Word: rationale
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Bogle wasn't the only observer who thought the professionalization of the investment business would wean markets from manias and panics. In the 1960s finance scholars rallied around the idea that smart, rational professionals would keep prices for stocks and other financial instruments in line with their real values.
In recent years this academic faith has faltered, largely because of the realization that it's tough for the pros to do what it takes to keep markets rational. That's partly because they're human and thus subject to the same decision-making quirks as amateur investors. But the...
When this very dilemma toppled the hedge fund Long Term Capital Management and rocked global markets in 1988, Shleifer and Vishny were hailed as visionaries. Their paper helped spark a broader re-examination of the role of professional investors. Whereas professionals inject sophistication and expertise into markets, most of them...
Can anything be done to halt such excess? Keynes proposed taxing financial transactions to discourage speculation, an idea that remains popular in antiglobalization circles but has never gained traction with U.S. lawmakers. Shleifer favors protecting consumers from some financial-market excesses--via mortgage lending regulations, for example--but is dubious...
But the Chavez announcement that most flabbergasted the international media in a month of strange goings-on was his proclamation that Venezuela will move its time zone back by a half hour, starting in the third week of September. The government expects the measure to give Venezuelans a more equitable...