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Eugene Fama

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Tastes and behavior are important in economics. Nobody denies that. But the question is: How much of behavior is irrational, and how much of the irrational behavior really affects prices? It turns out that's very difficult to answer. - Eugene Fama
#Answer
#Behavior
#Difficult
#Economics
If you go back to the late '50s, there really was nothing called "academic finance." Well, there was something being taught in business schools as finance, but it really had no strong research underpinnings. - Eugene Fama
#Back
#Business
#Finance
#Late
#Research
The proposition is that prices reflect all available information, which in simple terms means since prices reflect all available information, there's no way to beat the market. - Eugene Fama
#Beat
#Information
#Prices
#Simple
#Way
People are always saying that prices are too high. When they turn out to be right, we anoint them. When they turn out to be wrong, we ignore them. They are typically right and wrong about half the time. - Eugene Fama
#Always
#Ignore
#People
#Right
#Time
Active investment is a zero-sum game. Passive managers don't play the game. They buy something resembling the market as a whole, or some segment of the market, and they don't respond to the actions of active managers. - Eugene Fama
#Active
#Game
#Investment
#Play
#Respond
I don't know what a credit bubble means. I don't even know what a bubble means. These words have become popular. I don't think they have any meaning. - Eugene Fama
#Bubble
#Credit
#Know
#Meaning
#Words
People don't walk away from their homes unless they can't make the payments. That's an indication that we are in a recession. - Eugene Fama
#Away
#Make
#People
#Recession
#Walk
Debates go on to this day about what caused the Great Depression. Economics is not very good at explaining swings in economic activity. - Eugene Fama
#Day
#Depression
#Economics
#Good
#Great
I think bubbles are things people see with 20/20 hindsight. If you look at any particular period where prices go up and then they go down, you will always find people who predicted that they would go down. Those are the people you pay attention to. - Eugene Fama
#Attention
#Find
#Look
#People
#See
People think rationally that the world really is more risky. Imagine in 2008 that investors thought there was a 10% chance we'd have a depression. That would partly justify the drop in prices. - Eugene Fama
#Chance
#Depression
#More
#People
#World
In an efficient market, at any point in time, the actual price of a security will be a good estimate of its intrinsic value. - Eugene Fama
#Good
#Security
#Time
#Value
#Will
There's quite a bit of evidence that even professionals don't show any ability to pick stocks or to predict market rollbacks. Most of the people we identify as skilled based on returns have probably just been lucky. - Eugene Fama
#Ability
#Evidence
#People
#Predict
#Show
Everybody wants the world to be a better place, and some think that government actions can bring that about. But they don't take into consideration that government actions can often do more harm than good. - Eugene Fama
#Better
#Good
#Government
#Place
#World
After costs, only the top 3% of managers produce a return that indicates they have sufficient skill to just cover their costs, which means that going forward, and despite extraordinary past returns, even the top performers are expected to be only as good as a low-cost passive index fund. The other 97% can be expected to do worse. - Eugene Fama
#Extraordinary
#Good
#Past
#Return
#Skill
Market timing doesn't work. If all the bubbles and all this mispricing really exist, how come so few people see it before it turns out that way? - Eugene Fama
#People
#See
#Timing
#Way
#Work
An investor doesn't have a prayer of picking a manager that can deliver true alpha. - Eugene Fama
#Alpha
#Deliver
#Investor
#Prayer
#True
All the central banks are doing is substituting one form of debt with another form of debt. They're issuing short term debt and using it to buy long term debt. In finance, we tend to think that's a neutral activity, even though those stimulus programs are huge. - Eugene Fama
#Activity
#Debt
#Doing
#Finance
#Long
#Short
After 2008, my brand of finance got a bad rap. - Eugene Fama
#Bad
#Brand
#Finance
#Got
#Rap
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