“The Markets Can Stay Irrational ….”
By Christopher FailleI often encounter this quote, and I often wonder about its provenance. In fact, in the eight years now over which I have had the privilege of writing for HedgeWorld, I have repeatedly been tempted to quote it. But I never have, and I’ll now divulge the reason.
It is supposed to have been John Maynard Keynes who said, as a warning to traders looking for a quick buck on some return-to-normalcy theory: “The markets can stay irrational longer than you can stay solvent.”
The words sound like hard-earned wisdom. Indeed, if they came from Keynes, they were. It was in May 1920 that he lost disastrously on currency speculation. His brokers were rather lenient with him and at one point allowed him to meet a margin call by pledging to them the future proceeds of his then new book, The Economic Consequences of the Peace.
But did he actually say this? I google the phrase and arrive easily at 226 sites where he is quoted to this effect. I have not, I confess, thoroughly chased down each of the 226 references. But when I do go to any one of them and look for the primary source in the old-fashioned fact checker’s sense – a book with his name on the title page in which that sentence appears, or a collection of letters, or perhaps the name of a student of his who first heard it from his lips – some Boswell for this Johnsonian aphorism — I come up empty every time.
This source takes it from that source who takes it from another, and so forth.
So I put it to you, dear reader. Does anyone know the origin of this felicitously worded expression?
Aphorisms can remain mysterious longer, perhaps, than I can remain curious.
July 30th, 2008 at 8:50 pm
Also attributed to Warren Buffett.
July 30th, 2008 at 10:00 pm
Nothing from Google? I have an idea …Cuil.
July 31st, 2008 at 3:54 am
A couple of years ago a group of us tried to locate the original source for this quote. Daniel Davies nicely summed up our consensus here:
http://d-squareddigest.blogspot.com/2007/05/bits-and-pieces-congestion-pricing-road.html
Basically, Keynes probably said it in his lectures, and Joan Robinson is probably the original source. Unfortunately, no one took the time to actually go through Robinson’s works and find the first mention of the quote. But Keynes DEFINITELY never wrote it. Of that we were sure.
July 31st, 2008 at 4:36 am
It does not appear anywhere in the written works of Keynes. The first published reference to it that I can find is in George Goodman’s “The Money Game”, where he attributes it to Keynes. However, there are a number of Keynes quotes which don’t appear in his writings - the original source for many of them are remarks made at seminars at Cambridge in the 30s, many of them coming into print via Joan Robinson. So it’s most likely not apocryphal but the source you’re looking for doesn’t exist either.
September 18th, 2008 at 9:08 pm
[...] HedgeWorld’s Alternative Reality: …The words sound like hard-earned wisdom. Indeed, if they came from Keynes, they were. It [...]