Niall Ferguson Quotes

History demonstrates that participants in financial markets are susceptible to waves of optimism. Excessive optimism shows the seeds of its own reversal in the form of imbalances that tend to grow over time.

A conventional valuation which is established as the outcome of the mass psychology of a large number of ignorant individuals is liable to change violently as the result of a sudden fluctuation of opinion due to factors which do not really make much difference to the prospective yield; since there will be no strong roots of conviction to hold it steady.

A bull market is like sex. It feels best just before it ends.

The markets are moved by animal spirits, and not by reason.

While neurological studies have tried to identify components responsible for fear and greed, the impact on finance is less clear.

Most investors give too much credence to the theory that prices are rational; they presume that a market collapse must have been justified by serious economic trouble.

What we need to understand is, one, that there are market failures; and two, that there are things like asset bubbles and irrational exuberance. There are periods of booms, bubbles, and manias. These things, if left to themselves, can lead to crashes, to busts, to panics.

Markets do very weird things because it reacts to how people behave, and sometimes people are a little screwy.

The market is incredibly inefficient and capable on rare occasions of being utterly dysfunctional. And people have a really hard time getting their brain around that fact. They want to believe that it's approximately efficient almost all the time, and it simply isn't true.

The older I get, the less respect I have for the signals emitted by our vaunted speculative markets.

Looking at the stock market to understand the economy is like studying a manic depressive in order to understand human nature.

No matter how the financial system is set up, no matter what the economic system is, as long as you have people, you're going to have financial crises; you're going to have bubbles that manifest themselves in the financial system.

Every now and then, markets behave like schoolchildren. They overreact, they run around like crazy.

Stock prices aren't real things. They're just froth on a wave. The wave is the only real thing, which investors forget when they're watching the ticket slither by.

The possibility that stock value in aggregate can become irrationally high is contrary to the hard-form "efficient market" theory that many of you once learned as gospel from your mistaken professors of yore. Your mistaken professors were too much influenced by "rational man" models of human behavior from economics and too little by "foolish man" models from psychology and real-world experience.

Markets can remain irrational longer than you can remain solvent.

Financial markets are supposed to swing like a pendulum: They may fluctuate wildly in response to exogenous shocks, but eventually they are supposed to come to rest at an equilibrium point and that point is supposed to be the same irrespective of the interim fluctuations. Instead, as I told Congress, financial markets behaved more like a wrecking ball, swinging from country to country and knocking over the weaker ones. It is difficult to escape the conclusion that the international financial system itself constituted the main ingredient in the meltdown process.

The stockmarket is a semi-psychotic creature given to extremes of elation and despair.

The Stock Exchange is something very different. There is no economy and no production of goods and services. There are only fantasies in which people from one hour to the next decide that this or that company is worth so many billions, more or less. It doesn't have a thing to do with reality or with the Swedish economy.

The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists.

A major boom in real stock prices in the US after Black Tuesday brought them halfway back to 1929 levels by 1930. This was followed by a second crash, another boom from 1932 to 1937, and a third crash. Speculative bubbles do not end like a short story, novel, or play. There is no final denouement that brings all the strands of a narrative into an impressive final conclusion. In the real world, we never know when the story is over.

The intelligent investor is a realist who sells to optimists and buys from pessimists.

Fundamentals might be good for the first third or first 50 or 60 percent of a move, but the last third of a great bull market is typically a blow-off, whereas the mania runs wild and prices go parabolic... There is no training, classroom or otherwise, that can prepare for trading the last third of a move, whether it's the end of a bull market or the end of a bear market.

Cheer the bull, or cheer the bear; cheer both, and you will be trampled and eaten.