, meaning that you’re making even more on your money.

In addition to that, the “Worst Year” shrinks, meaning your exposure is minimized.

“But Andy, looking since 1928 isn’t relevant”

Well, that’s why I also made charts starting in 1950, 1975 and 2000.

“Successful investing is anticipating the anticipations of others.”

This one I struggled with a little bit when I first read it because I immediately thought of it being like gambling, but the more that I thought about it, it really seemed like it was similar to momentum investing.

The reason that momentum investing works is because you are essentially playing the people in the market.  When people are overbuying on a stock, you don’t get in the way and say it’s overvalued – you jump on and keep riding it up!

And when people are dragging that same stock down, you don’t buy into it thinking it’s undervalued – that is value investing.  Instead, you simply want to wait for that stock to stop its downtrend and then start to turn back up and then you jump on it.

It might sound difficult but it’s really not too hard.  I read ‘Dual Momentum Investing’ and made a book summary if you don’t feel like reading the book (I can’t blame you – it’s nearly $50). 

But it might be the most specific book that I’ve read in regard to leaving with a tangible plan of how to implement the Global Equities Momentum Strategy, which has beat the S&P 500 for 40 years by an average of 5%…. that’s a big deal.

“When my information changes, I alter my conclusions. What do you do, sir?”

This seems pretty obvious but unfortunately, it’s not in today’s world.

If you make a decision and then the facts change, you need to reevaluate that decision.  Not just in business, but in anything in life.  Real quick…

I feel like we, as a world, are so fast to jump to conclusions that we have our minds made up on things before situations even play out.  We assume we know everything about people based off one situation and will fight anyone over it.

On a recent podcast episode with Vitaliy Katsenelson the guys talk about how toxic politics are right now.  It’s either you agree with me or you’re the worst human in the world.  People are so focused on extremes and it does nobody any good.

Ok – I am really sorry there, but with the recent shooting in Kenosha, WI, it just has been on my mind a lot lately, and that’s a situation where I can completely understand both viewpoints, but I am trying to withhold my feelings until all of the facts come out.

And that’s the point that I am making – you need to know the facts before rushing to a judgment.  And if the facts change, you need to reevaluate your decision, right?

If you investing in a company because of their dividend and then they cut that dividend, would you still invest?  Or, maybe you invest in XOM for the dividend but then they cut their employee’s 401k match to keep the dividend going.  I mean, good for shareholders, but can that cause a chain reaction of bad morale and then lower quality of work?

Who knows – that’s for you to decide, but the thing is, you OUGHT to alter your conclusions as your information changes.

Don’t double down just to be the Skip Bayless (mega troll) of the investing world.

“If farming were to be organised like the stock market, a farmer would sell his farm in the morning when it was raining, only to buy it back in the afternoon when the sun came out.”

How true is this?  When I first started investing, I thought I was going to be a day trader just rolling in the dough by the time I was 30.

Well, now I am 2 months from turning 30, and the only thing that I am rolling in is my own tears from not being rich yet.

Doesn’t it seem weird that people flock to sales until it comes in the form of the stock market?  Maybe that’s because we view things we normally buy as transactional and that once you buy it, you have it forever.

Well, you should view your stocks the same way too.

Over time, the market has a 100% success rate of going up, so even if you’re buying at the highest point that year, you’re still going to be sitting pretty if you hold onto that investment for a little while.

Investing is incredibly important – you need to start taking advantage ASAP.

“The markets are moved by animal spirits, and not by reason.”

Ever have a company crush earnings and then the stock goes down?  Or, great news about the market in general comes out and then the market sinks?

I vividly remember in the middle of COVID when the jobs report would come out and every week showed a higher unemployment rate than anticipated, yet the market would actually go up.  It made no sense.

So many people take part in speculative investing but if you’re going to try it, buyer beware.  I think that speculative investing is one of the easiest ways to lose all of your money because people aren’t buying stocks for any reason.

