Keynes's trading on Wall Street: did he follow the same behaviour when investing for himself and for King's?

Abstract

In the last few years Keynes's investment activity, both as an individual trader and as a manager of institutions’ portfolios, has attracted attention in the specialised literature. Recently his investments on Wall Street, in particular – both on his own account (Cristiano, Marcuzzo and Sanfilippo 2018) and on behalf of King's College, Cambridge (Chambers and Kabiri 2016) – have been analysed, and the evident connection with his theoretical analysis of the functioning of the financial markets contained in chapter 12 of The General Theory has been duly stressed. This article aims to contribute to a more comprehensive understanding of Keynes's trading behaviour on Wall Street by providing a detailed comparison of his investment choices when he traded for himself and for King's. There are similarities, as might be expected, but also significant differences, well worth investigating. As far as the differences are concerned, one of the most striking is to be seen, for instance, in his attitude when, after a period of bull market in 1936, he had to face the spring 1937 burst of the speculative bubble and subsequent recession. Analysis of his behaviour in this specific case reveals that the event took him by surprise but his reaction differed with regard to his personal investments and the King's investments. The prevalence of a ‘buy and hold’ strategy, which, according to Chambers and Kabiri's reconstruction (2016), marked Keynes's behaviour in general (and also in this particular case) when he invested on behalf of King's, was not always his typical choice when the investments were undertaken on his own account. A tentative explanation of this result, which is also grounded on some different features characterising the two portfolios and not sufficiently investigated in previous studies, is at last provided in the article.