By Justin Fox

Talking efficient markets with Robert Kleinschmidt, Jerry Senser and Consuelo Mack

I hadn't realized that my appearance on Consuelo Mack WealthTrack in October was available in embeddable form. Thanks to Prieur du Plessis for showing me the way:

There's also a transcript where you can read semi-coherent utterances such as this one (it's better on TV):

JUSTIN FOX: It's funny, even though my book is critical of this whole idea coming out of academic finance, I spent enough time talking to all these finance professors that I immediately think to myself, "yeah, but do those guys really know where these stocks are headed?" But my thought is yeah, I should hope some people do because that's what makes, it's the work of Jerry and Robert that makes markets more efficient over time. My thinking is more power to them because I'm no good at that.

Fall speaking schedule

I just updated my upcoming events page for the first time in a while, and realized that I have enough stuff coming up in the next couple of months to merit a post. First, I'll be on the Consuelo Mack WealthTrack show on PBS this coming weekend. (Check your local listings!) Then there's this New-York-centric line-up of speaking events:

Columbia Business School, 6:30-8:30, William & June Warren Hall, 1125 Amsterdam Avenue, Feldberg Space. Register online.

Museum of American Finance, Oct. 29, 2009, 5:30-7, 48 Wall Street, New York ($15 for non-members).

New York Salon, Nov. 9, 2009, 7-8:30, Barnes & Noble Lincoln Triangle, Broadway and 66th, New York. Tickets required (but they're free); e-mail jean@nysalon.org.

Drucker Business Forum, Dec. 3, 2009, Los Angeles. Details to come.

New York Society of Security Analysts, Dec. 9, 2009, 5:30-7:45, 1177 Avenue of the Americas, 2nd Floor, New York ($25 for non-members).

Ryan Lizza puts Myth of the Rational Market in the New Yorker, and other news

In that other blog I write, I have whined a teensy little bit about Paul Krugman and The Economist failing to throw in a mention of my book in their recent pieces on what went wrong with economics. So it was great to see, in Ryan Lizza's epic account of economic decisionmaking in the Obama White House in this week's New Yorker, a largely unnecessary reference to The Myth of the Rational Market:

Summers told me that, as a graduate student, he first studied claims, made famous by economists at the University of Chicago, that financial markets are always rational and self-correcting. He said, “I encountered a sentence that was much quoted: ‘The efficient-market hypothesis is the best established fact in social sciences.’ Any sentence like that is a red flag to an ambitious academic.” Summers produced a body of work that undermined the efficient-market hypothesis, or E.M.H. A memorable paper on the subject, which he wrote in the early eighties but never published, began, “THERE ARE IDIOTS. Look around.” According to Justin Fox’s recent book, “The Myth of the Rational Market,” that paper persuaded Fischer Black, one of the leading theorists of E.M.H., to essentially abandon his belief in the hypothesis.

The Krugman effect

As I left Diane Rehm's radio studio in Washington after doing her show in July, her parting words were, "Watch your Amazon ranking." I did, and the Rehm effect was impressive, driving Myth of the Rational Market from somewhere in the 200s to as high as 112. The Daily Show effect was similar (on the Amazon rankings, at least—the Rehm show appearance also landed the book on the NYT extended bestseller list, which going on Jon Stewart did not do). I've already written here about the Nocera effect and the new Laffer curve.

Turns out the Krugman effect may be the most powerful of all (for my book, at least; we're not talking Oprah material here). When Paul Krugman's review of Myth went online the afternoon of Friday, Aug. 7, the book was in the 500s. Here's how high it got the following Monday:

Myth of the Rational Market on the Daily Show

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Justin Fox
thedailyshow.com
Daily Show Full Episodes Political Humor Jason Jones in Iran

That was nice, huh? I got the call at about 7:30 Wednesday morning that the night's guest had canceled and they were thinking about having me on as the replacement. Turns out it was Henry Waxman, who was in the hospital (they say he's feeling better now). By about 10 a.m. it was definite that I was going to be the night's guest. So I got my Daily Show gig. My line about the babies in high heels, in case you're wondering, is a reference to this very funny segment.

