Robert Lucas in The Economist
KRF: Professor Robert Lucas of the University of Chicago has an interesting guest article in The Economist, "In defense of the dismal science."
View ArticleThe Squam Lake Group
KRF: The Squam Lake Group recently published "The Squam Lake Report: Fixing the Financial System". We launched the book with a conference in New York.
View ArticleEfficient Markets, Economic Growth, and Market Volatility
Professor Eugene Fama discusses the connections between the financial crisis of 2008 and efficient markets, economic growth, and market volatility with students from the Chicago Booth Finance Club on...
View ArticleFama on EconTalk Podcast
EFF: I spoke with EconTalk host Russ Roberts about how the efficient market hypothesis relates to macroeconomic events of the past few years, with some additional thoughts on behavioral finance and...
View ArticleFinancial Times Interview
EFF: Last week I was interviewed by James Mackintosh from the Financial Times. We discussed the relevance of market efficiency for investors, the definition of market "bubbles," and measurements of...
View ArticleFama: Is Warren Buffett Lucky or Skilled?
EFF: I spoke with Client Insights host Dan Richards about the importance of effectively communicating the risks associated with equity investing. Also, I discuss how Warren Buffett's success is more...
View ArticleFama: Why Small and Value Stocks Outperform
EFF: I talked with Client Insights host Dan Richards about the problems with the Capital Asset Pricing Model (CAPM) and the development of the Fama/French three-factor model as a more accurate way of...
View ArticleQ&A: Is There a "New Normal"?
We often hear that the investment world must adjust to a "new normal", reflecting a permanent shift to greater market volatility worldwide. How should investors revise their portfolios in response to...
View ArticleQ&A: NASDAQ at 5,000: A Mistake?
Richard Thaler observes "Efficient market guys have to be willing to claim that the NASDAQ is efficiently priced at 5,000 and at 1,400. That's a tough sell." Comments? EFF: Stock prices depend on two...
View ArticleQ&A: Bear Markets and Monte Carlo Analysis
How useful was Monte Carlo-type analysis in preparing for the recent downturn in the economy and stock market? Is there an alternative approach that investors should consider in an effort to address...
View ArticleQ&A: What if Everybody Indexed?
If a growing percentage of market participants pursued passive investment strategies, at what point would market efficiency break down? Is this a practical concern? EFF/KRF: This is a complicated...
View ArticleQ&A: Is Market Efficiency the Culprit?
Justin Fox ("The Myth of the Rational Market") and many other financial writers claim that much of the blame for the financial meltdown is attributable to a misguided faith in market efficiency that...
View ArticleQ&A: Does Your Optimizer Need a Tune-Up?
The realized equity premium for U.S. stocks relative to long-term government bonds has been negative for the 5, 10, 15, 20, and 25-year periods ending in 2008 despite substantially greater standard...
View ArticleQ&A: Who Should Hold Long Term Bonds?
Is the absence of a meaningful premium for US long-term bonds relative to short-term bonds evidence of market inefficiency? Does this relation hold in other global bond markets? EFF: Unfortunately, we...
View ArticleQ&A: Financial Innovation -- A Blessing or a Curse?
Real economic risk appears to have decreased over time as global economies have become more advanced and diversified. But market risks appear to have increased due to innovative financial instruments...
View ArticleQ&A: Are Stocks Safer in the Long Run?
Lubos Pastor and Robert Stambaugh argue that long-horizon stock investors actually face more volatility than short-horizon investors. How should investors interpret this evidence? KRF: The...
View ArticleQ&A: Seeking the Best Inflation Hedge
How do TIPS and one-month Treasury bills compare as inflation hedges? EFF: TIPs are obviously a great hedge against inflation, but there is still uncertainty about the short-term real return on...
View ArticleQ&A: Can Investors Profit from Momentum?
A prominent money management firm has recently launched several mutual funds that seek to exploit the positive momentum effect in stock prices. Why does this well-publicized anomaly persist and under...
View ArticleQ&A: Do Fundamentals Tell Us When Stocks Are Overpriced?
In their book Valuing Wall Street published in early 2000, Andrew Smithers and Stephen Wright claim that the q ratio popularized by Nobel laureate James Tobin reliably identifies periods of extreme...
View Article