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 Read Quote
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. Eugene Fama Read Quote
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 Read Quote
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 Read Quote
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 Read Quote
An investor doesn’t have a prayer of picking a manager that can deliver true alpha. Eugene Fama Read Quote
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 Read Quote
