Eschewing Humpty Dumpty's more scientific approach, assume the following statement means what it says. They do not possess even the rudiments of what is required for a valid judgment, and are the prey of hopes and fears easily aroused by transient events and as easily dispelled. This is one of the odd characteristics of the capitalist system under which we live, which, when we are dealing with the real world, is not to be overlooked. Both the Treatise on Money and the General Theory draw the following inference from this characteristic of financial markets. Not all speculation is rational.
Rational speculation involves short run forecasting.
Since the relevant evidence possessed by individual rational speculators varies from individual to individual the rational degrees of belief of each will also vary. What matters from the perspective of the judgement of rationality is the method employed in reaching the expectations not the content of expectations themselves. This aspect of the irrational psychology involved provides the psychological basis for manic speculative bubbles and for a form of liquidity-trap. The 1940 letter I quoted in that response indicates very explicitly what a rational investment policy understood as rational speculation involves. I'll provide textual evidence in my next post demonstrating that this accurately describes Keynes's account of the rational component of the speculative demand for money.