Eugene Fama quotes:

Debates go on to this day about what caused the Great Depression. Economics is not very good at explaining swings in economic activity.

State constitutions typically provide that the state first has to service its debt, then make it pension payments, and then pay for services. What we don't know is whether that order will be enforced. And ultimately, the busted state is going to be looking to the federal government for a bailout. Think Greece, but on a much bigger scale.

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.

I don't think the Federal Reserve has any role in how high rates are right now. I don't understand why everyone is paying attention to this tapering. The Fed is using one kind of bond to buy another kind of bond. What's the big deal, and why is anyone taking the Fed seriously?

Economies typically do not function well in hyperinflation. The real value of government debt might disappear, but the economy is likely to disappear with it.

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.

In an efficient market, at any point in time, the actual price of a security will be a good estimate of its intrinsic value.

Active management is a zero-sum game before cost, and the winners have to win at the expense of the losers.

In an efficient market at any point in time the actual price of a security will be a good estimate of its intrinsic value.

After taking risk into account, do more managers than you'd see by chance outperform with persistence? Virtually every economist who studied this question answers with a resounding 'no.'

The distribution of the market is fat-tailed relative to the normal distribution... For passive investors, none of this matters, beyond being aware that outlier returns are more common than would be expected if return distributions were normal.

Markets are efficient, but there are different dimensions of risk and those lead to different dimensions of expected returns. That's what people should be concerned with in their investment decisions and not with whether they can pick stocks, pick winners and losers among the various managers delivering basically the same product.

An investor doesn't have a prayer of picking a manager that can deliver true alpha.

I can't figure out why anyone invests in active management, so asking me about hedge funds is just an extreme version of the same question. Since I think everything is appropriately priced, my advice would be to avoid high fees. So you can forget about hedge funds.

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.

I don't believe anyone wants to hear what I have to say.

I'd compare stock pickers to astrologers but I don't want to bad mouth astrologers.

I take the market-efficiency hypothesis to be the simple statement that security prices fully reflect all available information.

People would be a lot more skeptical if they understood that there is an incredible amount of chance in the results that you observe for active managers. The distribution of outcomes is enormously wide-but that's exactly what you'd expect by chance with lots of active managers who hold imperfectly diversified portfolios. The really good portfolios contain a lot of really lucky picks, and the really bad portfolios contain a lot of really unlucky picks as well as some really bad ones.

The efficient market theory is one of the better models in the sense that it can be taken as true for every purpose I can think of. For investment purposes, there are very few investors that shouldn't behave as if markets are totally efficient.

I don't even know what that means. People who get credit have to get it from somewhere. Does a credit bubble mean that people save too much during that period? 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.