The Artistic Investor

“It is not a case of choosing those [faces] which, to the best of one’s judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practise the fourth, fifth and higher degrees.”

John Maynard Keynes, General Theory of Employment Interest and Money, 1936

A key, yet underappreciated, aspect of equity markets is the mind games played by its participants. It is not what I believe that matters but what others believe that matters.

Investment Strategy Implications

Valuation is 2 parts science, 1 part art. The Keynesian beauty contest quoted above captures that artistic essence.