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

— Eugene Fama

The most eye-opening Eugene Fama quotes that will inspire your inner self

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.

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

42

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

37

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.

36

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

25

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.

24

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.'

11

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.

5

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.

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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?

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