耶鲁大学金融市场公开课英文文本1到4.pdf
Financial Markets:Lecture 1 TranscriptJanuary 14,2008Professor Robert Shiller:This is Economics 252,FinancialMarkets,and Im Bob Shiller.Let me begin by introducing theteaching fellows for this course;and so I have them up here.We have five teaching fellows at this time and theyre from allover.I like to put their pictures up so youll know who they are.The teaching fellows are very international and that reflectsmy intention to make this a course that is also veryinternational because finance is something about the wholeworld today,not just the United States.So we cover the worldvery well with our T.A.s.Usman Ali is from Pakistan,Lahore,and he graduated from theLUMS,Lahore University of Management Sciences.Hes a PhDcandidate now in Economics and hes doing his doctoraldissertation on stock analysts recommendations and therelation to returns in the stock market.Hes also interested inbehavioral finance,which is the application of psychology tofinance.The second teaching assistant-l see him right there,if you could raise your hand-Santosh Anagol,who is arepresentative of the United States,although he seems to haveconnections to India as well.He actually has a publicationalready in the American Economic Review on the Return toCapital with Ghana.He did this jointly with the Chairman of theEconomics Department here,Chris Udry and he has spenttime in India looking at the village economies.You were goingto be giving away cows,did you do that?Student:No,Im still working on cows but were not givingthem away.Professor Robert Shiller:Okay,thats the last time youll hearabout cows in this course.The idea was to give cows away tovillage farmers and to observe the outcome.Its a big changein some of these very poor villages to get a cow.Christian Awuku-Budu is from Ghana,Accra,but he,again,went to college in the United States at Morehouse College.Heis also a PhD candidate in Economics at Yale and hes beendoing research on financial markets in developing countries.Yaxin Duan is from China.She got her undergraduate degreefrom Nanjing University.No?You are from Nanjing,did I get adetail wrong?Where did you go to college?Okay,well Imsorry about that.She is also a PhD candidate in Economicsand is doing research on the behavior of options prices in aphenomenon called the options smile,as she*s smiling atme right now.She is also interested in behavioral finance,which is great to me because thats one of my interests.She isshown here standing precariously on a cliff.It makes menervous to look at it overlooking Machu Picchu in Peru.Shealso loves astronomy,which is incidentally an interest of minetoo,but you wont hear about it again in this course.Finally,Xiaolan Zhou is our fifth teaching assistant and shesalso from China,Hubei Province.She graduated from WuhanUniversity and is a PhD candidate in Economics at Yale.She isdoing research on bank mergers.Let me say,Ive been teaching this course now for over twentyyears and Im very proud of all of my alumni.Many of them arein the field of finance.In fact,I like sometimes when I give-1give a lot of public talks.When I give a talk on Wall Street oreven somewhere else in the world I sometimes ask myaudience,Did you take my course?It*s not infrequent that Illget one or even two people raising their hand that they tookEconomics 252 from me.But Im also proud of my alumni inthis course who are not in the world of finance.I think thiscourse goes beyond-lts not just for people who are planningcareers in finance because finance is a very importanttechnology and its very important to know finance tounderstand what happens in the real world.Just about anyhuman endeavor involves finance.Now,you might say,Icould be a poet and what does that have to do with finance?Well,it probably ends up having something to do with financebecause as a poet you probably want to publish your poetryand you*re going to be talking to publishers.Before you knowit,theyre going to be talking about their financial situation andhow you fit into it.I believe its fundamental and very important.I think you willfind this course as not a vocational course-not primarily avocational course-but an intellectual course about how thingsreally work.I see finance as the underpinning of so much thathappens.Its a powerful force that goes behind the scene and Ihope we can draw that out in this course.There is anothercourse-we have two basic courses in finance forundergraduates at Yale.The other one is Economics 251,Financial Theory;this is Financial Markets,that one isFinancial Theory.Last year it was taught by Rafael Romeu,because John,Geanakoplos who usually teaches the course,was on leave and so we had to find someone else.I assumethat next fall John Geanakoplos will be teaching 251 again.So what happened?Why do we have these two courses?Wellit was something like eight years ago that we reached thepresent situation with two finance courses.John Geanakoplosand I had a meeting and we tried to divide up the subjectmatter of finance