Economist, author and Yale University professor Robert Shiller speaks at at a news conference, Monday, Oct. 14, 2013, in New Haven, Conn. Americans Shiller, Eugene Fama and Lars Peter Hansen have won the Nobel prize in economics. (AP Photo/Jessica Hill)
Ordinary investors don’t stand much chance of beating the market. It moves way too fast and efficiently. Or it behaves in ways that make no sense at all.
Three Americans won the Nobel prize in economics Monday for their sometimes-contradictory insights into the complexities of investing.
Eugene Fama and Lars Peter Hansen of the University of Chicago and Robert Shiller of Yale University were honored for shedding light on the forces that move stock, bond and home prices — findings that have transformed how people invest.
Fama’s research revealed the efficiency of financial markets: They absorb information so fast that individual investors can’t outperform the markets as a whole. His work helped popularize index funds, which reflect an entire market of assets, such as the Standard & Poor’s 500 stock index.
“Fama’s work was incredibly fundamental in the ’60s and ’70s,” said David Warsh, who follows economists at his Economic Principals blog. “It led to enormous practical change in terms of people not Login to read more