John Maynard Keynes on Rational Investments
on Wednesday, March 6, 2013John Maynard Keynes Money Quotation saying belief in a rational market and rational decision-making when very little is rational in the world around us, represents a serious folly. John Maynard Keynes said:
“There is nothing so disastrous as a rational investment policy in an irrational world” — John Maynard Keynes
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In this quote, John Maynard Keynes is cautioning against relying too heavily on rational or logical investment strategies when making decisions in an unpredictable and often “irrational” global economic environment.
He seems to be suggesting that meticulously following a rational, analytical investment policy may lead to poor outcomes if broader market forces or behaviors are being driven more by irrational psychology, emotions or other non-rational factors outside of an investor’s control.
Keynes appears to be emphasizing that rationality has limitations, and strict adherence to a rational investment approach could prove “disastrous” when the actual conditions in the world do not behave rationally as models may predict.
The quote implies flexibility and consideration of irrational influences may be prudent for investors navigating uncertain, real-world economic conditions.
Birthday: June 5, 1883 – Death: April 21, 1946