Lord Keynes as a speculator

"The market can stay irrational longer than you can stay solvent.”
We know him as a revolutionary economist, but many of you don’t know that John Maynard Keynes was a great speculator. Below I share with you couple of things I have learned about investing from Lord Keynes.

He made all of his money from speculation. When he published his remarkable book, The Economic Consequences of Peace, he sent a letter to his publisher asking for an advanced cheque for £1,500 and with this money he was able to continue the trading. Why? Because as many of us he lost all his money first in the market. He had learned the valuable and painful lesson, markets can act perversely in the short-term. His quote later famously commented - "The market can stay irrational longer than you can stay solvent.”This is an uncommonly brilliant statement about the investment and speculation. Because he was a great longterm analyst, but thanks to the short random moves of the market he was burned out few times. Dennis Gartman, the great investor says corollary that „The market can stay far irrational than you and I can stay solvent”. Which is true and all of us have to agree with that. That is the harsh reality of the market.
Keynes’s statement that themarkets are irrational means the markets are not efficient. You could be the smartest analyst with myriads of great theories and maybe you are going to be right, but before that the market move in your favour, you had stopped out. This is the part of this business. Keynes was totally right. It is a really great case of point. All of us remember the irrationality periods of the market, like dot.com bubble, tulip bubble, Gold bubble…etc. I shorted the Nasdaq in 2000 and 2009 too. I needed to learn the lesson over and over again, the markets are irrationals and could go farer than any of us dreamed of that.
The next thing what I learned from him is. „… if the market change I have to change too…”. Each year in the 30s he made presentations at his university in UK about the markets and mostly he talked about only one stock. Explained fundamentally, technically why it needed to buy. He told everybody to buy that stock. Next year at the same auditorium he came back and recommended the same stock to sell it. One guy stood up and asked him "How can you do that Mr. Keynes? Last year you recommended to buy and this year you recommend not just sell it, but sell it short?” And Keynes made a brilliant statement when he said „Sir, the facts have changed. When the facts change I change and what do you do Sir?”
Most of us don’t understand that if the facts change we normally don’t change. The price is changing not going up anymore. THE PRICE, this is the five letter word, this is the most important fact of them all. All informations are in theprice. We only need to look at the price and read as an open book.
Those are my lessons from Maynard Keynes, it is very subjective, but I do believe since I am following those rules I am better and more disciplined trader.
Have a good trade for the next week