14. Guest Lecture by Andrew Redleaf

Financial Markets (ECON 252)

Andrew Redleaf, a Yale graduate and manager of Whitebox Advisors, a hedge fund, discusses his experience with financial markets. He addresses one of the fundamental questions in finance--whether or not markets are efficient--and concludes that although they don't seem to be efficient, beating the market is very difficult. Mr. Redleaf discusses his thoughts about psychological barriers that make markets inefficient. He also comments on his beliefs regarding risk management and how people are compensated for mitigating risks, rather than for taking on risk as is often perceived. He ends by answering several questions from students.

00:00 - Chapter 1. The Markets Are Not Efficient
10:15 - Chapter 2. Psychological Factors of Market Inefficiency
25:57 - Chapter 3. Rewards Are for Risk-Mitigating, Not Risk-Taking
33:14 - Chapter 4. Issues in the Current U.S. and Global Economies
43:41 - Chapter 5. Questions: Cash and Bonds as Default Investments
01:04:35 - Chapter 6. Speculating on Backdated Options

Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses

This course was recorded in Spring 2008.