--- title: "Meaning & Key Takeaway of: People think rationally that the world…" description: "\"People think rationally that the world really is more risky. Imagine in 2008 that investors thought there was a 10% chance we'd have a depression. That..." image: "https://sms4smile.com/quotes/i/712/eugene-fama-16985_chance_people-think-rationally-that-the-world-r_1788532.jpg" --- # People think rationally that the world really is more… ![“People think rationally that the world really is more risky. Imagine in 2008 that investors thought there was a 10% chance we'd have a depression. That would partly justify the drop in prices.” quote by Eugene Fama](https://sms4smile.com/quotes/i/712/eugene-fama-16985_chance_people-think-rationally-that-the-world-r_1788532.jpg) [Download](https://sms4smile.com/quotes/i/712/eugene-fama-16985_chance_people-think-rationally-that-the-world-r_1788532.jpg) [Open image](https://sms4smile.com/quotes/i/712/eugene-fama-16985_chance_people-think-rationally-that-the-world-r_1788532.jpg) > “People think rationally that the world really is more risky. Imagine in 2008 that investors thought there was a 10% chance we'd have a depression. That would partly justify the drop in prices.” [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Risk perception influences market behavior; underestimating risk can lead to price drops **In simple terms:** People’s risk views affect markets, causing price changes Key Takeaway Consider risk assessments carefully in investing Themes finance risk perception market dynamics Mood analytical cautious Type academic professional When to use this quote - investment strategy - risk modeling - economic forecasting Key Concepts probabilistic forecasting behavioral finance Questions to Reflect On - How do you quantify rare events? - What safeguards prevent misreading risk? A Different Perspective Risk estimates can be overly simplistic ★ ★ ★ ★ ★ No ratings yet [Chance](https://sms4smile.com/quotes/about/chance/) [Customer](https://sms4smile.com/quotes/about/customer/) [Depression](https://sms4smile.com/quotes/about/depression/) [Investing](https://sms4smile.com/quotes/about/investing/) [Investors Thought](https://sms4smile.com/quotes/about/investors-thought-1925315/) [More](https://sms4smile.com/quotes/about/more/) [People](https://sms4smile.com/quotes/about/people/) [People Think](https://sms4smile.com/quotes/about/people-think-239179/) [Really Risky](https://sms4smile.com/quotes/about/really-risky-1925316/) [Risky](https://sms4smile.com/quotes/about/risky/) [Risky Imagine](https://sms4smile.com/quotes/about/risky-imagine-1925317/) [World](https://sms4smile.com/quotes/about/world/) ## Related quotes > [I think that's really risky to make yourself unsexy, because the business demands that women be sexy.](https://sms4smile.com/quotes/david-morse/i-think-that-s-really-risky-to-make-yourself-unsexy-because-the/) [David Morse](https://sms4smile.com/quotes/author/david-morse/) > [A lot of things that people think are risky, I don't think are risky. I don't get all that. I think what was really…](https://sms4smile.com/quotes/james-patterson/a-lot-of-things-that-people-think-are-risky-i-don-t-think-are-risky-i/) [James Patterson](https://sms4smile.com/quotes/author/james-patterson/) > [I guess, you make a big studio film, you spend a lot of money on it and you hope people go see it. It's…](https://sms4smile.com/quotes/john-slattery/i-guess-you-make-a-big-studio-film-you-spend-a-lot-of-money-on-it-and/) [John Slattery](https://sms4smile.com/quotes/author/john-slattery/) > [The risk for me would be in not taking one - that's the only thing that's really risky for me.](https://sms4smile.com/quotes/kanye-west/the-risk-for-me-would-be-in-not-taking-one-that-s-the-only-thing-that/) [Kanye West](https://sms4smile.com/quotes/author/kanye-west/) > [Investors are employees you can never hire. We made sure to pick investors that thought like us.](https://sms4smile.com/quotes/biz-stone/investors-are-employees-you-can-never-hire-we-made-sure-to-pick/) [Biz Stone](https://sms4smile.com/quotes/author/biz-stone/) > [When something looks really risky from the outside, what people are doing on the inside - they're not professional risk takers. But they're probably…](https://sms4smile.com/quotes/anne-mcclain/when-something-looks-really-risky-from-the-outside-what-people-are/) [Anne McClain](https://sms4smile.com/quotes/author/anne-mcclain/) > [Gambles are the most fun because it's part of being an actor or being a creative person. It's risky only in the vulnerable sense.