31 Quotes by Andrew Lo

More and more investors may be coming into markets everywhere but that doesn't mean that the markets are really getting more and more efficient, even in the United States. It does mean that there is more access for savvy investors who watch the money flows.

Just because we didn't see an event (after GM and Ford) is small comfort. There are large exposures out there we haven't seen yet. I'd say the jury is still out on whether the industry can withstand the shocks that may come out over the next few months.

The fact that hedge funds have become so important is really the flip side of problems that could be generated. If they ceased to function in the way they are designed, that would create a fair amount of systemic risk.

Economists suffer from a deep psychological disorder that I call 'physics envy'. We wish that 99 percent of economic behavior could be captured by three simple laws of nature. In fact, economists have 99 laws that capture 3 percent of behavior. Economics is a uniquely human endeavor ...

The risks facing hedge funds are non-linear and more complex than those facing traditional asset classessuch risks are currently not widely appreciated or well-understood

Labor is getting more expensive and technology is getting cheaper.

Finance and economic research has hit a wall. We can't answer any more questions by running another regression analysis. Now, we need to get inside the brain to understand why people make decisions.

At this point, there isn't an obvious place to park money, ... A number of strategies that produced good returns in the past are no longer profitable. A lot of the smart money is sitting on the sidelines right now just waiting for the direction to change.

Credit derivatives and hedge funds have grown fairly spectacularly over the last five years.