into two courses.We thought FinancialTheory and Financial Markets would be the two.But theproblem was that both John and I are interested in both theoryand applications.John Geanakoplos is actually ChiefEconomist for a large investment called Ellington Capital inGreenwich,Connecticut,which youll see a lot in the news.Ithas been very successful.He is very much interested in thereal world and I am interested in financial theory,so we findit-we decided,after talking about it,that we really cant divideup the subject matter of finance into separate courses ontheory and practice.If you tried to do one alone it would notwork,so we decided to divide it up imperfectly and there maybe some repetition between our two courses.Both of them areself-contained courses,so you could take either 251 or 252,oryou could take both.I think maybe the best option is to takeboth if youre really interested in the subject matter.It is truethough that his course is more tuned into theoretical detailthan mine.John is a mathematical economist and we bothlove mathematics,but maybe John is going to do more of itthan I am.This course actually will not use a heavy amount ofmathematics.I try to keep it so that people who are notcomfortable with a lot of math can take this course and Iwanted to emphasize that this is-lve said that its-l think thiscourse is vocational preparation in a sense.I pride myself onthe fact that people who have taken this course find it useful intheir subsequent lives,but on the other hand,I think that itsreally interesting.At least I find it really interesting and so Ihope that you will too.Now I dont know,I may be differentthan other people,but I think organic chemistry is reallyinteresting.How many of you have that feeling?Can I get ashow of hands,who is interested in organic chemistry?Im notgetting a lot of hands raised.Unfortunately,Ive never taken acourse in it,but Ive started reading it lately out of just mybroad intellectual interest.That is a course that has a badreputation,doesnt it?Because people say Ive got to take thatif I want to be pre-med.But,you know,to me theres a lot ofdetail in organic chemistry.To me,when you read the detailyoure getting into something deep and important about theway everything works and so I start to find it interesting.So I dont know how people feel about taking-maybe Imturning you off by saying this-There going to be a lot ofdetail in this course.Maybe I made a big mistake by likening itto an organic chemistry course-1 dont mean to turn you off.The idea in this course is that by being a financial marketscourse,you have to know how the world works.Were going tobe thinking about that in connection with Financial Theory,butwe have to get into the details;so we are going to be learningabout facts.Let me start by talking about the textbook.So the principaltextbook is Frank Fabozzi,the other authors are Modigliani,Jones and Ferri,Foundations of Financial Markets andInstitutions.This textbook is very detailed and it may be-lvehad some reaction by students-more than you wanted toknow.I actually had a great experience reading it.Actually,it was anearlier edition,when I first assigned this book in the year 2000,I took it with me on vacation.I was going to the Bahamas withmy family and with Jeremy Siegels family-well come back toJeremy Siegel in a minute.I sat down by the pool with thisbook.Other people were reading novels and I dont know whatelse,but I was reading Fabozzi.I had such a great time with it,so Im telling you my experience.Maybe it was because it wasfilling in gaps in my knowledge-things Ive always wanted toknow and was always curious about.Thats partly what youhave to develop when you get interested in a field:some senseof curiosity about all the details.So I read the whole book,650pages,maybe I kind of read fast because I knew a lot of it.Itmight take you a little longer to get through it,but I wanted youto have the same experience.Ive been assigning this book,now its in another editionand-Fabozzi is working on a fourth or next edition,I forgetwhat number.Ive been assigning-lve gotten somecomplaints from students that this book is tough goingbecause theres so much information in it.I used to tell people,Im assigning the whole book and you have to knoweverything in the book.Thafs a little ambitious.I finallybacked down because I met a man on Wall Street,a veryprominent Wall Street person,and he said,You know,my sonstarted to take your course.I said,What do you mean startedthe course?He said,Well,he dropped out when he saw thisbook and the requirements.I didnt like that.I dont wantstudents to drop out.So what I decided is that you need toknow the whole book in the sense that you need to know all ofthe key terms and key points.Now if you look at the structureof this book,it has sections that say Key Points and KeyTerms.Anything thats mentioned there is fair game for me inan exam and thats the way l*ve done it.There are key pointsand key terms.Also,anything in my lecture is of course