> Warren Buffet has done nearly as well--and over a longer period--with
> absolutely *no* speculation.
If we define "speculation," as Keynes does, as "the activity of forecasting the psychology of the market," then I don't think this claim is not quite accurate.
Buffet's appproach, as I understand it, is to calculate "intrinsic value" understood as independent of psychological influence and then look for shares that market psychology has irrationally valued much below this, so it depends on the hypotheses that irrational psychology plays in significant role in financial markets and that this creates significant opportuinities for profit for those not themselves victims of it.
This isn't quite what Keynes means by rational "speculation." Here, "intrinsic value" is itself an expression of irrational psychology as expressed in the conventional practices governing behaviour in financial markets. One of these practices, according to Keynes, is to give much too much weight to current profits so if it's knowable by someone capable of such knowledge - i.e. the "speculator" able to be rational - that current profits are only temporarily below what they can reasonably be expected to return to in the rationally forecastable future then it's also knowable that irrational market psychology will raise the share price to its "intrinsic value" when that occurs.
"very few American investors buy any stock for the sake of something which is going to happen more than six months hence, even though its probability is exceedingly high; and it is out of taking advantage of this psychological peculiarity of theirs that most money is made." (Keynes, Collected Writings, vol. XII, p. 78)
Ted