This Monday, October 14th, Eugene F. Fama and Lars Peter Hansen (University of Chicago, USA) and Robert J. Shiller ( Yale University, USA) won the Nobel Prize in Economics. The Royal Swedish Academy of Sciences awarded them “for their empirical analysis of asset prices”.
Fama proved that markets were only efficient in the short run and that share prices were very difficult to predict. That conclusion led to the development of stock-index funds, which reflect the assets market.
Shiller found that markets’ short-term efficiency was less enduring over longer periods and that stock prices fluctuate much more than corporate dividends. His research also showed that investors can be irrational and that Read more