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158<br />
100-BAGGERS<br />
That excerpt comes from a letter in 1938 by one of the greatest investors<br />
of all time. He made money in one of the most difficult markets of all<br />
time—that of the Great Depression.<br />
He is John Maynard Keynes (1883–1946).<br />
This may surprise you. Keynes you know as an influential economist.<br />
But whatever you think of Keynes as an economist, the man was a great<br />
investor. He had a keen understanding of markets.<br />
Keynes managed Cambridge’s King’s College Chest Fund. The fund averaged<br />
12 percent per year from 1927–1946, which was remarkable given<br />
that the period seemed to be all about gray skies and storm clouds—it<br />
included the Great Depression and World War II. The UK stock market fell<br />
15 percent during this stretch. And to top it off, the Chest Fund’s returns<br />
included only capital appreciation, as the college spent the income earned<br />
in the portfolio, which was considerable. I think it must be one of the most<br />
remarkable track records in the annals of finance.<br />
How he did it is the subject of this section.<br />
600<br />
500<br />
What depression?<br />
The sizzling performance of Keynes’ chest fund<br />
Chest Index<br />
UK Index<br />
Index Value<br />
400<br />
300<br />
200<br />
100<br />
0<br />
’27 ’28 ’29 ’30 ’31 ’32 ’33 ’34 ’35 ’36 ’37 ’38 ’39 ’40 ’41 ’42 ’43 ’44 ’45<br />
Keynes also made himself a personal fortune as an investor. When<br />
he died, he left an estate worth some $30 million in present-day dollars,<br />
which surprised his contemporaries. Justyn Walsh, author of Keynes and<br />
the Market, points out that Keynes spent his last six years as an unpaid
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