Andrew Lo Quotes

During periods of extreme fear or greed, you don't have the proper balance between those two to generate market efficiency and you get extremes in behavior.

We see that hyperactivity and reward areas are important when the bubble's rising. People getting caught up in it. We also see areas involving mentalizing, which means thinking about other people: Who's buying? Who's selling? Do they know something? We see emotional areas before the crash that indicate a sense of uncertainty or dread.

The average investor does significantly worse than a simple index... It's literally because of the way our brains are wired.

Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble... to give way to hope, fear and greed.

All market response results from a reduction of uncertainty.

Be fearful when there is greed and be greedy when there is fear.

Fear tends to manifest itself much more quickly than greed, so volatile markets tend to be on the downside. In up markets, volatility tends to gradually decline.

Fear, greed and hope have destroyed more portfolio value than any recession or depression we have ever been through.

Most investors give too much credence to the theory that prices are rational; they presume that a market collapse must have been justified by serious economic trouble.

Markets do very weird things because it reacts to how people behave, and sometimes people are a little screwy.

Financial markets have a tendency to go to excess.

When the man who ought to want a stock doesn't want it, why should I want it?

When reviewing one's portfolio, it is important to be aware of common mental mistakes that may lead to bad decisions. The most powerful is commitment bias, which, as manifested in investing, is the tendency to fall in love with one's stocks.

It's human nature: for most investors, the pain of stocks going down is more tangible than the joy of when they go up. The common impulse is to do something - anything - to minimise the pain.

The markets are moved by animal spirits, and not by reason.

As long as you have markets, you'll have excesses. People went crazy with tulip bulbs. They went crazy with the South Sea Bubble, they went crazy internet stocks, they went crazy with the uranium stocks back when I was first getting started. I mean, you know, you're not going to change the human animal. And the human animal really doesn't get a lot smarter.

Be fearful when the markets get greedy, be greedy when the markets get fearful.

What motivates most gold purchasers is their belief that the ranks of the fearful will grow ... As 'bandwagon' investors join any party, they create their own truth - for a while.

I started in business journalism from the outside, so when I started writing about markets and business, I was struck by the fact that markets seemed to work well even though people are often irrational, lack good information and are not perfect in the way they think about decisions.

Tech stocks are trading at a 30-year-low when compared to the multiples of industrials (companies). It's the weirdest bubble when everyone hates everything.

You have a natural tendency to want an emotionally satisfying tale - and to make investments based on that - despite times when the actual data may be telling you something different.

If owning stocks is a long-term project for you, following their changes constantly is a very, very bad idea. It's the worst possible thing you can do, because people are so sensitive to short-term losses. If you count your money every day, you'll be miserable.

Markets rebounded quickly from morning jitters after the London Thursday terrorist bombing.

You don't want too much fear in a market, because people will be blinded to some very good buying opportunities. You don't want too much complacency because people will be blinded to some risk.