The Markets Work...Still

This is a great interview of Professor Gene Fama- (sometimes known as the father of modern asset pricing theory and more particularly the Efficient Market Hypothesis ) in The New Yorker. There have been a number of articles in the financial press of late questioning the veracity of EMH and Fama does a good job fending off the critics.

Dr. Fama discusses the issue (and overused term) of "bubbles" in the early portion of the interview and provides a very interesting perspective. His main point is this term is now thrown around, ex ante, but plenty of investment was being made in these "bubbles" by plenty of smart people.

The best parts of the interview may be towards the end (page 7 in particular) where he repeats the main thesis of EMH- that you can't beat the market (I might add except by chance/luck). The very best dialogue is just after that question where he states" the expected return on stocks is just a price-the price people require to bear the market risk. Like any price,it should vary from time to time. " Vintage Fama and precisely right. Enjoy!