Publishers Weekly gives 'Myth of the Rational Market' a rave review

Okay, this is the kind of thing I was looking for (or at least hoping for). In the May 18 Publishers Weekly (nine items down), a starred review that begins:

At the core of the current financial crisis has been the widely held assumption that markets behave rationally. Fox, Time magazine editor-at-large, isn’t the first to bring scrutiny—or censure—to the conceit, but his analysis is singularly compelling, and the rare business history that reads like a thriller. ...

And ends:

A must-read for anyone interested in the markets, our economy or government, this dense but spellbinding work brings modern finance and economics to life.

I felt kinda lightheaded after reading this. It was sort of my dream of how reviewers might see the book. But I wasn't entirely confident that the book merited such an endorsement—I'm way too close to it, and way too aware of the sections that fell short of what I hoped to accomplish with them.

The review also says the book is being published in July by Collins, when in fact it's being published in June by HarperBusiness (the Collins label has been shut down). Not that I'm complaining.

Important publishing industry news

It looks like we're going to change the name of my book to The Myth of the Rational Market (from The Myth of the Rational Investor). Because that seemed to make more sense, and seems to give the book a better chance of breaking through to non-investing readers.

First Time column

My very first "Curious Capitalist" column is in the current issue of Time. It's the issue that was supposed to hit newsstands last Friday, although an awful lot of newsstands haven't figured out yet that Time now comes out on Fridays. Last Friday night with the in-laws it took three stops before we finally found a copy (at the Reston Barnes & Noble). Today at the Raleigh-Durham airport the Hudson News still had last week's Time on display.

Anyway, the column is about hedge funds and their inevitable decline (as a group) into mediocrity. It stars Ed Thorp, about whom I offer some more detail in a blog post. And it continues what's becoming a theme for me: That despite all my jabbering about financial markets not being efficient, I still tend to believe that, over time,  markets are actually pretty efficient. Oh well.

The return of the Curious Capitalist

I started actually working at Time Monday. And blogging. So far on Milton Friedman (my favorite subject, apparently), newspaper economics, and hedge funds. At Fortune I posted once a week or so because the magazine only comes out once every two and I didn't have articles in every issue. Now I'm supposed to write a magazine column once a week, so I'm trying to figure out an appropriate frequency. I think it's more.

The book is ... about to be turned in. I meant to today, but I'm still doing some cleanup.

Big Time move

Here's the nicely geometric view from my new office, on the 24th floor of the Time & Life Building (up from the 15th). I made the move yesterday afternoon. Yesterday morning, as soon as I got up, I checked Keith Kelly's column in the New York Post, in which my hiring as Time's new business and economics columnist was to be disclosed. It was, but only sort of. This is what Kelly wrote:

Justin Fox, who has been writing The Curious Capitalist blog for Fortune.com, will now move the blog to Time.com...

Which wasn't wrong. He spelled my name right, and put it in bold letters. But he failed to mention that I'm also going to be a columnist for friggin' Time magazine. Which isn't nearly the big deal it would have been 30-odd years ago, when I first subscribed. Still, it's something, isn't it? Blogging's great and all, and in 10 years there will only be bloggers and Matthew Yglesias will be the richest man in America. But not yet.

So anyway, I checked the Post online at 6:30 yesterday morning, and was appalled. This was going to be the main announcement of my new job, it will surely be the only newspaper article written about it, and yet it left out the actual new job. So I did the modern thing, put up a post on The Curious Capitalist setting the record straight, and then sent Jim Romenesko an e-mail about it. After which, nothing happened. Hardly anybody I know saw Kelly's column. Romenesko missed it, and didn't see my e-mail about it until too late in the day to do anything about it. And really, who cares?

Well, I do. I now have a nice little office at Time, right between Joe Klein and Nathan Thornburgh. I don't start work there until January 22, before which I really, truly have to get my book manuscript in shape. Then I will start writing columns. Every week, it looks like. Got any topics for me?