John Maynard Keynes? A. Gary Shilling? Harold R. Evensky? Apocryphal?
Dear Quote Investigator: The gyrations of financial markets can be startling. I am reminded of the following words of wisdom attributed to the economist John Maynard Keynes:
The market can remain irrational longer than you can remain solvent.
Supposedly Keynes said this after he performed a series of highly leveraged trades, and he was humbled by the market. Yet, I have become skeptical of the attribution because the great economist died in 1946, and the earliest evidence I have seen appeared decades after the 1940s. Would you please help?
Quote Investigator: In 1986 “The Advertiser” newspaper of Montgomery, Alabama reported on a presentation given by an influential financial advisor. Emphasis added to excerpts by QI: 1
A. Gary Shilling, twice named Wall Street’s top economist in a poll conducted by Institutional Investor magazine, told more than 100 guests in an AmSouth Bank meeting room that the investment situation has completely reversed itself . . .
He also warned that “markets can remain irrational a lot longer than you and I can remain solvent.”
The next evidence for this saying appeared in a column by A. Gary Shilling in Forbes magazine in February 1993. Keynes was not mentioned when the aphorism was employed by Shilling: 2
Above all, in 1993 remember this: Markets can remain irrational a lot longer than you and I can remain solvent.
The journalist Jason Zweig was working at Forbes in 1993, and he believes that he heard the expression “numerous times” before Shilling’s column appeared. He thinks the phrase was in use by the late 1980s. 3 So Shilling may not be the originator though his name is connected to the earliest and strongest written evidence.
Another remark that has been credited to Keynes for decades may have influenced the attribution of this statement:
There is nothing so disastrous as a rational investment policy in an irrational world.
There is a conceptual overlap between these two quotations, and they share the focal word “irrational.” The reassignment of the statement from Shillings to Keynes may have been facilitated by the existence of this earlier saying. This link leads to the previous QI article exploring this alternative comment.
Here are additional selected citations in chronological order.
- 1986 December 3, The Advertiser (The Montgomery Advertiser), Economist Advises Change In Investment Strategy by Coke Ellington (Advertiser Business Editor), Quote Page 4B, Column 3, Montgomery, Alabama. (Newspapers_com) ↩
- 1993 February 15, Forbes, Scoreboard by A. Gary Shilling, Page 236, Volume 151, Issue 4, Forbes Inc., New York. (ProQuest) ↩
- Personal communication from Jason Zweig of the Wall Street Journal to Garson O’Toole. Email dated August 15, 2011. ↩