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Financial Markets: Lecture 10 Transcript February 15, 2008 << back Professor Robert Shiller: Before I begin, I just wanted to say that I was very--I found last period's lecture with David Swensen very interesting. Also, I liked being serenaded by New Blue, which is a first experience for me. Swensen--He gave, I thought, a very interesting talk. I've heard him talk before but it's always interesting. He really emphasized diversification. But, I don't know what you were thinking, we got a 28% portfolio return last year. There's something else going on besides diversification; diversification means we get the average return. And I was glad that you asked questions at the end. Some of your questions seemed to draw out other things that he doesn't plan to talk about, like what he really did to make money. One thing was that he said that they shorted the Internet stocks in the late 1990s. That's a brilliant market timing device that--I think enlightened people thought that those prices were getting high--and also made some play on credit spreads and now on real estate, he said. How does he do it? Again, it's my theory that there's no--you can't entirely be taught, but partly though I think that he does it, as do other good portfolio managers, by just keeping a very broad base of knowledge and listening to people and collecting information and watching the big trends and thinking about them. One of, I think, Swensen's best talents is he's a good listener and he incorporates basic facts and acts on them. You might have--it would be incorrect, I think, in listening to what he said and conclude that he just says diversify because he's obviously done something very different from that. By the way, I have another speaker who told me that he would like to talk to our class and I hope we can work it out. His name is Carl Icahn, who is one of the biggest Wall Street--powerful and enlightened people on Wall Street--who can also maybe tell us something about how he makes money or how he makes it a better world. The problem is that he has a--these people have very tight schedules and he's involved in various takeovers and things right now. He said he could do it if we could arrange to meet after 3:00 p.m., so I'm going to--on a Monday or a Wednesday, perhaps at 3:00 p.m. or later. He said--his assistant said it might even be 7:00 p.m., so that's the way he works. I don't think he gets up at 9:00 a.m., apparently. So, I take that that's all right with you--that you can come to a special section of this class. We would have to see if we can arrange that. Again, I don't guarantee that it will happen because the reality is, someone who is involved in as many things as he is--it's going to be something. We do have Stephen Schwarzman coming February 22 nd and we have Andrew Redleaf coming March 5 th , so we have a really strong set of outside speakers this year. Again, the mid-term exam is Monday; sorry that I misstated that last week. You've already seen last year's
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This note was uploaded on 03/17/2012 for the course ECON 252 taught by Professor Robertshiller during the Spring '08 term at Yale.

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transcript10 - Financial Markets Lecture 10 Transcript <...

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