Eugene Fama Quotes

Bulls don't read. Bears read financial history. As markets fall to bits, the bears dust off the Dutch tulip mania of 1637, the Banque Royale of 1719-20, the railway speculation of the 1840s, the great crash of 1929.

Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.

… a pin lies in wait for every bubble. And when the two eventually meet, a new wave of investors learns some very old lessons..

You cannot have an asset that goes up in price 1% every month or 1% every six months or every day without people starting to start thinking it'll do the same tomorrow, so that's why these bubbles form.

People forget that although we can pinpoint the price, we can only guess at future earnings. The past isn't much help: It simply tells whether a market was pricey or cheap.

If some stock categories get too hot-and-pricey, mass supply is created via stock offerings to tap that cheap money - and, when overdone, drives it all down.

In falling markets, there is nothing that has not happened before. The bear or pessimist sees only the past, which imprisons the wretched financial soul in eternal circles of boom and bust and boom again.

Fear and euphoria are dominant forces, and fear is many multiples the size of euphoria. Bubbles go up very slowly as euphoria builds. Then fear hits, and it comes down very sharply. When I started to look at that, I was sort of intellectually shocked. Contagion is the critical phenomenon which causes the thing to fall apart.

Predicting the market is always tough.

Markets are frequently ahead of, and often out of sync with, the economy.

Don't try to buy at the bottom and sell at the top. It can't be done except by liars.

Markets shouldn't be moving in a straight line.

Nothing ever surprises me about the market.

I've always believed that a speculative bubble need not lead to a recession, as long as interest rates are cut quickly enough to stimulate alternative investments. But I had to face the fact that speculative bubbles usually are followed by recessions. My excuse has been that this was because the policy makers moved too slowly - that central banks were typically too slow to cut interest rates in the face of a burst bubble, giving the downturn time to build up a lot of momentum.

Economists don't usually make good speculators, because they think too much.

In the financial markets I find it easy to predict what will happen and very difficult to predict when it will happen. I think that things were clear during the bubble as to what would happen eventually.

LTCM lost money when Russia defaulted on a certain class of bonds, and then they had other investments like on the spread between two different kinds of shares of Royal Dutch Shell Oil Company. Now that seems completely unrelated to Russian bonds. But they were related because other hedge funds saw similar discrepancies and they were all making similar bets.

Reversion to the mean is the iron rule of the financial markets.

The oldest [John Kenneth] Galbraith rule is that when you hear that a new era has dawned, you should take cover.

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes a bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill done.

In the financial markets, hindsight is forever 20/20, but foresight is legally blind. And thus, for most investors, market timing is a practical and emotional impossibility.

I think without a doubt, that what is called "financial genius" is merely a rising market.

Electrical fire and the fire of greed kindle economies. In that flux, nations become digitized commodities on stock-exchange floors and on investors' rating screens. A country becomes a product to be rated for its obedience to paying of deficits and debts.