Entrepreneurial investment management

Introduction

The fruits of truly great minds never go out of season. They are cherished for the rarefied insights they continue to deliver when all of their contemporaries have long withered away.

Risk, uncertainty, and profit, Frank Hyneman Knight’s 1916 dissertation, undoubtedly ranks among these achievements in the field of economics. The essay makes a thorough investigation into the nature of profit and to whom it should accrue. Knight’s conclusions are well-known: it is the presence of intrinsic uncertainty in business decisions that allows for a difference between market price and production costs and which gives rise to a very particular class of economic agents — the entrepreneurs — who specialise in managing this uncertainty.

In this entry, we reread Risk, uncertainty, and profit with a particular business activity in mind, viz. investment management — the organisation of committing capital in order to gain a financial return. → Read More