John Maynard Keynes as an investor has not really been studied. Robert Skidelsky, Donald Moggridge and Roy Harrod each wrote biographies of Keynes and, as noted in Part I of this essay, they barely discuss Keynes as an investor. However, many statistics can be found among the Keynes papers that were collected and edited by Professor Donald
Moggridge. Those that I’ll be referring to are included in The Collected Writings of John Maynard Keynes: Volume XII: Economic Articles and Correspondence; Investment and Editorial, which is out of print, unfortunately.1 It cannot be purchased for any sum of money, because it simply is not available.
It is not well appreciated that Keynes, as a personal investor, used a not-insignificant amount of leverage in his portfolio. Table 1 of this section is extracted from the Moggridge book, and it provides an idea of how leveraged Keynes was at different times during his career. For example, in August 1920, his net assets were negative 1,837 pounds sterling. The table shows the number of securities he carried and the loan balances. In 1929, on the eve of the Great Depression, Keynes had net assets of 7,815 pounds sterling, and loans of 14,000 pounds sterling. Clearly, he had a significant amount of leverage. By 1930, the value of his debt position was 65,000 pounds sterling, and the currency value in pounds sterling of his net asset position was 12,525.
In 1936, his high-water mark, not in terms of leverage, but in terms of the absolute value of the loan portfolio, was slightly in excess of 299,000 pounds sterling. Keynes employed a high degree of leverage and, as anyone can see from looking at these numbers, he used it during what anyone would say was the most disastrous economic period of the 20th century.
The interesting question to ask is how Keynes was able to navigate that economy. As noted in Part I of this series, Keynes became a long-term investor in the 1930s.