financial markets

“Really all that matters in markets is relative skill. That if you've got, you know, 10 PhDs in a room, maybe 3040 years ago, that meant you were going to earn enormous alpha. But now everyone has those 10 PhDs, and they're fighting against each other. It's a r…”

“The fact that you and I are suboptimal and it's easy for us to show that we're suboptimal as individuals that doesn't necessarily translate into a market setting, right? Because our errors may cancel out. You're overconfident. You buy, I'm overconfident. I sel…”

“I think that the market as complex adaptive systems both explains why markets tend to be efficient. This is, you know, the wisdom of crowds concepts. But also explains why markets episodically go haywire, which they clearly do.”

“And so when we do have the next inflationary surprise, It's going to throw all of this completely haywire and it's going to be underpriced in the market as well.”

“We actually think a way of compounding capital better will be direct investment in companies that are long-term compounders.”

“Central banks, with the exception of the Bank of Japan, have been signaling for a year or more that they are trying to reactivate financial markets, and financial markets don't want to hear it.”

“When you incorporate behavior and psychology into markets, the best description is not something that's volatile, but it's something that's turbulent. And turbulence is different than volatility because it's a nonlinear dynamical system, right? You see phase t…”

“Regulators don't find frauds. Auditors don't find frauds. It's the market that finds frauds.”

“So the wisdom of crowds exists when you have Heterogeneous agents. Good aggregation mechanisms. So in other words, the information is being brought together and you have good incentives. And by the way, that should be your default assumption is that markets ar…”

“The point I try to stress is that it's not clear to me that those little things actually manifest in markets, right? Because They can cancel out, essentially. So the market is really, you're not competing. It's not me, Michael versus Ted. It's really Ted versu…”

“One of the answers is, literally, if you're, especially for individuals, is don't look at that And recognize that in three, six, 12, 24 months, things would probably revert back to something that's pre-crisis levels.”

“And I think a lot of the greatest innovations in Financial markets have come not through technology changes, but through structural changes.”

“Is it fair to say that climate change currently is going to cause financial stability or a financial crisis? No, not at the time. But if we have to think about climate change going forward for decades, and when you have these micro shocks across the country, w…”

“I do think we're in a bubble, but I also think it's unlike any other bubble.”

“In financial markets, the vast majority of what happens is just noise. And so you have to be very careful to not try to find a signal in the noise when there isn't one. We've had some real success doing things with machine learning and AI, but equally we've se…”

“The reality is there are so many other horses in the race other than it's going to finish first and it's going to finish last, which is the way most market people get to. There are so many outcomes on the distribution that they don't all end up in the same way…”

“Well, my father taught me, which has been great for all markets is not to focus on who's going to win, but look at where the value are on the odds, not the value of the security.”

“The first scenario, just to be clear, is I think what the market is pricing right now, with market action being where it is.”

“What I came to realize was there was no greater game theoretic experiment in the world than financial markets. It was the most complex and there was also the most on the line.”

“Financial markets are really a big reservoir of excess liquidity. You, me, everybody needs money to go through our daily lives, to buy stuff, to pay for the energy we need, to pay for our food, pay for everything. And when there's stuff left over, it tends to …”

“I think if you look at today, it's pretty obvious that not only are we in a more fools than money phase, we're actually in an outright liquidity crisis because you have a lot of drains on liquidity at the same time.”

“A lot of time was spent trying to make sure that the information you had was a unique source, and it wasn't just a confirmatory thing, that you're getting the same thing reported through different sources that ultimately lead to the same place, and you're real…”

“And as a result, we've built up tremendous amounts of sovereign debt, which were, I guess, manageable when rates were at zero. Well, rates are not at zero anymore. So as a result, there's a tremendous crowding out factor that is occurring right now.”

“And I actually am pretty optimistic that they will remain Even if computers were replacing people as money managers, and we're doing all the trading, and that's because the nature of what causes the inefficiency, it's human, but I think the computers will mimi…”

“Financial markets are very powerful. Expectations can be self-fulfilling, and if you make the good policy choices, you can have a slow and steady catching up, and if you don't, it will be a bumpy ride, and you can have capital flows coming in and out in a very…”

“So having a price that you can immediately turn into a probability really leads to improved communication about the underlying risk in a way that you don't have even in the financial markets. What does it mean for a stock to be trading for a 117 dollars? You h…”

“Geopolitical is an interesting one because 30 years ago, 20 years ago, a geopolitical event would have massive market implications. Since then, geopolitical events have had less and less and less implications to the market. I feel like the pendulum went from o…”

“So, we think the chance of a recession in the US is quite high over, say, a three-year time horizon, and it doesn't appear that markets are currently pricing that in.”