fairgame for the exam.Let me also add that I have a reading listthat has clickable things on it and also things that are onreserve in the library.Anything thats clickable is requiredreading.I dont expect you go to the library,however,becauseI think that were moving into an age where you tend to want tobe online,right?So the library books are all optionalbackground.Fabozzi,a faculty member here at Yale,has offered to giveme-we have at least one chapter from the new edition thathasnt come out yet.Im going to put that on reserve in thelibrary;but again,I think that the edition that you have isreasonably up to date and so thats all that Im expecting youto read.The other author,Franco Modiglianiin the book,thesecond author-was my teacher at MIT.He died in 2003.He isalso a Nobel Prize winner and I think has a remarkable intellect.So this book,Fabozzi,et al.-Fabozzi,Modigliani,Jones andFerri-is a very solid book about financial markets.The second book that Im assigning is Jeremy Siegel,Stocksfor the Long Run.This is an old friend of mine.I met him ingraduate school.Funny story,I met him because at MIT theysigned us all up for chest x-rays alphabetically-thats the wayMIT does things,an orderly way.Shiller and Siegel are next toeach other in the alphabet,so I was standing in line with himfor an x-ray and was talking with him and Ive known him eversince.A funny coincidence is that since our names are closein the alphabet-you often find our books right together inbookstores because Shiller and Siegel-if theyre shelvingalphabetically-would end up together.He wrote a book calledStocks for the Long Run,starting in 1993.It just came out withthe fourth edition and that book was a best seller.I think it soldover a half million copies.Im not sure where it is now but ithas done very well.Its been a perennial classic.It emphasizesthe long run performance of the stock market,but its really ageneral treatise of financial markets.I get a very good reactionfrom students about this book.This one is very readable.Itsnot as intense as Fabozzi,et al.Jeremy Siegel holds theunique distinction-Business Week did a poll asking MBAsabout their favorite professor.This was about ten years ago.They ranked business school professors according to theirpopularity.He came out number one in the United States asbusiness school professor.I think youll like this book.The next book is my own and called Irrational Exuberance.This is the last book-Thats a phrase that was coined by AllenGreenspan in 1996 and it refers to the stock market boom ofthe 2000s-of the 1990s and the boom and the bust-well I thinkits related to the bust that came out later,after 2000.I wrotethis book in 2000 right at the peak of-fortunately right at thepeak of the stock market.But what Im assigning to you is thesecond edition,which came out in 2005,pretty much at thepeak of the housing market.Were going to talk about both thehousing market and the stock market in these different books.These books are all on sale at Labyrinth Books,which is anindependent bookstore here in New Haven.I put it therebecause,well,I think the major chain bookstores fulfill animportant function but I also like to support independentbookstores.I dont know if you know the story,but LabyrinthBooks is independent,it*s not a chain,and independentbookstores are trying-struggling-to survive.This is finance.In the book business,theres something difficult aboutmaintaining an independent operation.Labyrinth was atColumbia University and Yale.For some reason they shutdown their Columbia bookstore,but theyve opened up now inPrinceton.There was this famous bookstore in Princeton onNassau Street called Micawbers,which is a wonderfulbookstore.Ive been in there a number of times.But they justwent out of business.Labyrinth has moved in to take theirplace.Anyway,thats where all the books are and they areavailable now.Were going to have these lectures on Mondays andWednesdays.Were going to have T.A.sections in the secondpart of the week.We*re going to ask you to look at yourschedule sometime before our next lecture and think aboutwhen you can come to a teaching assistant section.They willbe Wednesday,Thursday,and Friday and we have six problemsets.The six problem sets are due generally on Mondays andwell go over the problem sets in the teaching sections,several days after you turn them in.This is one of the biggestclasses at Yale,but I think we*ve got it so it will be a good andsatisfying experience for you.We have very qualified-lm veryimpressed with our teaching assistants.The important thing isfor you to stay with them and get to know them and I urge youto attend the T.A.sections.The course is going to be graded.We have two mid-terms and one final.The in classmid-terms-the grades will be roughly 10%problem sets,20%first mid-term,30%second mid-term,40%final.But we willalso use judgment and Im going to appeal to the T.A.s to helpme on judging the grading.Also,I ask the teaching assistantsto give me little capsule descriptions of y
