“The market can remain irrational longer than you can remain solvent.”
–Not John Maynard Keynes
I am reading a pretty good book by an industry expert that (like so many others) is a semi-autobiographical mix of business and personal history. The introduction to the book is a broad, throat-clearing exercise, outside of their expertise.
And I begin to notice a few errors.
Little things at first: dates, market levels, valuations. The narrative history about the GFC. It jars. I got a sense a publisher/editor type scanned the book and declared “This needs an intro.” Thus, a section gets written without the same love as the main (more interesting) story. As far as I can tell, the heart of the book (which is outside my area of expertise) is error-free. But these small misstatements are revealing about the industry: Publishers have morphed into mere copy shops, shadows of their former selves, no longer bothering with editing, fact-checking, etc. They have become glorified, spell-checking, xerox machines.
The errors are about things within my area(s) of expertise. It gnaws at me. So much so that when I come to the famous Lord Keynes quote above within the context of this throwaway chapter, it bothers me. This forces me to question whether it too is wrong.
Full disclosure: I have used that quote too many times to count. Mostly verbally, sometimes on social media, occasionally in print. Never once was I self-motivated to see if it was truly written by Keynes.1 My assumption was that it was Keynes, simply because every utterance of his has been poured over and annotated since the day they were made.
We have all used that line because it is a brilliant insight into the madness of markets, a reveal of human psychology, and the ugly reality that you can be right and still lose money. Of course it was by Keynes! Who else is wise enough to utter such pithy insight about the human condition as manifest in capital markets?
Despite everyone knowing this was John Maynard Keynes, I wanted to confirm these were really his words. I cannot say why it felt wrong to me, it just did. Read enough media, books, news, etc. and your Spidey-sense will tingle about these things.
So off I go a-hunting.
It didn’t take long to debunk Keynes as the source. Literally the first Google link points to Quote Investigator. QI looked into the issue some time ago. As it turns out, there is no evidence that Keynes wrote this, and very little to suggest he ever said it. The quote was first seen in print in a February 1993 Forbes column penned by Gary Shilling in. (In one of those odd coincidences, I bumped into Gary at Bloomberg the same day I found this quote. Weird).
Shilling’s Forbes column in 1993 was the first ever instance found of this quote being seen in print. Not Keynes in the 1930s, but Gary Shilling, who you may know as Merrill Lynch’s first chief economist. Also mentioned by QI is Jason Zweig, who was at Forbes at the same time. Zweig recalled hearing it around Forbes in the late 1980s. I tagged the vacationing Zweig, who confirmed all of the above. In 2011, he offered cash for anyone who could prove that the quote was by Keynes. No one appears to have stepped forward to claim the prize. Bill Bernstein reached out to Keyne’s most authoritative biographer, Lord Robert Skidelsky, who said he believed the quote was “apocryphal,” or of dubious authenticity.
Color me shocked that this is a myth. I bet most of us have heard this quote so many times and we all assumed it to be true. To quote the brilliant humorist and writer Mark Twain, “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
Only here is the twist: Twain never wrote or said that either. It is another example of an infamous misquote which when put into the mouths of a great, just seems to be all that more full of worldly wisdom.
Both of these quotes are poignant reminders: Assume nothing; Question everything; Verify all.
UPDATE: June 21, 2019 11:47am
“The intelligent investor is a realist who sells to optimists and buys from pessimists.”
Nope, turns out that Jason Zweig wrote those words in his commentary to Graham’s The Intelligent Investor. He adds “I’d like to think Graham would have approved them, but I wrote them.”
1. My own experience with famous person quote errors was in my own book, Bailout Nation. I used lots of quotes, many as a header to each chapter, all of which were well known, and easily verifiable.
In the Central Bank chapters, I quote one Thomas Jefferson: “The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin.”
I was horrified to learn that quote (and the rest of the paragraph I cited) has been called into question as “partially spurious.” Since then, I have not been able to confirm or disconfirm its authenticity.
And I used what was a pristine source: “Jefferson’s Opinion on the Constitutionality of a National Bank,” 1791, The Avalon Project at Yale Law School.