I mean, I can’t put out too much blame because I have been this way before.  I have bought stocks in the past where I literally didn’t even know the name of the company.

I bought the company for no other reason than that someone on CNBC said, “this stock is going to $50” and I saw it was at $46, so I would buy it to try to make a quick 8%.

How dumb is that strategy?  Like honestly.

This type of investing strategy (looking at you Dave Portnoy) is what gets the market to be so irrational.  Now, over time, I do think that the market is fairly rational and that the long-term success of investing will somewhat regress to the mean, but it’s definitely not an efficient market.

The more speculative investors in the market, the more opportunities that you have to really make major gains and play those investors against themselves.  Find those companies that are undervalued vs. their intrinsic value, understand their business, create conviction either for investing in them or passing on the opportunity, and then put your money to work.

That’s the formula for success.

“There is no harm in being sometimes wrong – especially if one is promptly found out.”

This one goes hand in hand with the quote about changing your conclusions.  It’s okay to be wrong!

Do you know what isn’t ok?  Doubling down just to try to prove a point or again, be an extremist.  I’ve been wrong on stocks before.  I’m probably wrong on some stocks that I am currently invested in now but it’s really, really hard to sell out of those positions when you have big losses because they feel even more undervalued.

The thing is to always just focus on the facts and review each situation with an unbiased perspective.  Just because a stock drops 20% doesn’t mean it’s cheap.  Maybe something about the business has fundamentally changed and you need to exit your decision promptly.

Don’t let pride get in the way of making money.

You show me someone that hasn’t made an investing mistake and I’ll show you someone that’s never invested.

“Long run is a misleading guide to current affairs. In the long run we are all dead.”

This might seem a little backwards, but let me explain…

I am 100% all about saving/investing for the long-term

I think that people should bust their butt early in life to reap the rewards later on

I think that people should have a side hustle to make extra money, especially early in life

I think that people should cut out ALL non-valuable spending, aka something you don’t care about

I think that people should have a minimalist mindset

What I don’t think that people should do is make life so incredibly miserable that you absolutely hate yourself and are miserable to be around.

Yes, I plan for the future, but the only thing that is guaranteed to me is right now.  

Planning for the future is great, and math says that you’re likely not going to die today, but you might.  So, you shouldn’t cut every single enjoyable thing in your life just to be able to retire early.

I’ve talked before how I am a huge fan of craft beer.  I will spend $20 on a 4-pack of craft beer that I absolutely love and that likely seems extreme to you, but to me, it’s something that I get a ton of enjoyment from.

The things that I don’t enjoy that many others do are buying clothes (haven’t bought a single new shirt in 2020 and it’s August 26), buying coffee at a coffee house (Folgers grounds are $5.99 for 210 cups or I can get Starbucks for $3 for 1 cup.  $210 Starbucks cups are $630 vs. $5.99 lol.) or driving a nice car. 

I bought a car in 2019 since I didn’t need one in Chicago, and my requirements list was the following:

  • Newer (2015+)
  • 30+ MPG
  • Reputable brand
  • Sunroof
  • Cheap – under $12K

Well, a 2015 Nissan Sentra accomplished all of these goals for me.  It’s white, which I don’t love, but that wasn’t in my 5 requirements, so I didn’t care.  The thing is, I am perfectly content with riding this car into the ground because I am minimizing the amount that is needed to spend on this car and I’m not sacrificing anything because I don’t really want anything more.

We could’ve easily afforded a nicer car, but why?  Why not take that extra $200/month and just invest it?  That’s 40% of my Roth IRA!

If a nice car is your thing, don’t rob yourself.  Get what’s important to you IF it fits in your budget. 

If you don’t have a budget, you need to stop right now and get the best budget planner on the market.

All that I am saying is that sometimes you have to stop planning for tomorrow and live for today.  This is something that I live by but with the important asterisk that you should also keep planning for tomorrow a little bit lol.