2013-47 More on Nobel winners and markets

Various publications have been stressing that there are differences of opinion between two of the laureates, Eugene Fama and Robert Shiller

Fama is of the opinion that markets are rational and a monkey, picking stocks by throwing darts at stock market listings, would do as well as a a professional money manager. Shiller thinks that  this is not true and that there are bubbles in the stock market (as well as in the housing market) caused by irrational behaviour of investors. In his view, share prices tend to the average price/earning ratio, and house prices to the long-run average proportion of income.

Shiller has a persuasive graph showing that prices return to long-run averages.


Here is an article from 2005 about Shiller's prediction that house prices in the US will fall