…](https://sms4smile.com/quotes/emma-stone/gambles-are-the-most-fun-because-it-s-part-of-being-an-actor-or-being/) [Emma Stone](https://sms4smile.com/quotes/author/emma-stone/) > [Making any statement of your feelings is risky. It's just like making pictures.](https://sms4smile.com/quotes/joel-meyerowitz/making-any-statement-of-your-feelings-is-risky-it-s-just-like-making/) [Joel Meyerowitz](https://sms4smile.com/quotes/author/joel-meyerowitz/) > [Its risky in a marriage for a man to come home too late, but it can sometimes pose an even greater risk if he…](https://sms4smile.com/quotes/marcel-achard/its-risky-in-a-marriage-for-a-man-to-come-home-too-late-but-it-can/) [Marcel Achard](https://sms4smile.com/quotes/author/marcel-achard/) > [High testosterone levels have been proven to make men more likely to commit crimes. The tendency in men toward risky behaviour keeps turning up…](https://sms4smile.com/quotes/rodney-stark/high-testosterone-levels-have-been-proven-to-make-men-more-likely-to/) [Rodney Stark](https://sms4smile.com/quotes/author/rodney-stark/) > [Life Gets Risky Sometimes But You Gotta Take Chances, Life's A Game You Gotta Risk It](https://sms4smile.com/quotes/anonymous/life-gets-risky-sometimes-but-you-gotta-take-chances-life-s-a-game/) [Anonymous](https://sms4smile.com/quotes/author/anonymous/) > [“Now that Olive was grown, I didn't know what to do with myself. You could build your life around one single thing, like a…](https://sms4smile.com/quotes/michael-lee-west/now-that-olive-was-grown-i-didn-t-know-what-to-do-with-myself-you/) [Michael Lee West](https://sms4smile.com/quotes/author/michael-lee-west/) > [Most people, even in simple risky situations, don't behave the way the theory of utility would have them behave.](https://sms4smile.com/quotes/howard-raiffa/most-people-even-in-simple-risky-situations-don-t-behave-the-way-the/) [Howard Raiffa](https://sms4smile.com/quotes/author/howard-raiffa/) > [I once invested in a risky business. Quite a few people warned me not to do so, but I still went ahead and invested…](https://sms4smile.com/quotes/gautam-rode/i-once-invested-in-a-risky-business-quite-a-few-people-warned-me-not/) [Gautam Rode](https://sms4smile.com/quotes/author/gautam-rode/) > [I'm seen as a little risky to the industry, I think. All my favorite directors are.](https://sms4smile.com/quotes/sean-baker/i-m-seen-as-a-little-risky-to-the-industry-i-think-all-my-favorite/) [Sean Baker](https://sms4smile.com/quotes/author/sean-baker/) ## More by Eugene Fama > [I don't even know what that means. People who get credit have to get it from somewhere. Does a credit bubble mean that people…](https://sms4smile.com/quotes/eugene-fama/i-don-t-even-know-what-that-means-people-who-get-credit-have-to-get/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [I don't believe anyone wants to hear what I have to say.](https://sms4smile.com/quotes/eugene-fama/i-don-t-believe-anyone-wants-to-hear-what-i-have-to-say/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [After taking risk into account, do more managers than you’d see by chance outperform with persistence? Virtually every economist who studied this question answers…](https://sms4smile.com/quotes/eugene-fama/after-taking-risk-into-account-do-more-managers-than-you-d-see-by/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [Debates go on to this day about what caused the Great Depression. Economics is not very good at explaining swings in economic activity.](https://sms4smile.com/quotes/eugene-fama/debates-go-on-to-this-day-about-what-caused-the-great-depression/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [In an efficient market at any point in time the actual price of a security will be a good estimate of its intrinsic value.](https://sms4smile.com/quotes/eugene-fama/in-an-efficient-market-at-any-point-in-time-the-actual-price-of-a/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [Active