Eugene Fama

The problem that people don't understand is that active managers, almost by definition, have to be poorly diversified. Otherwise, they're not really active. They have to make bets. What that means is there's a huge dispersion of outcomes that are totally consistent with just chance. There's no skill involved it. It's just good luck or bad luck. ”

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. ”

I buy the market through index funds. Since I'm getting older, I buy TIPS. ”

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. ”

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

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. ”

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. ”

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. ”

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? ”