investment is a zero-sum game. Passive managers don't play the game. They buy something resembling the market as a whole, or some segment…](https://sms4smile.com/quotes/eugene-fama/active-investment-is-a-zero-sum-game-passive-managers-don-t-play-the/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [The distribution of the market is fat-tailed relative to the normal distribution... For passive investors, none of this matters, beyond being aware that outlier…](https://sms4smile.com/quotes/eugene-fama/the-distribution-of-the-market-is-fat-tailed-relative-to-the-normal/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [There's quite a bit of evidence that even professionals don't show any ability to pick stocks or to predict market rollbacks. Most of the…](https://sms4smile.com/quotes/eugene-fama/there-s-quite-a-bit-of-evidence-that-even-professionals-don-t-show/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [State constitutions typically provide that the state first has to service its debt, then make it pension payments, and then pay for services. What…](https://sms4smile.com/quotes/eugene-fama/state-constitutions-typically-provide-that-the-state-first-has-to/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [The efficient market theory is one of the better models in the sense that it can be taken as true for every purpose I…](https://sms4smile.com/quotes/eugene-fama/the-efficient-market-theory-is-one-of-the-better-models-in-the-sense/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [People are always saying that prices are too high. When they turn out to be right, we anoint them. When they turn out to…](https://sms4smile.com/quotes/eugene-fama/people-are-always-saying-that-prices-are-too-high-when-they-turn-out/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [People don't walk away from their homes unless they can't make the payments. That's an indication that we are in a recession.](https://sms4smile.com/quotes/eugene-fama/people-don-t-walk-away-from-their-homes-unless-they-can-t-make-the/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [In my junior year in college, I was getting kind of tired of French. So, I took an economics course, and I loved it.…](https://sms4smile.com/quotes/eugene-fama/in-my-junior-year-in-college-i-was-getting-kind-of-tired-of-french-so/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [All the central banks are doing is substituting one form of debt with another form of debt. They're issuing short term debt and using…](https://sms4smile.com/quotes/eugene-fama/all-the-central-banks-are-doing-is-substituting-one-form-of-debt-with/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [Tastes and behavior are important in economics. Nobody denies that. But the question is: How much of behavior is irrational, and how much of…](https://sms4smile.com/quotes/eugene-fama/tastes-and-behavior-are-important-in-economics-nobody-denies-that-but/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) [Explore all 38 Eugene Fama quotes ](https://sms4smile.com/quotes/author/eugene-fama/) ## More Chance quotes > [Before I debuted, it was my goal to make my debut, and afterwards, I aimed at winning champion titles on television music shows, and…](https://sms4smile.com/quotes/hyuna/before-i-debuted-it-was-my-goal-to-make-my-debut-and-afterwards-i/) [Hyuna](https://sms4smile.com/quotes/author/hyuna/) > [I understand it's promotion, but no one ever gave me a chance. 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But a knob…](https://sms4smile.com/quotes/tom-robbins/there-are-times-when-we-can-feel-destiny-close-around-us-like-a-fist/) [Tom Robbins](https://sms4smile.com/quotes/author/tom-robbins/) > [Pain held no terror for him. Pain was, if not friend, then family, something he had grown up with in his crèche, learning to…](https://sms4smile.com/quotes/paolo-bacigalupi/pain-held-no-terror-for-him-pain-was-if-not-friend-then-family/) [Paolo Bacigalupi](https://sms4smile.com/quotes/author/paolo-bacigalupi/) > [Love changes people, for better or for worse. You could look at it as a chance for you to change. 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